Reddit CEO and co-founder Steve Huffman
Source: CNBC | YouTube
Testifying before Congress on Thursday, Reddit CEO Steve Huffman defended the role Reddit played in the January surge of GameStop shares.
Huffman told members of the House Financial Services Committee at a hearing on Thursday that Reddit did not detect any significant activity driven by bots or foreign actors on the WallStreetBets subreddit. Users in the online community helped spark a buying frenzy last month for highly-shorted stocks like GameStop and AMC.
As retail traders continued to buy once-undesirable stocks, lawmakers and media observers raised questions about who was really behind the posts driving the trading and how such a mechanism could be manipulated.
Huffman testified that Reddit’s moderation mechanism makes it particularly good at weeding out bad information. The site allows users to vote comments up or down to increase or decrease their visibility. Moderators of different communities help enforce the rules in their corners of the platform. Huffman said Reddit has invested heavily into the voting system and that the WallStreetBets moderators have done an “excellent job.”
“Our userbase is exceptionally good at sniffing out untruths, misinformation, fake stories, both within this community and Reddit at large,” Huffman said. “In order for any piece of content to be successful on Reddit, it has to be accepted by that community and receive the same amount of votes that anything else would.”
While users don’t need to use their real identities, Huffman said asking them to do so would not necessarily make the site safer.
“Other platforms have real identity and it doesn’t do anything to improve their behavior,” he said.
Financial advice from Reddit users may actually be more reliable than advice from traditional media, Huffman suggested.
“People can say, in fact they do on television all the time, encourage people to make what I would call bad investment decisions,” Huffman said. “On Reddit, I think, the investment advice is actually probably among the best because it has to be accepted by many thousands of people before getting that sort of visibility.”
Reddit is largely protected from legal responsibility for their users’ posts through a law known as Section 230 of the Communications Decency Act. The legislation shields online platforms from liability for users’ posts and also allows them to freely moderate or remove content as they see fit. The law has attracted scrutiny from lawmakers on both sides of the aisle who believe it unfairly shelters them from responsibility for their products.
Still, Huffman suggested his company could be held responsible for things that happen on its platform. Later, Huffman noted Reddit could still be subject to civil litigation.
“Reddit can be held responsible and we take our responsibilities here incredibly seriously,” he said.