RPT-BREAKINGVIEWS-Social media reform requires more than toll takers

By Sebastian Pellejero

NEW YORK, Feb 19 (Reuters Breakingviews) - JB Pritzker is taking another swing at the attention economy. After imposing an amusement tax on social media platforms, the Illinois governor is now proposing a statewide fee per user. He hopes the toll will raise $200 million a year for education, as the state grapples with a $2 billion budget shortfall. It’s just the latest front in a worldwide regulatory movement to limit online harms, and especially among children. The instinct is sound: firms that profit from social costs should help pay for them. The design is less convincing.

The cost of distraction is staggering. Survey data suggests that 73% of America's 160 million workers use social media while working, averaging 47 minutes a day, according to productivity tracker Timewatch. That's some 24 billion hours lost annually. At $73 in output per hour, even assuming only a small fraction of that time would otherwise be productive implies an annual drag of hundreds of billions.

Illinois wants platforms to pay. But Pritzker's proposed tiered fee system, up to 50 cents per user monthly, penalizes scale, not harm. Illinois is also moving to ban phones in schools this year. That’s a necessary step if distraction is the disease – Pew Research Center found nearly half of all teens say they are online almost constantly, and are heavy social media users.

Yet funding education with a tax that ignores usage gives platforms no reason to make their products less habit-forming. Compulsive use is associated with worse mental health for users. Europe, by contrast, enforces rules with penalties that can reach up to 6% of global revenue, meaning platforms pay for breaking obligations, not for being big.

A cleaner approach would link taxes to engagement intensity, say time spent or advertising exposure per user, so platforms can lower their liability by redesigning recommendation systems. Shorter sessions would mean fewer impressions. Yet seeking attentive audiences over zombie scrollers can carry more value, as advertisers shift budgets toward platforms that deliver better results. Studies suggest even brief ads that hold viewers' gaze can be several times more effective as those merely served.

Illinois is not a market platforms can easily abandon. With roughly 13 million residents, a retreat would be expensive. Meta Platforms META.O is stepping up political spending tied to state campaigns in Texas and Illinois, backing candidates who favor a lighter touch. Like smoking bans and tobacco taxes, multiple jurisdictions are experimenting with ways to make what’s considered a vice less appealing. The risk to social media companies is that successful methods tend to spread.

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CONTEXT NEWS

Illinois Governor JB Pritzker is proposing a new fee on social-media companies that he says would raise about $200 million a year for education, Bloomberg reported on February 18. The proposal would also bar companies from passing the cost on to users.