CEO and co-founder of Reddit, Steve Huffman
Source: CNBC | YouTube
Testifying before Congress on Thursday, Reddit CEO Steve Huffman defended the role Reddit played in the growth of GameStop shares in January.
Huffman told House Financial Services Committee members Thursday that Reddit did not detect any significant activity driven by robots or foreign actors in the WallStreetBets subreddit. Users of the online community helped spark a buying frenzy last month for very short stocks like GameStop and AMC.
As retailers continued to buy stocks that were previously undesirable, lawmakers and media observers raised questions about who was really behind the places that led the negotiation and how this mechanism could be manipulated.
Huffman stated that Reddit’s moderation mechanism makes it particularly good for removing bad information. The site allows users to vote comments up or down to increase or decrease their visibility. Moderators from different communities help enforce the rules in their corners of the platform. Huffman said Reddit has invested heavily in the voting system and that WallStreetBets moderators have done an “excellent job.”
“Our user base is exceptionally good at sniffing out falsehoods, misinformation, fake stories, both within this community and on Reddit in general,” Huffman said. “In order for any content to be successful on Reddit, it must be accepted by that community and receive the same amount of votes as anything else.”
While users don’t need to use their real identities, Huffman said asking them to do so won’t necessarily make the site safer.
“Other platforms have real identity and don’t serve to improve their behavior,” he said.
Financial advice from Reddit users may be more reliable than advice from traditional media, Huffman suggested.
“People can say, in fact, they do it on TV all the time, encouraging people to make what I would call bad investment decisions,” Huffman said. “I think on Reddit investment advice is probably one of the best because it has to be accepted by many thousands of people before it gets that kind of visibility.”
Reddit is largely protected against the legal liability of its users ’posts by a law known as Section 230 of the Communications Decency Act. The legislation protects online platforms from the responsibility of users ’posts and also allows them to freely moderate or remove content they deem appropriate. The law has attracted the control of lawmakers on both sides of the aisle who believe it unfairly protects them from liability for their products.
Still, Huffman suggested his company could take responsibility for things happening on its platform. Huffman later noted that Reddit could still be subject to civil litigation.
“Reddit can be held accountable and we take our responsibilities incredibly seriously,” he said.
SEE: Retail investors are pushing GameStop’s explosive rise despite the fundamentals