Facebook actions will lead to regulation
FACEBOOK became a $US500 billion (AUS$643 billion) company and its founder, Mark Zuckerberg, a $US65 billion man, by sharing users’ data so that advertisers, including political ones, could more precisely target ads than ever before.
But it wasn’t until Facebook helped get Donald Trump elected that the mob descended and the searchlight of regulation was turned on.
By getting caught up in the widening search for someone to blame for Trump, Zuckerberg has got into far more trouble than he ever did by just getting rich destroying his customers’ privacy.
Cambridge Analytica, the shady firm that acquired data on 87 million Facebook users and sold it to the Trump campaign, is now a thread that is beginning to unravel not just Facebook’s own usual imperviousness but Google’s and the rest of social media as well. It feels like we’re at a tipping point for internet regulation.
The 33-year-old Zuckerberg did pretty well this week, perched on his cushion in front of the Senate Judiciary Committee, patiently, carefully answering hours of often dim questioning.
On display was the changing world, and if it wasn’t Mark Zuckerberg sitting there, having persuaded billions of people to enter the details their lives on to his database so that advertisers could chase them with ads designed specifically for them, it would have been someone else.
And after all, targeted Facebook advertising is just the extremity of what the media has always done: marketers buy particular TV and radio shows and newspaper sections based on demographic data to try to better target their spending to improve the return on investment.
The problem is that with Facebook the data is personal and often private, not demographic, and now it’s been used in politics, not just commerce.
The question is what regulation might now be imposed on Facebook, social media and maybe the internet as a whole, because it feels like it won’t be nothing.
A lot of people complain that Facebook is a monopoly utility and should be regulated like one, but the difference is that regulated utilities sell essential services: you can’t not buy electricity and basic communication, but you don’t have to use Facebook (and a lot of people are now taking that option).
The fact that the internet has become something of a winner-takes-all environment controlled by monopolies is a matter of brand strength, quality of service and convenience for users, not barriers to entry.
One model for global regulation might be the EU’s General Data Protection Regulation (GDPR), passed in April 2016 and due to start in six weeks, the essence of which is that all use of personal data must be based on direct permission.
However some analysts think this will improve the position of Facebook and Google. Ben Thompson of the “Stratechery” newsletter says: “The unacknowledged reality is that the GDPR is going to devastate nearly every other ad network [than Google or Facebook’s].
“GDPR will be a pain for Google and Facebook, but it will be lethal for many of their competitors, which means digital ad revenue postGDPR ... will go to Facebook and Google.”
Emulating the European GDPR has so far not been seriously on the table in the US, but a full range of options is now being discussed and maybe that will be one of them.
David Dayen, writing in The New Republic, suggests a ban on targeted advertising: “Nothing tied to a user’s identity should be used to serve them a particular message. The ban would remove the financial incentive to collect data and spy on users. Companies still might do it, to understand what keeps users on their sites. But competitors can overcome that by delivering compelling and useful content, which may actually become important again.”
There’s some appeal in the simplicity of that, but it’s hard to imagine US politicians going that far, and it would be hard to define and police. Others have proposed even more extreme solutions, like breaking up Facebook under antitrust laws or forcing it become a co-op, run by users.
More likely is a more moderate set of laws requiring things that Facebook is mostly already doing, such as data portability (allowing users to take control of their own data), full transparency about how data is being used, and/or consent requirements and opting in.
To some extent the whole thing is an argument about free content versus paid, personified in the public debate between Tim Cook of Apple (subscription) and Mark Zuckerberg
Most publishers have been forced to go down the Apple path and erect paywalls because they can’t compete with Facebook’s low advertising prices (because of the unpaid content provided by users) and its unmatched ability to target advertising and improve marketers’ ROI because of the data those users type in.
Those things are two sides of the same coin: the content on Facebook is provided free by users and the same material is used by advertisers to target them. It’s a transaction most Facebook users vaguely understand and accept.
And as a result Facebook has been one of the most beautiful money-making machines in history, right up until it was used to get Donald Trump elected. As the man himself would tweet: BAD! of Facebook
Facebook CEO Mark Zuckerberg arrives to testify before a House Energy and Commerce hearing on Capitol Hill in Washington, about the use of Facebook data to target American voters in the 2016 election and data privacy.