What Lies Beneath Facebook’s Sudden Embrace of Government Regulation

Facebook CEO Mark Zuckerberg called for greater government oversight and even
regulation of the Internet in an op-ed piece published last weekend in The Washington Post. Zuckerberg, who famously built the social
network by playing by his own rules, said it was time for
government and regulators around the world to step up and help rein in
the Internet.

The main point was to regulate what he called “harmful content.” Only
by updating the rules for the Internet will it be
possible to preserve what is best about it, Zuckerberg argued — including allowing people to express themselves freely, and allowing entrepreneurs to
build new things.

Regulation will protect society from broader harm, he maintained.

4 Areas of Regulation

Zuckerberg targeted four areas for increased government regulation: harmful content, election integrity, privacy and data portability.

With respect to harmful content, Zuckerberg’s remarks suggest that he does not believe social media companies should be responsible for differentiating between valid “free speech” and “dangerous speech.”

Instead, regulators should determine what might count as terrorist propaganda or
hate speech, and Internet companies should be held accountable for enforcing the standards they set, he proposed.

Some lawmakers already have complained that Facebook has too much power to judge what actually is harmful content, Zuckerberg pointed out.

He also called for legislation that would provide greater protection for
elections. Facebook already has made changes to the processes of purchasing political ads, including the creation of a searchable archive that shows who actually paid for
any such advertisement on its network.

Regarding the issues of privacy and data protection, Zuckerberg said that
citizens across the world have called for a comprehensive privacy
regulation that would align with the European Union’s General
Data Protection Regulation (GDPR), and he added that it would be good
for the Internet if more countries adopted such regulations.

Zuckerberg also wrote that any regulation of the Internet should
guarantee a principle of data portability, so that if data is shared
with one service, it should be possible to move it to another. This would give
individuals choice, while enabling developers to innovate and compete.

About-Face for Facebook

The timing of Zuckerberg’s “manifesto” is notable, as U.S.
federal prosecutors have begun an investigation into Facebook’s
practices involving the sharing of data with other large tech
companies. European officials also have been putting the company under
the microscope for alleged data-sharing misdeeds.

Facebook already faces a multibillion-dollar fine by the U.S. Federal
Trade Commission, and it has been negotiating a potential
settlement to end the FTC’s year-old privacy investigation. That probe was
triggered by revelations that the company allowed the personal
information of 87 million users to be used by political data firm
Cambridge Analytica.

It isn’t just fines looming over Facebook, however, as the FTC could
seek changes to the company’s behavior, including how it
collects and handles data. Member data is used in Facebook’s
advertising-driven business, so it’s plausible that Zuckerberg’s calls for
regulation might be less about saving the Internet, and more about preserving
his company’s lucrative business model.

Need for Regulation

Whatever the rationale for Zuckerberg’s about-face on regulation, it
is overdue, by some accounts.

“I’m happy to see that there’s acknowledgment around the need for
regulation on Mr. Zuckerberg’s part,” said Josh Crandall, principal
analyst at Netpop Research.

“Facebook has controlled the ‘dialogue’ on the limits of privacy for
about a decade,” he told TechNewsWorld.

“Needless to say, the company hasn’t done a very good job of it on its
own; the public and private sector need to define appropriate
legislation in partnership, to balance the scales for users and
Internet platforms,” added Crandall.

It is also about time that some Internet giants, including Facebook, be
required to play by a basic rule book — one that regulates how
companies can compete on similar footing in the U.S. and even in global
markets, he suggested.

The question is what such regulation should include?

“Stronger privacy and data use clauses are one area that could be
improved,” Crandall said. “Another would be to force platforms to
adopt open standards and protocols for commonly used services like
identity and geo — e.g. maps — that would be managed by a public organization
and funded by the platforms.”

Smoke and Mirrors?

Zuckerberg’s credo could be no more than lip service to regulators. How often is it that an industry leader suggests the regulations that government should institute?
This could be a case of offering only what one is willing to give up.

The call to ‘save the Internet’ is a smoke screen, suggested social media
consultant Lon Safko.

“Zuckberg knew full well that his business model was based on selling
our personal information and especially our behaviors,” he told
TechNewsWorld. “All the talk about apologizing for not catching his privacy issues
and ‘we’ll fix that’ is nonsense — it was their business model.”

What Greater Regulation Could Mean

If Zuckerberg’s calls for regulation are embraced, there could be
tradeoffs for all involved.

“Regulatory supervision will cause the company to second-guess its own
decisions, which almost always reduces innovation and slows the
development of new products and processes,” warned Iain Murray, the
Competitive Enterprise Institute’s vice president for strategy.

“However, regulated companies are always, to a degree, protected from
competition, as regulation creates market entry barriers,” he told
TechNewsWorld.

There is a phenomenon called “regulatory capture” as well, in which regulated companies gain a degree of operational control as former staffers become regulators.

Thus the Roman concept of “Quis custodiet ipsos custodes” — or who
guards the guards — is reflected in who regulates the regulators.

“The converse, however, is also possible; former regulators start to
staff the company, so making it less likely to challenge the
regulator,” suggested Murray.

“Either version of regulatory capture intensifies the effect of entry
barriers,” he noted. “At CEI, we take the view that while
regulation may possibly benefit a company by erecting those entry
barriers, the tradeoffs are always bad for the industry as a whole,
competition, consumers, and the company itself in the long run.”

The Case Against Regulation

A number of factors could stand in the way of any such
regulation of the Internet. The United States Constitution’s First
Amendment is perhaps the greatest barrier.

However, “other countries could easily impose such regulation, such as
prohibition from allowing ‘blasphemous’ content to be published,”
noted Murray.

That already has been happening in some parts of the world, and that fact
could make privacy advocates stand up and take notice. The cost of
regulation in a free market is another factor.

“Consumer privacy regulation could strictly constrain what Facebook
and its partners use consumer data for, and could insist on consumers
having the right to remove their data and take it elsewhere,” said
Murray.

There have been calls from some — notably presidential hopeful Sen.
Elizabeth Warren, D-Mass., to break up some successful companies. However,
it is the Europeans that have been most zealous when it calls to saber
rattling around antitrust issues.

“EU regulators, who are the most aggressive in the tech area, have
refrained from threatening breakups, instead inflicting fines on
successful tech companies that in their view break competition rules,”
Murray observed.

A Level Playing Field

The rationale for greater regulation is to create a rulebook for all of
the players that would benefit users of their services and the common good.

“The value of the content and contributions that users provide to the
Internet platforms needs to be ‘paid forward’ for the benefit of the
next generations,” said Netpop Research’s Crandall.

“After all, it was the government’s investment in DARPA that created
the foundations on which today’s platforms have been built,” he pointed out.
The public should receive some benefit in return for the original investments.

“Without smart regulation, it’s hard to see how the Internet platforms
are going to do that on their own,” suggested Crandall.

“Google, for example, removed the ‘Don’t Be Evil’ from their code of
conduct last year,” he said. “There are risks involved with any
change, and new regulations are no different from other market forces.
Ideally, the right mix of regulations will enable the next generation
of entrepreneurs to have opportunities to create value themselves.”

Getting Around Regulations

Another consideration for any proposed regulation is going to be whether it is
even enforceable. Savvy users find ways around the barriers they don’t
like.

“We are already seeing more use of [virtual private networks] in the EU to get around
restrictions that are the result of the GDPR,” said CEI’s Murray.

“In some ways, this mirrors the use of VPNs in oppressive regimes;
content regulation in the form of restrictions on speech will almost
certainly see the use of the Dark Web to transmit digital samizdat,”
he added.

“The more restrictive the content regulation is, the more likely that
people who previously used social networks will find themselves
exploring the Dark Web,” suggested Murray.

The final factor is one of “privacy” but in many cases what a lot of
people actually are concerned about is data “security.”

“They are happy to share their data with other parties in order to
gain some benefit, whether that be supermarket loyalty discounts or
free software products,” said Murray. “They are unhappy when that data
is left unsecure. It is unclear to what extent government regulation
can ensure that security without compromising the benefits people
like.”


Peter Suciu has been an ECT News Network reporter since 2012. His areas of focus include cybersecurity, mobile phones, displays, streaming media, pay TV and autonomous vehicles. He has written and edited for numerous publications and websites, including Newsweek, Wired and FoxNews.com.
Email Peter.

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