Mark Zuckerberg vs. Silicon Valley's Richard Hendricks: Why Facebook 'Welcomes' Regulation

[Muda69]

http://reason.com/reasontv/2018/04/11/mark-zuckerberg-vs-silicon-valleys-richa

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Mark Zuckerberg is the multi-billionaire founder and CEO of Facebook. This week he testified before Congress, assuring lawmakers that his company will play nice with government regulators.

Richard Hendricks is a character on HBO's sitcom Silicon Valley, the bumbling CEO of the unfortunately named Pied Piper. His memorable moments include evacuating his bowels, vomiting, and then lunging into a glass wall in front of his workers.

One is poised when being grilled by Congress and the other can't deliver a pep talk to his staff without hurling under his desk.

But Hendricks is a better hope for the future of the internet than Zuckerberg. Here's why.

In his testimony, Zuckerberg welcomed regulation—and agreed to help craft it. He's in the same position as late-19th-century railroad tycoons. Contrary to conventional wisdom, these robber barons embraced regulation as a way to raise the barriers to entry for competitors who were eating into their profits and market share.

Still sporting a hoodie, Richard Hendricks is at an earlier stage of his career. He's trying to build a new internet in an effort to outmaneuver Hooli, a fictional amalgamation of Google and Facebook. Richard represents the next wave of innovation—the competitor who, if government stays out of it, will eventually erode Facebook's market share by offering a better product.

Even Richard's approach to disrupting Facebook is more than just TV fantasy. There's a real movement in the tech world to build a new decentralized web that would give users actual control over their own data and create open platforms that aren't controlled by any single all-powerful CEO. One reason to bet on real-life projects such as Blockstack and Ethereum to decentralize the internet is that talented engineers are beating down their doors, because working at Google and Facebook is lucrative but soul killing.

As Facebook and Congress start to write new rules for cyberspace, all of us who believe in free expression and permissionless innovation have a stake in making sure that the future of the internet remains as open as possible.

Agreed.   But of course smart tycoons like Mr. Zuckerberg will use government regulations to protect itself from competition.,  which I'm sure is what all the supporters of government regulation really support.

 

[Muda69]

3 Reasons Why Facebook's Zuckerberg Wants More Government Regulation: https://mises.org/wire/3-reasons-why-facebooks-zuckerberg-wants-more-government-regulation

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Facebook CEO Mark Zuckerberg wants more government regulation of social media. In a March 30 op-ed for the Washington Post, Zuckerberg trots out the innocent-sounding pablum we've come to expect from him:

I believe we need a more active role for governments and regulators. By updating the rules for the Internet, we can preserve what’s best about it — the freedom for people to express themselves and for entrepreneurs to build new things — while also protecting society from broader harms.

But what sort of regulation will this be? Specifically, Zuckerberg concludes "we need new regulation in four areas: harmful content, election integrity, privacy and data portability."

He wants more countries to adopt versions of the European Union’s General Data Protection Regulation.

Needless to say, anyone hearing such words from Zuckerberg should immediately assume this newfound support for regulation is calculated to help Facebook financially. After all, this is a man who lied repeatedly to his customers (and Congress) about who can access users' personal data, and how it will be used. He's a man who once referred to Facebook users as "Dumb F-cks." Facebook lied to customers (not be confused with the users) about the success of Facebook's video platform. The idea that Zuckerberg now voluntarily wants to sacrifice some of his own power and money for humanitarian purposes is, at best, highly doubtful. (Although politicians like Mark Warner seem to take it at face value.)

Fortunately for Zuckerberg, thanks to the economic realities of government regulation, he can both support government regulation and enrich himself personally.

Those who are familiar with the effects of government regulation will not be surprised to hear a billionaire CEO throw his support behind it. Large firms with dominant market share have long made pace with government regulation because it often helps these firms create and solidify monopoly power for themselves.

Specifically, there are three ways that regulation will help Facebook.

One: Regulations Will Give Facebook More Monopoly Power

Many Facebook critics like to claim that Facebook is a natural monopoly. That is, they think Facebook is so dominant in the marketplace, that it can use its supposed market power to keep out competitors. We're told that Facebook has so many users, no serious competition will ever be possible.

But remember MySpace? People used to say exactly the same thing that that social media platform. A recently as 2007, The Guardian was asking "Will Myspace ever lose its monopoly?" Xerox corporation was once a tech powerhouse, as well. It has now all but disappeared.

Obviously, the answer to the Guardian's question is "yes." But we're now hearing about how Facebook is a monopoly. The reality, however, is that unless governments artificially erects barriers to entry, no firm can expect a safe place as a dominant firm. Other firms with new ideas will come along, threatening the older firm's dominance.

The answer to this problem, from the point of view of a firm like Facebook, is to make things for expensive and difficult for smaller startups and potential competitors.

Facebook knows that if government regulations of tech firms increase, the cost of doing business will increase. Larger firms will be able to deal with these additional costs more easily than smaller start ups. Big firms can access financing more easily. They have more equity. They already have sizable market share and can afford to be more conservative. Large firms can absorb high labor costs, higher legal costs, and the higher fixed costs brought on by regulation. A high-regulation environment is an anti startup, anti-entrepreneurial environment.

Two: Zuckerberg and Facebook Will Help Write the New Rules

In an earlier age, many might have taken Zuckerberg's new proclamation as sincere. Fortunately, we live in a cynical age, and even a beat reporter at Mashable knows how this game is played. Mashable's Karissa Bell writes:

It may seem obvious that Zuckerberg's proposal is self-interested, but it's important to remember that his ideas are, of course, designed to help Facebook....

And by touting the social network's existing work around political advertising and content moderation, Facebook has an opportunity to determine the rules the rest of the industry will also have to abide by.

Part of the reason Zuckerberg has made peace with the idea of government regulation is the knowledge that Facebook will be one of the most powerful groups at the negotiating table when it comes to write the new regulations. In other words, Facebook will be in a position to make sure the new rules favor Facebook over its competitors.

This is a common occurrence in regulatory schemes and is known as “regulatory capture.” When new regulatory bodies are created to regulate firms like Facebook and other dominant firms, the institutions with the most at stake in a regulatory agency’s decisions end up controlling the agencies themselves. We see this all the time in the revolving door between legislators, regulators, and lobbyists. And you can also be sure that once this happens, the industry will close itself off to new innovative firms seeking to enter the marketplace. The regulatory agencies will ensure the health of the status quo providers at the cost of new entrepreneurs and new competitors.

Moreover, as economist Douglass North noted, regulatory regimes do not improve efficiency, but serve the interests of those with political power: "Institutions are not necessarily or even usually created to be socially efficient; rather they, or at least the formal rules, are created to serve the interests of those with the bargaining power to create new rules."

After all, how much incentive does the average person have in monitoring new regulations, staying in touch with regulators, and attempting to affect the regulatory process? The incentive is almost zero. The incentive for regulated firms, on the other hand, is quite large.

Not only will a small start up lack the resources and political pull to challenge Facebook in the rule-making sphere, but those small firms won't be be large enough to be considered important "stakeholders" on any level. Thus, Facebook will continue to wield more power than its smaller competitors through its regulatory power.

Three: It Will Limit Facebook's Legal Exposure

Another big benefit of regulation for Facebook will be the potential for using government regulation to limit Facebook's legal liability when things go wrong. Bell continues:

By offloading decisions about harmful content, privacy rules, and elections onto third-parties, Facebook may not have to take as much of the heat when mistakes are made.

Put another way, Facebook can  protect itself form both the legal and public-relations repercussions to itself when it uses its platform to delete the posts and visibility of users with whom Facebook employees disagree.

As FTC commissioner Brendan Carr put it, Facebook's proposed regulatory agenda would allow it to "outsource[e] censorship." Not only would this put the federal government in a position to be directly determining which opinions and ideas ought to be eliminated from tech platforms, it would also allow Facebook to pretend to be an innocent third party: "Don't blame us for deleting your posts," Facebook could then say. "The government made us do it!"

Moreover, regulation can be employed by firms like Facebook to shield the firm from lawsuits. Potentially, in the marketplace, Facebook could be sued for using its platform to endanger domestic abuse victims, or victims of suicide. Whether or not the firm should be found guilty of such things would be complex legal questions decided on a case-by case-basis. However, regulation can be used to circumvent this process entirely, and serve the interests of large, abusive firms.

This phenomenon was explained by Murray Rothbard in the context of building regulations:

Suppose, for example, that A builds a building, sells it to B, and it promptly collapses. A should be liable for injuring B's person and property and the liability should be proven in court, which can then enforce the proper measures of restitution and punishment. But if the legislature has imposed building codes and inspections in the name of "safety," innocent builders (that is, those whose buildings have not collapsed) are subjected to unnecessary and often costly rules, with no necessity by government to prove crime or damage. They have committed no tort or crime, but are subject to rules, often only distantly related to safety, in advance by tyrannical governmental bodies. Yet, a builder who meets administrative inspection and safety codes and then has a building of his collapse, is often let off the hook by the courts. After all, has he not obeyed all the safety rules of the government, and hasn't he thereby received the advance imprimaturof the authorities?

Let's apply this to the tech industry: Firm A is a new startup which has developed a way to make money in a way that satisfies consumers, and does not expose them to any unwanted harassment, de-platforming, or violations of privacy. Meanwhile, Facebook (Firm B) continues to use its dominance in the regulatory process to keep in place costly regulations that prevent new startups from making much headway. These same regulations, however, continue to allow privacy violations, and other abuses up to a certain thresholdestablished in by regulators.

Thus, the outcome is this: Firm A is unable to deploy its new, inventive, non-abusive model at all because regulatory costs are too high. Meanwhile, Facebook can continue to endanger and abuse some users because regulations allow it. Moreover, Facebook enjoys greater immunity form lawsuits because it complies with regulations.Thus consumers are denied both the benefits of the new startup and legal remedies from suing Facebook for its continued abuse.

In short, Zuckerberg's pro-regulation position is just a pro-Zuckerberg position. By further politicizing and regulating the internet, policymakers will assist large firms — and their billionaire owners — in crushing the competition, and ensuring the public has fewer choices.

 

 

Edited April 2, 2019 by Muda69

[Muda69]

[Muda69]

Mark Zuckerberg Calls for Government Regulation of Political Speech on Facebook: http://reason.com/blog/2019/04/05/mark-zuckerberg-calls-for-government-reg

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With apologies to Camus, the internet died today. Or maybe yesterday. Or last week, or last year.

The important thing is that Mark Zuckerberg, the founder and CEO of Facebook, is explicitly calling for government regulation of specifically political speech on his platform and beyond. In his quest to limit expression on social media, Zuckerberg is joined not only by progressive Democrats such as Sen. Elizabeth Warren (D-Mass.) but conservative Republicans such as Sen. Ted Cruz (R-Texas) and Sen. Josh Hawley (R-Mo.), who are calling for the equivalent of a Fairness Doctrine for Twitter and similar services.

For those of us who believe in freedom of expression, this is a revolting development. The internet, once championed as an unprecedented engine for free speech of all sorts, is slowly but surely being locked down like a state-owned TV station in Venezuela.

 

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Yesterday, in an interview with ABC News' George Stephanopoulous, Zuckerberg said that it shouldn't simply be up to Facebook and other private companies to set and enforce their own rules for participants, especially when it came to political speech. Instead, he claimed that Facebook and other services are now "the digital equivalent of the town square," which invites government regulation and censorship of speech (more on that in a moment). From his colloquy with Stephanopoulos:

STEPHANOPOULOS: Does [political speech or advertising] have to say, "Vote for," or, "Vote against," for example...

ZUCKERBERG: Well, yeah. That's exactly right. All of the laws around political advertising today primarily focus on a candidate and an election, right, so, "Vote for this candidate in this election." But that's not, primarily, what we saw Russia trying to do and other folks who were trying to interfere in elections. And what we saw them doing was talking about divisive political issues. They'd run, simultaneously, different campaigns on social media trying to argue for immigration or against immigration. And the goal wasn't, actually, to advance the issue forward. It was just to rile people up and be divisive. But the current laws around what is political advertising don't consider discussion issues to be political. So that's just one of the examples of where you know, it's not clear to me, after working on this for a few years now, that we want a private company to be making that kind of a fundamental decision about, you know, what is political speech? And how should that be regulated? (Emphasis added.)

If "we" don't want a private company to decide what is or is not political speech, it seems even more obvious that we don't want the government to do so, especially if that means speech can be shut down on the grounds that it traverses campaign-speech laws. It bears underscoring: If the First Amendment protects anything, it's political speech, however hard that might be to define. Whatever their intentions, campaign-finance laws and other attempts to control political speech are always arbitrary and used to squelch rather than expand political discourse.

Elsewhere in the interview, Zuckerberg talks about increasing the number and quality of various reports about what sort of material gets taken down, whether for fomenting violence, influencing votes, or other reasons. However imperfect such a mechanism might be, that sort of attempt at transparency is a far less-destructive way to give users context and information than applying prior restraint to conversations on Facebook or other platforms by having, as Zuckerberg suggests, oversight boards of "40 people, who are experts on free speech and safety" making binding decisions on what is legitimate content and which is not. Especially if some or all of those censorship boards are dictated or overseen by the government. Facebook's "walled garden" would be about as freewheeling as a university safe space offering coloring books and squeeze toys to high-strung college kids on Election Night.

Zuckerberg's enthusiasm for having the government step in right about now is understandable. Since at least the 2016 election, it's a rare week that doesn't bring a new story about some privacy breach or major scandal involving Facebook. Unsurprisingly, the service appears to be losing a significant number of users in the United States, and the average age of users is climbing, which doesn't portend well for its future. Democrats still wrongly blame Facebook for costing Hillary Clinton the election by letting Russian-controlled pages drive down voter turnout while Republicans are, also with zero good evidence, claiming that conservative voices are being suppressed at Facebook and other services such as Twitter. In a move that should freak out anyone remotely interested in limited government, Sen. Hawley of Missouri recently demanded that Twitter submit to a third-party investigation to see if it was suspending more right-wing than left-wing users. In most commercial sectors, that sort of bipartisan Malachi Crunch, combined with market-share concerns, leads inexorably for to calls for regulation by companies worried about declining revenue and position. That such calls are made in the name of the public good only makes them more nauseating.

But Zuckerberg is ultimately being shortsighted, especially when he claims that Facebook and other social media platforms are actually functioning as "the digital equivalent of the town square." Up until now, the courts have ruled that in fact social media platforms are more like shopping malls. That is, they are private spaces that don't have to allow for freedom of speech the same way that an actual town square does. In a case decided late last year, a U.S. District Court ruled that YouTube, owned by Google, had every right to decide what sort of videos appeared on its service and whether they could be monetized or not. The plaintiff in that case, the conservative video producer Prager University, argued that YouTube and other services were effectively public spaces that should have to abide by broader First Amendment guarantees. Which is exactly how Zuckerberg is now characterizing Facebook—as a "town square." Inviting government oversight into his business might help lock in Facebook's dominant market position for a few years—remember, he's willing to help them write the regulations!—but ultimately that sort of collaboration merely forestalls a business's decline, it doesn't eliminate it.

More importantly, producing more and more rules that allow for more restrictions on speech for an endlessly proliferating number of reasons will hasten Facebook's value as a place where people can go to share anything more interesting than recipes and death notices. In the name of preserving some vague notion of community, it will create a dessicated space that has less and less value for all of us. That's not a tragedy, really, as websites come and go (RIP, My Space, et al.).

But it is a waste and a loss nonetheless. The far-better solution is for platforms such as Facebook and Twitter to help users develop stronger media-literacy skills so that we can all more easily spot rotten information and develop critical reading skills while also providing more-robust tools to block material we don't want to see. The brilliance of social media is that it creates an infinite sandbox where we can find more and more interesting places to play while avoiding bullies and blowhards, however we subjectively choose to define them. That was the animating spirit of the internet and it's a dream whose passing we should all mourn.

 

[Muda69]