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Facebook: The sorry company

from Dean Baker

Earlier this month, Facebook CEO Mark Zuckerberg apologized to Congress for allowing improper access to the data of tens of millions of Facebook users. This was just one of a long sequence of apologies that Zuckerberg has made for this and other failures of the social media giant.

Given this track record, it’s probably will not the last apology that Zuckerberg has to make for his company. It is long past time for Congress to take action so that Zuckerberg does not have to keep asking for our forgiveness. There are several simple steps the government can take to help him and his company in this area.

The first is to try to give Zuckerberg some competition. Facebook has an effective monopoly on the sort of social media platform it provides with no competitor having a reach that is even within an order of magnitude of Facebook’s. In fact, when Zuckerberg was asked during his testimony who his competitors were he stumbled blindly and eventually suggested email.

The government can certainly force the company to end its practice of buying up potential competitors. In the last decade Facebook bought up both Instagram and Whatsapp, with the explicit purpose of eliminating potential competition. This is pretty much a textbook violation of anti-trust law in the United States, but the Obama administration chose to look the other way.

In addition to preventing Facebook from buying up potential competitors, the government can also prevent the company from using its near monopoly as a way to ply its way into new markets. This was the initial remedy proposed by the judge when Microsoft lost an antitrust case in the 1990s. 

The judge ruled that Microsoft would be able to keep its near monopoly in the computer operating system market, but it would have to break off from its other divisions and would be prohibited from entering new markets. A new judge later reversed this ruling, but it would be a great precedent to apply to Facebook.

The second issue with Facebook is its tendency to pass on news items from phony sources. This turned out to be a big issue in the 2016 presidential campaign. Millions of people received fake news stories that were passed on from phony sources.

The best remedy for this problem would be to follow a practice now used for the enforcement of copyright law. The Digital Millennial Copyright Act (DMCA) requires websites to promptly remove material from their site after they have been notified of the alleged infringing material by the copyright holder. If they fail to do so, the website owner can face thousands of dollars of punitive damages for each act of infringement.

The comparable requirement for Facebook would be that it would have to promptly notify recipients of fake news after it has been called to their attention. If there were punitive penalties for failing to issue corrections that were comparable to those in the DMCA, it would give the company a strong incentive to limit the spread of fake news.

Finally, there is the problem that Mr. Zuckerberg was testifying to Congress over, the misuse of personal information that is collected through the system. The best remedy here is one that was suggested by the reporter and columnist David Dayan: simply ban individualized advertising.

As it stands, Facebook’s great value is that it can narrowly target advertising based on its extensive knowledge of the interests and habits of its users. It knows what music you like, where you travel, what movies you see. It knows how much you use Facebook and at what times. It also likely knows what you are doing during your downtime from Facebook.

The best way to discourage Facebook and other companies from learning every detail about our lives is to take the money out of it. If they are prohibited from doing individualized marketing, they have no incentive to collect the data.

While Facebook will undoubtedly whine about its free speech rights being violated, it doesn’t have much of a case. The courts have long accepted that commercial speech can be regulated; for example, we ban cigarette and alcohol ads from television. A ban on individualized advertising would be in the same vein.

This sort of ban would fundamentally change the Facebook model, but that is not the public’s concern. Presumably, Zuckerberg and his team will be able to adapt to the new rules, but if not, that’s capitalism.

An advantage of this sort of ban would be to increase the value of traditional advertising. Companies would again value placing ads in newspapers, magazines, or websites that they knew influenced a particular segment of the market. That might not be as cost effective for them as Facebook’s individualized targeting, but if such targeting is prohibited, going the old-fashioned route will be the best they can do.

These three measures together will undoubtedly make Facebook a much smaller company. But it will also be a much better company. If such measures get implemented quickly, we might even have seen our last Mark Zuckerberg apology.

See article on original site

  1. Prof James Beckman, Germany
    May 6, 2018 at 11:16 am

    Personally I don’t feel endangered by advertising, but I agree fake news must be controlled by Social Media & that competition should be encouraged.

  2. patrick newman
    May 12, 2018 at 4:38 pm

    The road to hell is paved with well-intentioned Facebook postings!

    • Prof James Beckman, Germany
      May 12, 2018 at 4:52 pm

      Hi, Patrick, I really can’t fathom all the concern, as it is the insurance, banking, credit card, department store, credit review firms, etc. which sell all the valuable stuff about our court records, property holding, employment history & medical “abnormalities” (of which we all have some). Just check on your credit standing, for example–it will probably be inaccurate but will potentially help or hurt you more than any FB revelations–mostly by ourselves, it seems to me. Am I wrong?

  3. May 18, 2018 at 10:45 am

    Collecting and even sharing personal (how personal is a fair concern) data for individuals is not a concern for me. What does concern me, however is the unquestioned assumption created from nearly 50 years now of efficient markets nonsense that such information must be monetized. If you collect such data, you are required to use it to make a profit. The single-minded pursuit of profit (greed) is eating away at almost every society in the world. After it destroys humans’ interpersonal lives, it will start on the flesh. Do humans taste like chicken?

    • Prof James Beckman, Germany
      May 18, 2018 at 12:18 pm

      Agreed, Ken, as after all didn’t Adam Smith also write about the moral dimensions of capitalism? Some of the super-rich support legitimate foundations, but most are seemingly willing to snuff out the lives of their nations’ inhabitants with support for inferior health care education & infrastructure.

      • May 19, 2018 at 5:46 am

        James, why would the willingness of capitalists to “snuff out the lives of their nations’ inhabitants with support for inferior health care education & infrastructure” surprise any of us? They received their instructions directly from the prophet of capitalism, “The businessmen believe that they are defending free enterprise when they declaim that business is not concerned “merely” with profit but also with promoting desirable “social” ends; that business has a “social conscience” and takes seriously its responsibilities for providing employment, eliminating discrimination, avoiding pollution and whatever else may be the catchwords of the contemporary crop of reformers. In fact they are–or would be if they or anyone else took them seriously–preaching pure and unadulterated socialism. Businessmen who talk this way are unwitting puppets of the intellectual forces that have been undermining the basis of a free society these past decades.” (Milton Friedman)

      • Prof James Beckman, Germany
        May 19, 2018 at 7:53 am

        Ken, you make sense. However, how then can we go to war or put workers in very dangerous work situations in order “to do a job”? We can infer consequences from experience, such as any informal “risk analysis” implies. It is not capitalism or socialism here, as ownership models, but the role of managers who put workers into risky mines or military situations, it seems to me.

      • May 20, 2018 at 5:38 am

        James, contrary to what humanists may tell us, human culture is malleable. So malleable in fact that during WWII the most dangerous part of the Nazi state was the ordinary, everyday police. During the American Civil War biological brothers killed one another and friends for years subjected one another to torture and deprivation to the point of death. Many news reports in the US of murder, assault, rape, etc. while dozens looked on but did nothing. The “banality of evil” (Hannah Arendt’s phrase) is with us always. Managers learn that growth of the company or business is essential. They will do what’s necessary to gain that growth. Even placing workers in harms way or depriving workers of income and security. In negotiating a union contract, the CEO of one the companies told me that he would like to grant our requests but would be fired immediately by the board if he did so. To protect the company and its profits was his top priority because it was the only priority he was allowed. Arendt’s phrase came from her study of Adolf Eichmann, a man with no ambitions beyond personal advancement. He would never consider murdering his boss even for this, however. His crime, per Arendt, lack of imagination. He was not stupid and at his trial explained in full the “reevaluation of values prescribed by the Nazi government.” In her final summing, Arendt tells us it was sheer thoughtlessness that predisposed Eichmann to become one of the greatest criminals of WWII. “That such remoteness from reality and such thoughtlessness can wreak more havoc than all the evil instincts taken together which, perhaps are inherent in man—that was in fact, the lesson one could learn in Jerusalem. But it was a lesson, neither an explanation of the phenomenon nor a theory about it.” Is capitalism as great a threat to humankind as Nazism? A question we need to answer.

      • Prof Dr James Beckman, Germany
        May 20, 2018 at 7:18 am

        Ken, very nice summary of the situation. Many political leaders exhibit the same focus on retaining power, as do business leaders, as this gives them a variety of satisfactions including a title (social aspect), money (direct & indirect payoff) & power (keeping people off your back/doing your bidding). That is a total gestallt with which Arendt would have been well informed.

      • May 22, 2018 at 3:30 am

        James, you’ve got it backwards. Political leaders may want to stay in power. But they can do that only if those they “lead” don’t run away from them. Hitler took the people of Germany (80% of them) with him into National Socialism. Thus, the problems involved with maintaining the group and having it perform effectively as a group were resolved, for a period. In fact, many historians have observed Nazi Germany was one of the most efficient and effective, and brutal and racist groups in modern history. As I said, there are lots of ways for culture to solve the problems of group cohesion and cooperation. Other cultures may abhor those used in Nazi Germany. Point is, however, they worked.

      • Prof Dr James Beckman, Germany
        May 22, 2018 at 10:49 am

        Hi, Ken, I don’t think we disagree. First, you take political power. Then you massage your voters as Mr Trump & PM May are both trying to do–Mr Trump more with the electorate & PM May more her Parliament. Further, Hitler saw no necessity for another public vote, nor May by her Parliament. Trump probably dreads the day.
        Trump, May & Hitler had a portion or more of the media strongly supporting them. Trump is now busy attacking the Washington POST & NY TIMES, while editors opposing Hitler ran for their lives. May now gives her ministers little projects to keep them under control. Thus, we the illiterate masses are either massaged or ignored much of the time and serious discussion is minimal, it seems to me. Makes life easier for our state CEO’s. does it not?

  4. Craig
    May 22, 2018 at 8:50 am

    The way to tame/remedy capitalism’s suave dominance is the same remedy for socialism’s tendency toward rather un-suave dominance. Love and its active form grace/graciousness as a zeitgeist/ethic and applied monetary and economic policies that align with and effect its primary aspects. Like a universal dividend and discount/rebate policies at strategic points throughout the entirety of the legitimate economic/productive process. Abundant, direct and reciprocal monetary free gifting IS the new monetary and economic paradigm….because it will bring rational, ethical and good and appropriate order to economic systems.

    • May 22, 2018 at 9:28 am

      Craig, maybe it will bring torture and death squads. Lots of ways to solve the problems of group coherence and cooperation. Some you obviously like. Others you just as obviously do not like. What’s your plan when the job is done well by those you hate, as with fascist, racist, violent groups in America today? Once debated this issue in a Boston Unitarian Church. One of the panelists agreed with your proposal. But she said something interesting about the issue I’m raising. What if the offer of free gifting is met with violence? Her response – bury the bodies and pray, but don’t give up on the idea. Thankfully, we’ve not come to this yet. But it is something you ought to consider.

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