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 has already 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 GeneralData 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 choices 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’spractices 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’sadvertising-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 should such regulation 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.

“Zuckerberg 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, theCompetitive 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 are actually 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 unsecured. It is unclear to what extent government regulation can ensure that security without compromising the benefits people like.”