Is it too late to fix Facebook? Part Deux - 4 ideas that might (or might not) work

Profile picture for user Jerry.bowles By Jerry Bowles November 27, 2018
Summary:
There are plenty of ideas about what Facebook needs to do to fix its problems. It still doesn’t seem to be listening. But there will be a day of reckoning.

Mark Zuckerberg European Parliament
Zuckerberg unfazed

Mark Zuckerberg has become the Rodney Dangerfield of the Big Tech world. For the past two years, the 34-year-old CEO of one of the biggest and most prosperous companies in the world has been relentlessly battered. This has come as a result of his failure as CEO to deal with the fallout from the spread of Russian propaganda in the 2016 election, the Cambridge Analytica scandal, and fierce battles over whether fake news and disinformation should be allowed on the platform. Like the chronically esteem-deprived comedian of 1980s TV, Zuckerberg is now getting respect from virtually nobody.

Stuart Lauchlan has extensively documented the unfolding events. Most recently we had the Serjeant-at-Arms wielding ancient powers quickly followed by an executive grilling in front of the representatives of nine governments representing some 477 million people.

Tech is the answer - no it's not (completely)

Zuckerberg still appears convinced that the company can fix itself. To Zuckerberg, the answer is always technology. He points out that the company is halfway through a three-year retooling exercise aimed at shoring up its platform against abuse in myriad forms. He is counting heavily on better artificial intelligence systems to root out and expunge extremist materials.

The company now employs 20,000 people to eliminate offensive content and Zuckerberg is on record warning the markets that his development spend will increase in the range 40-50%. None of this makes up for what political representatives and academic researchers see as a sometimes arrogant disregard to offer himself up as an accountable CEO.

Facebook’s stock price is 40% off its high mark and the company signaled that it expects both user numbers and revenues to shrink further. Stock investors—who are generally for ethics and online privacy as long as they don’t cut too deeply into the bottom line—have responded savagely to Zuckerberg’s vow to harden defenses at the possible expense of profits.

Limited supervisory options

In a typical public organization confronted by problems this serious, the board fires the CEO and other key managers in an effort to reassure investors and users. Firing Zuckerberg is not an option. Not because he is the founder—founders are eventually shown the door about 80% of the time —but because Zuckerberg was unusually clever about setting up Facebook so that he controls nearly 60% of the voting shares. He is also the chairman of the board. In other words, he is accountable only to himself. Today, commenters see right through that, casting his confidence in key people as saying I'm confident in me and my abilities as the king of all I survey.

So, how can Facebook be fixed, by which I mean, compelled to clearly define and delineate the privacy rights of its users and give them much more control over their data? How can they prevent bad actors from using the data for nefarious reasons? How can they eliminate or limit hate speech and flag misinformation without trampling on American free speech rights?

There are no shortages of ideas floating around, ranging generally from the difficult to the impossible. Here are some of them.

1. Regulate. Regulate. Regulate.

The demand that governments regulate social networks more aggressively has been growing steadily, with European governments leading the charge to strengthen consumers’ data and privacy rights. If Facebook is a social utility, as it has described itself, then it should be regulated like one.

Europe’s adoption of the General Data Protection Regulation (GDPR) and punishing platforms that do not take down hate speech fast enough are commendable steps. Six months into GDPR, Politico reports, there has been an explosion in complaints by individuals, reports of data breaches by companies, and greater awareness among Europeans about data protection. Facebook has already faced fines under a variety of European states' measures but they're chump change to what it might face under GDPR.

On the other hand, GDPR has had a negative impact on EU startups and very little effect on Facebook and Google. The American firms are more dominant than ever, suggesting the possibility that the fact that they are competition-destroying monopolies may be as serious a problem as their invasion of user data. The truth is that both Facebook and Google have expertly deployed the 'winner-takes-all' model which comes from outsized network effects that operate on the Internet.

The state of California adopted an aggressive California Consumer Privacy Act in late June. While it doesn’t go as far as GDPR, it gives California’s 40 million citizens the right to see what information is being collected about them and rights to request that data be deleted. They will also be able to find out whether their information is being sold to third parties including advertisers and to request that they stop doing so. With the notable exception of Apple and Amazon which favor better user data protection through regulations, Big Tech has sought to appear cooperative while pushing for a less rigorous set of rules from Washington.

The Act is slated to come into effect on January 1, 2020, after which companies could be penalized up to $7,500 for each violation. The rules will be enforced by California’s attorney general. Ohio and other states have followed suit with similar types of legislation.

2. Make Facebook legally responsible for its content.

Another argument is that Facebook and other social media platforms should be treated like publishers rather than a platform and held legally responsible for all content, just like the New York Times or CBS. But, being categorized as a publisher instead of a neutral network would have devastating consequences for Facebook.

Under Section 230 of the 1996 Communications Decency Act internet intermediaries are protected from liability for the content their users post. If Facebook were to start creating or editing content on its platform, it would lose that immunity and find itself liable for several billion pieces of content a day.

Another suggestion to control content is to ban all political advertising. That sounds great in theory but is a lot tougher in practice. Alex Stamos, the now departed head of security at Facebook, believes social media platforms and governments should work together to establish clear standards: Stamos wrote:

Congress needs to codify standards around political advertising. The current rules restricting the use of powerful online advertising platforms have been adopted voluntarily and by only a handful of companies. Congress needs to update Nixon-era laws to require transparency and limit the ability of all players, including legitimate domestic actors, to micro-target tiny segments of the population with divisive political narratives. It would be great to see Facebook, Google and Twitter propose helpful additions to legislation instead of quietly opposing it.

It wouldn’t be that hard to ban official political advertising, but how does one determine if users reposting or posting content that reinforces their political views constitutes unofficial advertising or simply the exercise of free speech. As long as there are social networks, politicians and their operatives will go around mainstream media to feed the platform with spurious narratives designed to appeal to emotions rather than reason. Steve Bannon, the former WH “chief strategist” admitted as much to writer Michael Lewis:

We got elected on Drain the Swamp, Lock Her Up, Build a Wall. Anger and fear is what gets people to the polls.

In Bannon’s view, the political imperative is to dominate the conversation rather than contest a battle of ideas.

The Democrats don’t matter. The real opposition is the media. And the way to deal with them is to flood the zone with shit.

That’s pretty sad, IMHO. As John Thorhill summed it up so colorfully in the Financial Times:

Social media has provided the means to spray faecal matter around the planet at the click of a mouse. And, for the moment, our societies are without an adequate mop.

3. Do a Zuckerberg workaround.

Since forcing him out of the company is not a viable choice, perhaps Zuckerberg could be persuaded to give up one of roles and his titles—CEO or Chairman of the Board—in favor of a more seasoned, admired and less personality-challenged tech executive. This is the model used by Google founders Larry Page and Sergy Brin when they brought on industry veteran Eric Schmidt as Executive Chairman of Google from 2001 to 2015 and Alphabet Inc. from 2015 to 2017. That worked out pretty well.

Of course, many people thought that was one of Sheryl Sandberg’s roles but she, too, has been deeply wounded by the series of recent disasters.

There is a mini-revolt underway to oust Zuckerberg from the board. Trillium Asset Management as well as the state treasurers of Illinois, Rhode Island, Pennsylvania, and the comptroller of New York City have filed a shareholder proposal to remove Zuckerberg as chairman of the company. The proposal will be voted on at next year’s shareholder meeting. Jonas Kron, senior vice president of Trillium, which owns about 53,000 Facebook shares, told CNBC that recent activity…

"…makes it abundantly clear that an independent board chair is necessary."

But, that’s not going to happen without Zuckerberg’s blessing.

4. Break up Facebook.

As we know from the New York Times stunning investigative piece, Facebook has been at war recently with Freedom from Facebook, a coalition of privacy and anti-monopoly advocacy groups, essentially born out of the Open Markets Institute in May. It counts at least nine other groups among its coalition and has just added its most powerful ally yet: The Communications Workers of America union, which represents 700,000 US workers.

Sarah Miller, deputy director of the Open Markets Institute and spokeswoman for Freedom from Facebook, said:

Mark Zuckerberg has far too much power, his own shareholders called him a dictator. The set of positions that we're offering are returning to a more responsible, reasonable status quo.

Freedom from Facebook has three key objectives:

  1. Separating Facebook, Instagram, WhatsApp, and Messenger;
  2. Forcing Facebook to be interoperable with competing social networks; and
  3. Introducing strong privacy rules to protect Facebook users.

The group is by no means alone. Tim Wu, the Columbia law professor who coined the term “net neutrality,” proposes breaking up Facebook in his new book, The Curse of Bigness: Antitrust in the New Gilded Age. Wu’s short book is a plea to return to the day when antitrust enforcement focused on the concentration of wealth and power and the damage that might have on democracy rather than the much more mundane question of whether consumer prices might rise.

To Wu, Google, Facebook and Amazon are the Standard Oil or US Steel of our day--companies that are more powerful than governments, and ones that pose a threat to liberal democracy unless they can be curbed through a broader view of monopoly.

New York University marketing professor Scott Galloway argues that these companies’ size and technological disruption have led to a host of social ills, from tax avoidance to job destruction to electoral interference.

My take

The ethical problem with both Facebook and Google (which probably has and is selling a lot more information about you than Facebook) is that their business models are built on the intense surveillance of users like you and me, the collection and storage of vast caches of personal data on billions of individuals, the sale of that information to entities that want to manipulate us to buy something or believe something and their willingness to sell “your” information to almost anybody for almost any reason. That is a hard turd on which to pin a rose.

What's more, legislation has evolved over the last 35 years to reflect a 'capital first' model of business rather than a 'labor first' or the kind of labor and capital partnerships we saw in the immediate post-World War 2 period. As such, companies like Facebook wield de facto power in the halls of government that is hard to resist under the lobbying system unless there is a fundamental shift in government thinking about its own role in society. For instance, anti-trust law was designed to deal with the robber barons who hurt the individual through the exercise of monopoly power. Even taking changes in settled law, that's a much harder concept to articulate in regards to Facebook when the very people who use the service are the product.

As we've noted, settling on Facebook - and possibly by definition Google - as media entities is an area of constitutional law that is fraught with risk.

But, of course, the big adtech monopolies are wildly popular, incredibly profitable but also, as we're discovering on an almost daily basis,  sneaky. How many disgusted Facebook users abandon that platform for Instagram without knowing that Facebook owns that too?

Of all the potential “fixes” floating around, the most likely to be adopted anytime soon is more regulation. Governments should enact strict, detailed, comprehensive federal laws on data confidentiality, empower a federal agency (like the FTC in the U.S.) to enforce them within a stringent framework and impose draconian fines on violators. Europe’s GDPR should be the starting point. The problem, as we note, is that wide sweeping protective measures like GDPR can (and likely will) lead to a greater concentration of power. In short, governments don't have a good track record of developing legislation in haste.

Meanwhile, I suspect we’re going to have Mark Zuckerberg to kick around for a long time.