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Meta Suspends Fact-Checking Program In The US

Meta Platforms has announced a major shift in its approach to content moderation in the United States, suspending its fact-checking program. The parent company of Facebook, Instagram, and Threads, which collectively boast over 3 billion users, will relax restrictions on controversial subjects such as immigration, sports, and gender identity. This move comes just as President-elect Donald Trump is poised to take office.

Key Changes

Rather than relying on an official fact-checking program to address questionable claims across its platforms, Meta plans to implement a community-based system similar to the one on Elon Musk’s X (formerly Twitter). This new approach, known as “community notes,” will enable users to provide context and flag misinformation, shifting responsibility from the company to the community. Additionally, Meta will no longer proactively monitor hate speech or other policy violations. Instead, posts will only be reviewed if flagged by users.

Meta will also relocate the teams responsible for content moderation from California, where most of the company’s US operations are based, to Texas and other locations in the country.

A Shift In Policy

This overhaul represents the most significant shift in Meta’s content moderation strategy, signaling a potential shift in its alignment with the incoming presidential administration. CEO Mark Zuckerberg seems to be signaling a return to a more lenient stance on freedom of expression.

In a video statement, Zuckerberg stated, “We’ve reached a point where there’s just too much wrongdoing and too much censorship. It’s time to get back to our roots around freedom of expression.”

A Strategic Move

Meta’s decision follows its recent hiring of conservative figures to its board, including Joel Kaplan, a former Republican Party political strategist, who was appointed head of global affairs. Dana White, the CEO of the UFC and a close ally of Trump, was also named to the board. Zuckerberg has publicly expressed regret over some of Meta’s previous content moderation decisions, especially in relation to COVID-19. Additionally, Meta made a notable donation of $1 million to Trump’s inauguration fund, diverging from its past practices.

A Backlash

The decision to end the fact-checking program, which began in 2016, was met with strong opposition from partner organizations. Angie Drobnick Holan, head of the International Fact-Checking Network, called it “a serious blow to the community,” emphasizing that fact-checkers did not censor posts but provided additional context and debunked false claims and conspiracies.

What’s Next?

Currently, Meta plans to implement these changes exclusively in the US market. It remains unclear whether similar changes will be made in the European Union, which has adopted stricter regulations through the Digital Services Act. This law, which came into force in 2023, mandates large online platforms like Facebook and X to address illegal content and potential public safety risks. X’s “Community Notes” feature is already under scrutiny by the European Commission, which launched an investigation in December 2023.

If Meta or any other company violates EU regulations, they could face fines of up to 6% of their global revenue.

AI Spending Is Complicating The Fed’s Fight Against Inflation

Silicon Valley leaders have long argued that artificial intelligence will make technology and services dramatically cheaper. OpenAI CEO Sam Altman has described a future where intelligence becomes extremely inexpensive, while Tesla and SpaceX CEO Elon Musk has predicted that AI and robotics will create greater abundance and drive down costs.

So far, those benefits have yet to materialise at scale. AI adoption remains relatively slow, while the enormous investment needed for data centres and AI infrastructure is putting pressure on electricity prices, supply chains and other costs. For the Federal Reserve, this creates a difficult balancing act: AI could eventually boost productivity and reduce inflation, but its current buildout is contributing to higher prices.

OpenAI chief economist Ronnie Chatterji said AI needs to be adopted by organisations and generate measurable value before its broader economic impact becomes visible in productivity statistics.

AI Adoption Remains Uneven

Capital spending on AI infrastructure in the U.S. is expected to reach $581 billion this year, according to Goldman Sachs Research, with global investment potentially reaching $1 trillion.

Despite the scale of spending, adoption remains far from universal. A May survey by the U.S. Census Bureau found that 17% to 20% of U.S. businesses reported using AI, with adoption significantly higher among large companies.

Companies that have implemented AI at scale also highlight the challenges. Julie Averill, former CIO of Lululemon, said successful deployment requires changes in employee behaviour and trust in the technology. OpenAI has observed a similar divide: its most advanced business users deploy AI at around eight times the rate of average companies.

Why Productivity Gains May Take Time

Economists point to the limits of automation. AI can perform individual tasks effectively, but many jobs combine tasks that are difficult to automate.

Stanford professor Charles Jones refers to these as “weak links”. Radiology, for example, involves interpreting scans but also communicating with patients and working with colleagues. AI can automate part of the job without eliminating the profession itself.

As a result, the full economic impact of AI may not become clear until businesses adopt the technology more broadly and reorganise their operations around it.

AI Adds To The Fed’s Policy Challenge

AI’s economic impact has become part of the Federal Reserve’s policy debate. Fed Chairman Kevin Warsh has argued that AI could eventually become a significant disinflationary force by increasing productivity and strengthening U.S. competitiveness.

Other officials are more cautious. In July, the Fed kept interest rates at 3.5% to 3.75%, while some officials expressed concern that AI infrastructure spending could add to inflationary pressures.

Minneapolis Fed President Neel Kashkari pointed to massive data-centre investment as a new source of demand. Household electricity prices rose 10% in the two years through July, compared with a 6.2% increase in overall consumer prices. Meanwhile, shortages of chips and other AI components are pushing up costs. JPMorgan Chase estimates that DRAM prices could rise 400% by the end of 2026 compared with 2024.

Warsh has consequently adopted a more cautious tone, saying that while AI investment is laying the groundwork for future growth, the timing and scale of its economic effects remain difficult to predict.

For the Fed, the challenge is clear: AI could eventually deliver major productivity gains, but the cost of building that future is already showing up in the economy.

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