Fines don’t work. To control tech companies we have to hit them where it really hurts

Today’s Observer comment piece

If you want a measure of the problem society will have in controlling the tech giants, then ponder this: as it has become clear that the US Federal Trade Commission is about to impose a fine of $5bn (£4bn) on Facebook for violating a decree governing privacy breaches, the company’s share price went up!

This is a landmark moment. It’s the biggest ever fine imposed by the FTC, the body set up to police American capitalism. And $5bn is a lot of money in anybody’s language. Anybody’s but Facebook’s. It represents just a month of revenues and the stock market knew it. Facebook’s capitalisation went up $6bn with the news. This was a fine that actually increased Mark Zuckerberg’s personal wealth…

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Regulating the tech giants

This from Benedict Evan’s invaluable newsletter, written in response to Chris Hughes’s long NYT OpEd arguing that Facebook should be broken up…

I think there are two sets of issues to consider here. First, when we look at Google, Facebook, Amazon and perhaps Apple, there’s a tendency to conflate concerns about the absolute size and market power of these companies (all of which are of course debatable) with concerns about specific problems: privacy, radicalization and filter bubbles, spread of harmful content, law enforcement access to encrypted messages and so on, all the way down to very micro things like app store curation. Breaking up Facebook by splitting off Instagram and WhatsApp would reduce its market power, but would have no effect at all on rumors spreading on WhatsApp, school bullying on Instagram or abusive content in the newsfeed. In the same way, splitting Youtube apart from Google wouldn’t solve radicalization. So which problem are you trying to solve?

Second, anti-trust theory, on both the diagnosis side and the remedy side, seems to be flummoxed when faced by products that are free or as cheap as possible, and that do not rely on familiar kinds of restrictive practices (the tying of Standard Oil) for their market power. The US in particular has tended to focus exclusively on price, where the EU has looked much more at competition, but neither has a good account of what exactly is wrong with Amazon (if anything – and of course it is still less than half the size of Walmart in the USA), or indeed with Facebook. Neither is there a robust theory of what, specifically, to do about it. ‘Break them up’ seems to come more from familiarity than analysis: it’s not clear how much real effect splitting off IG and WA would have on the market power of the core newsfeed, and Amazon’s retail business doesn’t have anything to split off (and no, AWS isn’t subsidizing it). We saw the same thing in Elizabeth Warren’s idea that platform owners can’t be on their own platform – which would actually mean that Google would be banned from making Google Maps for Android. So, we’ve got to the point that a lot of people want to do something, but not really, much further.

This is a good summary of why the regulation issue is so perplexing. Our difficulties include the fact that we don’t have an analytical framework yet for (i) analysing the kinds of power wielded by the platforms; (ii) categorising the societal harms which the tech giants might be inflicting; or (iii) understanding how our traditional toolset for dealing with corporate power (competition law, antitrust, etc.) needs to be updated for the contemporary challenges posed by the companies.

Just after I’d read the newsletter, the next item in my inbox contained a link to a Pew survey which revealed the colossal numbers of smartphone users across the world who think they are accessing the Internet when they’re actually just using Facebook or WhatsApp. Interestingly, it’s mostly those who have some experience of hooking up to the Internet via a desktop PC who know that there’s actually a real Internet out there. But if your first experience of Internet connectivity is via a smartphone running the Facebook app (which means that your data may be free), then as far as you are concerned, Facebook is the Internet.

So Facebook has, effectively, blotted out the open Internet for a large segment of humanity. That’s also a new kind of power for which we don’t have — at the moment — a category. Just as the so-called Right to be Forgotten* recognises that Google has the power to render someone invisible. After all, in a networked world, if the dominant search engine doesn’t find you, then effectively you have ceased to exist.


  • It’s not a right to be forgotten, merely a right not to be found by Google’s search engine. The complained-of information remains on the website where it was originally published.

Getting things into perspective

From Zeynep Tufecki:

We don’t have to be resigned to the status quo. Facebook is only 13 years old, Twitter 11, and even Google is but 19. At this moment in the evolution of the auto industry, there were still no seat belts, airbags, emission controls, or mandatory crumple zones. The rules and incentive structures underlying how attention and surveillance work on the internet need to change. But in fairness to Facebook and Google and Twitter, while there’s a lot they could do better, the public outcry demanding that they fix all these problems is fundamentally mistaken. There are few solutions to the problems of digital discourse that don’t involve huge trade-offs—and those are not choices for Mark Zuckerberg alone to make. These are deeply political decisions. In the 20th century, the US passed laws that outlawed lead in paint and gasoline, that defined how much privacy a landlord needs to give his tenants, and that determined how much a phone company can surveil its customers. We can decide how we want to handle digital surveillance, attention-channeling, harassment, data collection, and algorithmic decision­making. We just need to start the discussion. Now.

Toxic tech?

This morning’s Observer column:

The headline above an essay in a magazine published by the Association of Computing Machinery (ACM) caught my eye. “Facial recognition is the plutonium of AI”, it said. Since plutonium – a by-product of uranium-based nuclear power generation – is one of the most toxic materials known to humankind, this seemed like an alarmist metaphor, so I settled down to read.

The article, by a Microsoft researcher, Luke Stark, argues that facial-recognition technology – one of the current obsessions of the tech industry – is potentially so toxic for the health of human society that it should be treated like plutonium and restricted accordingly. You could spend a lot of time in Silicon Valley before you heard sentiments like these about a technology that enables computers to recognise faces in a photograph or from a camera…

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Finally, a government takes on the tech companies

This morning’s Observer column:

On Monday last week, the government published its long-awaited white paper on online harms. It was launched at the British Library by the two cabinet ministers responsible for it – Jeremy Wright of the Department for Digital, Culture, Media and Sport (DCMS) and the home secretary, Sajid Javid. Wright was calm, modest and workmanlike in his introduction. Javid was, well, more macho. The social media companies had had their chances to put their houses in order. “They failed,” he declared. “I won’t let them fail again.” One couldn’t help feeling that he had one eye on the forthcoming hustings for the Tory leadership.

Nevertheless, this white paper is a significant document…

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Focussing on the difficulty of ‘moderating’ vile content obscures the real problem

Good OpEd piece by Charlie Warzel:

Focusing only on moderation means that Facebook, YouTube and other platforms, such as Reddit, don’t have to answer for the ways in which their platforms are meticulously engineered to encourage the creation of incendiary content, rewarding it with eyeballs, likes and, in some cases, ad dollars. Or how that reward system creates a feedback loop that slowly pushes unsuspecting users further down a rabbit hole toward extremist ideas and communities.

On Facebook or Reddit this might mean the ways in which people are encouraged to share propaganda, divisive misinformation or violent images in order to amass likes and shares. It might mean the creation of private communities in which toxic ideologies are allowed to foment, unchecked. On YouTube, the same incentives have created cottage industries of shock jocks and livestreaming communities dedicated to bigotry cloaked in amateur philosophy.

The YouTube personalities and the communities that spring up around the videos become important recruiting tools for the far-right fringes. In some cases, new features like “Super Chat,” which allows viewers to donate to YouTube personalities during livestreams, have become major fund-raising tools for the platform’s worst users — essentially acting as online telethons for white nationalists.

So Facebook does exercise editorial control after all

Senator Elizabeth Warren is running for President — or at any rate for the Democratic nomination. One of her policy proposals is to break up the tech giants. Like all other presidential hopefuls, her campaign advertises on Facebook. The ads included a video which pointed users to a petition on Warren’s campaign website urging them “to support our plan to break up these big tech companies.” “Three companies have vast power over our economy and our democracy”, said one ad that Warren’s campaign had placed on Friday. “Facebook, Amazon, and Google. We all use them. But in their rise to power, they’ve bulldozed competition, used our private information for profit, and tilted the playing field in their favor.”

Guess what happened next? Facebook removed the ads on the grounds that they violated the company’s terms and conditions for advertisers. Politico reported the takedown, after which Facebook hurriedly restored the ads. “We removed the ads because they violated our policies against use of our corporate logo,” explained a spokesperson. “In the interest of allowing robust debate, we are restoring the ads.”

Warren then tweeted

“Curious why I think FB has too much power? Let’s start with their ability to shut down a debate over whether FB has too much power,” she tweeted. “Thanks for restoring my posts. But I want a social media marketplace that isn’t dominated by a single censor.”

Warren is on the warpath and she’s right

One of the planks of Senator Elizabeth Warren’s emerging campaign is a radical proposal to break up the tech giants. She did a robust defence the other day of her proposal.

I’m with her all the way on that, as is Dave Winer. But, Dave writes,

we need to do more, and do it very soon. They [the tech giants] are destroying natural resources the way oil giants did before the government stepped in. However our political leaders, like most users, don’t understand.

The natural resource they are destroying is the World Wide Web, an open, unowned resource that has fostered the innovative environment that gave birth to Google and Facebook.

Google is acting as if it were the government, without any checks and balances, no oversight, no redress of grievances. They say they’re doing it for the good of the net, but we know they’re a huge corporation, and that’s not how it works.

Facebook is sucking the life out of the web, along with Medium (where Warren published her manifesto!). Some simple rules, if followed, would restore balance to the web ecosystem. But there are no rules here, so they run wild, and take whatever isn’t nailed down.

They’ve had a fantastic run, but it’s long past time for some rules, and consequences for not respecting that we all have ownership of the resource they are foreclosing on.

Yep.

Facebook’s vassal state

Since the late 1950s, my native land’s grand strategy — initially for survival and later for prosperity — was to be welcoming to foreign multinational companies. For half a century, that strategy worked well. But now it’s become problematic. Why? Because some of the giant multinationals which have made Ireland their European bases have become toxic.

Chief among these is Facebook, the leading data-vampire. Until the other day, we had our suspicions about the subservience of the Irish government to the wishes and requirements of the Zuckerberg empire. Now — thanks to two remarkable pieces of reporting — we have some evidence of the cosy relationship that developed between Facebook’s second-in-command, Sheryl Sandberg (the ‘Typhoid Mary’ of surveillance capitalism, as Shoshana Zuboff describes her) and the previous Irish Taoiseach (Prime Minister), Enda Kenny.

The first breakthrough came from my Observer colleagues Carole Cadwalladr and Duncan Campbell and was based on a leaked internal Facebook document which described, among other things, Facebook’s

“great relationship” with Enda Kenny, the Irish prime minister at the time, one of a number of people it describes as “friends of Facebook”. Ireland plays a key role in regulating technology companies in Europe because its data protection commissioner acts for all 28 member states. The memo has inflamed data protection advocates, who have long complained about the company’s “cosy” relationship with the Irish government.

The document also noted

Kenny’s “appreciation” for Facebook’s decision to locate its headquarters in Dublin and points out that the new proposed data protection legislation was a “threat to jobs, innovation and economic growth in Europe”. It then goes on to say that Ireland is poised to take on the presidency of the EU and therefore has the “opportunity to influence the European Data Directive decisions”. It makes the extraordinary claim that Kenny offered to use the “significant influence” of the EU presidency as a means of influencing other EU member states “even though technically Ireland is supposed to remain neutral in this role”.

The second revelation comes from a terrific investigation by the Irish Independent newspaper. This tells how, two days after the meeting the Taoiseach in Davos (where else?), Sandberg wrote to Kenny, warning him how changes to taxation or privacy laws might lead Facebook to consider ‘different options for future investment and growth in Europe’.

Her email reads:

“I also want to commend you once again for your leadership during your Presidency of the EU. You made enormous progress. When it came to the European Data Protection Regulation, you and your staff really internalised our concerns and were able to present them in a reasonable way, which has had a positive impact …We hope we can rely on you for your continued leadership on this regulation since we still have more work to do here. Along the same lines, I was pleased to hear that you are so involved in the OECD working group process on tax reform. These discussions will be very complicated and important, and we hope to be helpful to you identifying the implications with different options for future investment and growth in Europe. We are keen to collaborate with your office on this, just as we have on the DPR.”

Following the meeting in Davos, Facebook’s Senior Policy team, comprising 15 executives from Washington, California, Dublin, and across Europe, requested a personal meeting with the Taoiseach in Government Buildings, Dublin on February 6 2014.

Kenny did not meet the delegation but instead sent his special adviser, Paul O’Brien, the Secretary General to the Government, Martin Fraser, and two of the Taoiseach’s experienced assistant secretaries with responsibility for international economic matters, Lorcan Fullam and John Callinan.

But then Kenny was given the treatment that generally suborns impressionable technically-illiterate politicians: an invitation to Facebook’s headquarters in Menlo Park, California, in June 2014, where he was granted a 43-minute audience with Sandberg.

According to the Independent report, the mogul and her awestruck visitor discussed the need for one tax regulator in the EU, and also the issue of who would replace Billy Hawkes as the Irish Data Protection Commissioner (who was due to retire on August 31 that year). And a follow-up letter to the Taoiseach in June 2014 specifically mentions Billy Hawkes and the need for his replacement to be “a strong candidate”.

“While Mr Hawkes’s independence and integrity are undisputed”, says the Independent — with an attentive eye to legal niceties — “there is no doubt that Facebook would have been relieved in 2013, when Mr Hawkes refused to investigate claims that Facebook Ireland had transferred data to the States for examination by the NSA”.

Background: Hawkes had refused the investigation on the legal grounds that Facebook was entitled to send data from the EU to the US under EU Commission Safe Harbour provisions. Interestingly, though, when Sandberg was being granted personal access to the Taoiseach, a judicial review of Hawkes’s decision had been initiated in the Irish High Court. And of course, in the end, the European Court ruled that the ‘Safe Harbour’ agreement was invalid.

These are extraordinary revelations, though I suspect they will surprise nobody familiar with the servile cringe that Irish politicians habitually adopt when dealing with their corporate ‘guests’. Note particularly, the tone and content of the leaked emails. For example:

  • Referring to the tricky challenge (for Facebook) of European Data Protection Regulation, you and your staff internalised our concerns and were able to present them in a reasonable way, which has had a positive impact. …We hope we can rely on you for your continued leadership on this regulation since we still have more work to do here.

  • And, on tax reform, I was pleased to hear that you are so involved in the OECD working group process on tax reform.

Emphasis added. Pass the sickbag, Alice.

Quote of the Day

“Too much is at stake, especially for those who don’t live in the wealthier parts of white America, to let our technological world to become merely a shopping mall where we buy things and exchange half-truths.”

Cindy Cohn, Executive Director of the Electronic Frontier Foundation, Foreword to The End of Trust.