I had a similar thought. I honestly don't understand exactly what is being proposed here. On the one hand, they talk about protecting fr## sp##ch (e.g. against the platforms censoring conservatives) and on the other on removing liability protections for content posted on their platforms.
Those seem to point in opposite directions and it reminds me of the stupid wars we had over ISPs and web hosts way back (except the oligopoly position of Facebook et al does change things).
But to your point, if you take away legal protections, wouldn't this open Twitter up to a lawsuit for libel due to, for example, Trump's accusations against Joe Scarborough? And wouldn't a small number of suits like that basically spell the end of Twitter? Twitter has recently admitted that any user other than Trump would be banned if they behaved the same way, but basically, they don't dare to stand up to him.
Most people seem to think the courts will reject this executive order.