Are Social Media and Digital Content platforms like Facebook Inc and YouTube (Alphabet Inc) Shariah compliant?
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Are Social Media and Digital Content platforms like Facebook Inc and YouTube (Alphabet Inc) Shariah Compliant?

Total stocks: 44
Compliant: 20
Non-compliant: 24
(As on 17th June 2020)

In the recent past quite a few social media platforms like Facebook, Twitter, Snapchat and content platform companies have got listed. There is a perception that these companies should be Shariah non-compliant because of the general content displayed on them. Let us analyse if they are indeed Shariah not compliant and the Shariah principles of analyzing such companies for Shariah compliance.

Social media and digital content platforms – An overview

Social media and digital media content platforms are technology companies which allows users to connect with other users and share social messages, pictures and videos. They provide tools for users to create a personal digital profile and exchange content for the other users to interact with.

Essentially, they are a digital platform giving users access to such tools through which they can express their personal views and share social messages.

Given this view, they seem to be Shariah compliant as they are involved in information sharing.

But aren’t such social media and digital portals displaying content which seem Shariah non-compliant?

Social media and digital content platforms can be categorized as follows so as to analyse them better:

A. Platforms which do not produce content
B. Platforms which do not produce content, but allow only curated or a single theme content

A. Platforms which do not produce content:

Social media platforms which do not produce their own content but allow users to upload content of their choice and interact with other users generally are permissible since the platform does not promote permissible or non-permissible content and is neutral. Secondly, such platforms can be used for both, permissible as well as non-permissible dissemination of information. For example, general educational content, news, sports information can be posted on such platforms which seem compliant; as well as content about movies, actors, models etc. can be posted which seem non-compliant can be posted.

Hence the operative criteria that decides the compliance are:
i. is the platform neutral to content posted?
ii. Is the platform purely for user generated content and does not produce its own non-permissible content?


If the answer to both is yes, then an additional filter is applied to assess their compliance

iii. is the platform sensitive to explicit content such as pornography, explicit content, drugs, illegal activities and has an explicit policy and framework to prohibit such activities?

If yes, then they are considered Shariah compliant as they are considered a neutral social communication technology platform.

B. Platforms which do not produce content, but allow only curated or a single theme content

A platform may qualify all the condition as mentioned above, but may follow a specific theme such as music sharing or any other theme which is not permissible. Such platforms would be classified as non-compliant.

The reasoning here is that the company is intentionally involved in a segment which is considered non-permissible from a Shariah perspective.

But what about the revenues of such companies as they seem to get most of their revenues from advertising and isn’t that considered non-permissible?

Advertising revenues of such social media companies are generally comprised of promoting user content, text based ads, pictorial or short videos. Platforms which are neutral (non-theme based) and having an ads review policy are generally considered compliant.

So, is Facebook Inc and YouTube (part of Alphabet Inc) Shariah compliant?

Shariah Compliance of Facebook Inc:

Facebook, Inc. is a technology company that enables users to communicate with their family, friends, and coworkers. Facebook also allows users to share information, photographs, website links, and videos.
Major source of revenue for Facebook is from advertising which consist of promoting products - text as well as video based. All ads have to be approved by Facebook which follows an anti-pornography, anti- child abuse and prohibits vulgar content. Additionally, no ads or content on Facebook is produced or owned by Facebook. It is a platform for content sharing with basic ethical controls.
The business of such social media platform companies was discussed at length with the Shariah scholars and after a considered review, such companies were deemed to be Shariah compliant. Hence Facebook passes the business sector screening and since it also passes the financial ratio screens, it is classified as Shariah Compliant.

Shariah compliance of YouTube (Alphabet Inc):

YouTube as a business segment of Alphabet Inc is Shariah compliant since it is a neutral platform, does not produce its own content, derives revenue from ads which are screened and has a policy of regulation against posting Adult content, Adult themes in family content, Dangerous or derogatory content , Recreational drugs and drug-related content, Alcohol-related content, Tobacco-related content, Gambling and games-related content, Healthcare-related content, Hacking and cracking content, Pages that offer compensation programs, Misrepresentative content, Shocking content, Weapon-related content, Content that enables dishonest behavior, Illegal content. Hence, Alphabet Inc’s business sector is considered compliant.
Since it also passes the financial ratio screens, it is considered Shariah compliant.

So which digital platform companies are considered non-compliant?

Once such example is SPOTIFY Inc. It is a digital content platform which is considered non-compliant. Although it is a digital content sharing platform and does not produce its own content, but it follows a theme which is music content. Since music as a business is opposed to Shariah tenants, such digital content sharing platforms are considered non-compliant.
The same would be true for NETFLIX INC as it produces its own content which is usually Shariah non-permissible as well as it only allows curated content (chosen by Netflix) to be displayed on its platform. Although the revenue its makes is from subscription, the subject matter of the service for which the subscription is collected is not permissible and hence NETFLIX INC fails the Shariah compliance business sector screening.

Conclusion:

Social Media and digital content platforms are a tricky segment and need to be analysed in detail for ascertaining their Shariah compliance. Hence, some may be Shariah compliant while others may not. Islamicly, by working with its renowned Shariah Scholars Board has been able to frame a guideline to assess such businesses as has been explained in this report. And as we always say, Shariah compliance screening isn’t a straight forward algorithm based subject. It requires a detailed study of the business and then an application of Shariah principles, to assign Shariah permissibility of investment in that company’s equity.

All listed Social media and digital content companies and their Shariah compliance is available on Islamicly app.

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