Zuckerberg Tries, Tries Again

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Mark Zuckerberg’s most recent effort to change the conversation about Facebook seems like just another attempt at self-justification. In a recent Washington Post op-ed, he places the onus squarely on the shoulders of government to do the right things by regulating how social media works.

“From what I’ve learned, I believe we need new regulation in four areas: harmful content, election integrity, privacy and data portability,” Zuckerberg wrote. Translation: Please keep me from doing this because I can’t do it myself.

Zuckerberg isn’t alone. There is no doubt we need some kind of regulation in these areas. But will his recommendations actually solve some of the problems in social media that were surfaced by the company’s runaway success? My bet is they won’t, for important reasons.

Leveling the Field

Social media has traversed a typical lifecycle in a rags-to-riches story. The story often ends with some form of regulation because the innovation — social media in this case — can dominate a society as it becomes a monopoly or oligopoly, and the social media landscape certainly qualifies.

There might be multiple social media companies, but each does a different thing, and each exists more or less as a unique entity. Customers want and need it this way. Social media represents a network of users, and a big network is more valuable than two smaller ones.

If Facebook had direct competition, social wouldn’t be as useful. Vendors being vendors, they’d ensure that data didn’t cross platforms easily or well, at least early on. Zuckerberg’s recommendations call for easy data portability, though it’s hard to see where you’d take it if you could get it. You might include Twitter or Instagram or the other social media vendors in the same category, but they are as different as pineapples and sweet potatoes.

So, at this stage of development, The People often set down rules that all players have to abide by to optimize utility for the users. It’s just leveling the playing field. Back in the day, there were many different railroad track gauges. The practical effect of this strategy meant that competitors couldn’t use each other’s tracks.

Freight that had to cross onto a different rail line had to be unloaded and reloaded, adding cost and delay to what should have been a simple process. Multiple roads served the same cities in cutthroat competition. Regulation changed that, and it often has a commoditizing effect on the activity being regulated, to which The People say, too bad.

So Zuckerberg’s ideas aren’t bad at all, but they are probably not enough for a global market.

Global Market, Local Solution?

Facebook is global in scope, which means that regulations promulgated in the U.S. would have a lot of influence around the world — but maybe not enough. There are other players who want a say in how Facebook behaves.

For instance, the EU consistently has been ahead of Facebook and the rest of the industry in trying to protect its citizens’ privacy with regulations like GDPR. If Zuckerberg really was serious about his four bullet points, he could always adopt some of the EU’s ideas as company standards. Why does he want/need U.S. law on the subject? Does he feel he can influence the U.S. standards setting process?

Whatever the ultimate regulation is, it would be best for all parties if the regulations were universally adopted. For that reason, having U.S.-centric regs is nice, but…

Is This the Right Business Model?

Before going much further, we need to ask, is the Facebook/Google advertising business model the best it can come up with? Capitalists understand the importance of a business making money at what it does, but Facebook and social media generally have been making money selling things they ought not. So, no amount of regulation is going to make up for a lousy business model.

The real hangup is selling data about individuals and their behavior patterns to advertisers and, it has to be said, almost anyone else who can pay. Facebook, Google and many other social and AI vendors began life in an era when their products were applications based in the Internet.

Now these vendors have morphed into platforms that support multiple apps that share customer data and leverage analytics to influence the way users think and the way they use the platforms’ products. Importantly, they make it hard for vendors competing at the application level to have a level playing field at the platform level.

The whole social media industry has become big enough that some thought it would make sense to break up the vendors, or at least establish a firewall between the different entities. Perhaps warding off that eventuality is a motivator for Zuckerberg’s call for regulation?

In regulatory history, we see walls going up all the time. For instance, in banking, the Depression-era Glass-Stiegel act separated a bank’s commercial banking from its investment side to prevent a repeat of the problems that led to the Great Depression. That lasted about 70 years, until some geniuses decided deregulation in the banking industry would be fun. It caused the housing crisis, the Great Recession, and a 10-year economic slump felt around the world.

Where were we? Oh, yes, regulation and separation. They’re good ideas and they work, and the Internet and social media are ripe for some form of each. Unfortunately, regulation would put a crimp in the Silicon Valley business model of selling advertising.

So, the social media companies are looking everywhere for things that look like solutions that also will preserve their business model — but in the end, they probably won’t work. We need to bite the bullet and split them up. They’ll find enough ways to make money. That’s also part of economic history.

We Also Need a Treaty

Many people break out in a rash whenever we talk about regulation or international treaties, and now is an especially good moment for rashes. The effort to make America great again is all about strength through independence, unless a deal is so lopsidedly good for America that it must be done. The same people also fret about international government taking away local sovereignty; just consider Brexit.

Really, we’re already bound together by treaties. Internationally, we agree about clean air, climate, and eliminating chloro-fluoro-carbons. There’s a Law of the Sea. There’s even the Geneva Conventions on War. Also, there’s the World Trade Organization, which manages how we trade goods and services at low or zero tariffs.

This is the appropriate level for discussing how to make elections safe and make trading partnerships work. This is the level where at least the industrialized nations should come together to agree what can and can’t be done across social platforms.

Implementing a Treaty

There’s no requirement that all nations have to agree on what an election is, for instance, to implement a strong plank on noninterference. The fact that a nation declares its election season open should be all that’s required to keep other treaty signatories from interfering by launching cyberattacks.

Speaking of cyberattacks, since we’re living in one homogenizing market, it should go without saying that business partners don’t, or at least shouldn’t, perform industrial espionage and hacking against each other.

You can’t have it both ways, which is why social, data privacy and noninterference with another nation’s internal affairs should be part of the WTO and treaties like it. Bad IT behavior should be sanctioned within the trading regimes with expulsion as an ultimate step.

Where To?

There’s no doubt civilization is at a crossroads in IT, including social media, data and international hacking. The brainchild of the 20th century is maturing, and with maturation comes abuse and bad habits. Regulating a company like Facebook was once a good idea, but now it seems quaint and wildly short of the mark.

Zuckerberg’s call for regulation seems at best an attempt to steer away from the worst impacts of regulation on social media companies while saving social’s precious business model. This smacks of trying to burn the candle at both ends.

Big cloud computing companies that rely on selling advertising have reached a tipping point. They are too big and successful for society to live without them, but their current outlaw behavior needs to be tamed.

Local laws alone, even within a big and sophisticated country like the U.S., will not solve the myriad problems surfaced by social media and tech in international space over the last few years.

We may have reached a point when regulation is necessary, but so too is international agreement over acceptable behavior by nation states. I never said this was going to be easy, but we’re all adults and this, or something like it, is needed.

The opinions expressed in this article are those of the author and do not necessarily reflect the views of ECT News Network.


Denis Pombriant is a well-known CRM industry analyst, strategist, writer and speaker. His new book, You Can’t Buy Customer Loyalty, But You Can Earn It, is now available on Amazon. His 2015 book, Solve for the Customer, is also available there. Email Denis.