Listening to Mark
Mark Zuckerberg, Chairman of Facebook, testified to a committee of the US Senate yesterday. Everyone wanted a piece of it; it was actually a joint meeting of two Senate committees, and forty Senators were poised with questions.
Zuckerberg was articulate and prepared. He answered the questions with practiced politeness, and only occasionally descended into Facebook “geek-speak.” To those Senators who didn’t have much of a grasp of the technology, Zuckerberg was kind, not making them look stupid. To those who knew a lot though, he generalized, refusing to get specific about the technical details of his product.
I’m not a huge fan of Senator Lindsey Graham (R-SC), but he made a significant point yesterday. In questioning Zuckerberg, he asked him who Facebook’s biggest competitor was. Zuckerberg came back asking about what area of the industry Graham was talking about: person to person, video and picture, messaging, and the like. Graham pursued the question: who is your biggest competitor: “…if someone didn’t want to use Facebook, what would they use?”
Zuckerberg didn’t answer the question, but the answer was clear. There is no one media application that can do what Facebook does. If you don’t want to use Facebook, you can’t replace it. Graham’s point: Facebook has a monopoly of two billion users with no real competition. In America, being pegged as a monopoly can have dangerous consequences.
You can’t blame Facebook, it’s an American success story. Two kids in a dorm room come up with a computer program, they grow it, expand it, find financing for it, move it from Cambridge, Massachusetts to Silicon Valley, and make billions of dollars. There avowed goal: connect the people of the world. They are a third of the way there.
But monopolies have their downside. Since there is no competition there is little incentive to change a “business model” that works. And with the current financial capacity of Facebook, the new and innovative ideas that come up are bought up and subsumed into the Facebook system.
In America we either break up monopolies, forcing them to become multiple competing companies (Old ATT became eight different corporations), or we regulate them, as we do with public utilities in Ohio. Breaking monopolies up creates competition, giving consumers choices and encouraging innovation and reduced costs. Regulation controls costs and how business is conducted, but does not necessarily encourage innovation.
Mark Zuckerberg is willing to become a participant in developing regulations for Facebook (he said so to Senator Klobuchar.) It’s a smart move: if it’s regulated, it can remain a monopoly. Zuckerberg has made it clear that he is in favor of regulating “advertising” on Facebook – what he is avoiding is touching the financial heart of the Facebook model: user data.
Senator Dick Durbin (D-Ill) made a significant point in his questioning. His first question to Zuckerberg: “Will you tell me which hotel you stayed in last night,” followed by “…tell me who you messaged this week.” Zuckerberg answered “no” to both questions, underlining Durbin’s concern about the loss of personal information control that Facebook creates.
Data is the heart of Facebook, and the ability to sell data and data use is the Facebook business model. Collecting user data is what they do. And it’s the heart of the problem as well: how can American’s protect themselves from data “profiling,” and from those profiles being used to subversively influence them.
As a monopoly, there is no competition forcing Facebook to change. If users don’t want to use Facebook, they certainly can choose to delete their accounts. But they can’t find a similar service, and Facebook is THE major form of communication for millions or more.
Regulation is the answer. And while the “regulators,” members of the US House and Senate, may not have the technical insights to understand how to control Facebook, they can find the folks who do. Maybe Mark Zuckerberg specifically, and Silicon Valley in general, will participate to lend their technical understanding.
Facebook influences what we think, what we buy, and who we vote for. The past two years have made it clear that, knowingly or not, the leaders of Facebook haven’t found a way to get control of their “platform.” If the American “free enterprise” system doesn’t provide a choice, then it’s up to the government to provide those controls.
I watched/listened to all 5 hours of the testimony yesterday, because the outcome of this will greatly effect what I do every day to put food on the table. Analytics is a huge part of what I do, and this issue is so incredibly complicated. I use services like Facebook advertising to target my audiences in ways that other media venues such as radio can’t provide. However, Facebook is not my only option…and all good digital marketing strategies spread their channels to get the word out about their products. There are lots of ad options out there such as Google advertising, which will spread your ads across lots of different sites and are targeted to you. You could advertise on Pinterest, Houzz, Twitter, ect. Selling those ads is what keeps Facebook in business. Nearly every website on the web is tracking what you are doing, including this platform here. Cookies have been around since the dawn of the web and are growing more and more sophisticated, but code can only collect the data you provide. The more data you put on the web, the more sites know about who you are and what you prefer.
When Mark said that the competitor depends on the channel, he wasn’t avoiding the question. It really depends on what audience you are talking about. The audience we initially think of, the people that have profiles and post pictures and content, they have several options. I would argue that Facebook isn’t nearly as relevant as it was several years ago because there actually are a lot of communication options. It all depends on what platform the people you interact with most, use. For instance, I follow twitter to keep up to date on what is happening in the tech world. I follow Facebook to learn what is new with family and friends I don’t see often, but I use Instagram to follow accounts that foster kittens when I need that mid-day cuteness break. Nextdoor alerts me when there is crime happening in the area or the times for the neighborhood trick or treat, and I use any number of platforms including Facebook and email to know if a sports practice is cancelled or see pictures of my oldest son on his 8th grade DC trip. I use slack for a number of business conversations and updates. I rarely dive into reddit because I don’t understand the platform, and I don’t trust that I am safe while on that site.
The service Facebook sells is ad space that will target specific audiences, and that is their second audience…companies looking for ad space. The data they gather for ads is kept within Facebook and a potential advertiser simply asks them to show the ad to a certain demographic. I never see who is in that demographic, I only know the amount of people I am reaching and the effectiveness of that ad (in % of click-throughs). While the housing ad situation was terrible and I agree that should be dealt with according to the law, throwing the entire model out because of the few issues that are there is not the solution. Certain target demographic options such as race should not be options. However just like a men’s shaving product would probably not choose to advertise in Country Living magazine, I don’t want to spend my advertising dollars having my ads for geriatric medical equiptment shown to 18-22 year olds. Regulation on those algorithms is needed to make sure that Facebook (and all other digital marketing avenues) are held accountable according to our current laws.
The problem I see specific with Facebook is that they had a lot of loopholes in their platform structure that allowed groups like Cambridge Analytica to take advantage and as Google would say “do harm.” They happen to be on the hot seat right now, but you can plug any number of institutions in their place both online and off, and see parties taking advantage of loopholes to “game the system.” Third party developers were using APIs as loopholes and pulling in that data that Facebook doesn’t typically show an advertiser client. Users have the ability to go in their settings and see what third party apps are gathering data the same way Cambridge Analytica was. If you choose to “log in using Facebook” (or google, for that matter) at any time in a website or app, that data siphon is there. But you choose (opt-in) to that choice. It’s up to the third party to let you know what data they are collecting, and it’s Facebook’s duty to make sure all the API holes are safe which they have recently done and are still doing. Online security is an on-going battle that is a lot like whack-a-mole. No matter how secure your code is, the bad guys find 5 more ways to expose holes, including vulnerabilities that have been there for decades like the intel chips.
I don’t think a monopoly is the correct term for Facebook, but I do agree that regulation needs to happen across the board. The public doesn’t understand exactly how analytics is collected and used because it really is extremely complicated. That fear of the unknown is justified in cases like Cambridge or the Equifax breech. I hope that Mark and other tech executives choose to work with the government to help them understand the inner workings, and form legislature that not only protects but educates the public while still allowing the great user experiences that we have today.