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Congress is holding several hearings on Facebook, all emanating from the revelation that Cambridge Analytica improperly obtained data on Facebook users and used it to assist the Trump campaign.
People have expressed outrage, senators have threatened Facebook with regulations, and the Federal Trade Commission (FTC) is opening an investigation. Before Congress and the FTC go very far, it would be good to look at what’s really happened.
What Cambridge Analytica did has been done before without objection
Several political campaigns have used Facebook user data. The best-known and probably most effective political use of Facebook and other data analytics were President Obama’s campaigns.
These campaigns were uniquely capable at obtaining and leveraging Facebook and its data. Facebook cofounder Chris Hughes helped assemble the new media strategy for Obama’s US Senate and 2008 presidential campaigns. Obama’s 2012 campaign took social media and data analytics to a new level. The campaigns obtained the Facebook data of supporters and their friends through Facebook apps and by having supporters log into My.BarackObama.com using their Facebook accounts.
The 2012 campaign’s tech team was reputed to be able to exploit Facebook capabilities before even Facebook knew the means existed. One Facebook outreach program let supporters know if their close friends had not voted in an election and encouraged the supporters to contact those friends. This required intimate knowledge of supporters’ Facebook friends and the nature of their relationships.
Was this like what Cambridge Analytica did? Basically. The Obama campaigns appear to have acted with Facebook’s blessing, or at least without objection. And the Obama campaigns appear to have used Facebook data much more effectively. Otherwise, it is hard to discern any difference.
Facebook’s mistake was letting its business model drift without keeping users fully informed
The company’s primary failure is not being clear and candid with its users. (I distinguish between users, who are the subscribers, and customers, who are entities that buy ads and other services.) For markets to perform well, users should have complete and understandable information on the nature of the services they are using, even those that have a zero monetary price as in the case of Facebook. This isn’t happening. The company has changed how it serves its users and uses their data without ensuring that they fully understand Facebook’s evolving roles in their lives. Facebook has morphed from a connector of communities to an entity that investigates people’s lives and filters their Facebook communications.
The pivotal moment appears to have been in 2007 when Facebook’s growth stalled. Since Facebook’s creation, adding users was a primary goal. The stall triggered the company to hire a team that, according to some of its former members, attempted to use psychological manipulation to increase users and time spent on Facebook. Since then it seems fair to describe the company’s business as gathering people into a context where they reveal information about themselves so that others can market products and ideas. In a sense, Facebook’s users are its product.
Facebook’s shift appears to be a case of a company allowing itself to drift: Each step over the years probably made sense by itself, but taken as a whole they constitute a change in who the company is. Many businesses have gone down this road — monetizing current customers rather than respecting relationships. When things go too far, competition steps in.
One of Facebook’s methods for expanding its reach was developing News Feed. News Feed changed Facebook yet again, making it a discussion monitor that determines who is allowed a voice and who hears what voices on the platform.
The right regulatory response is to let customers and users decide
New regulations intended to address Facebook’s challenges are likely to harm Facebook users, for two reasons. One is that new regulations would likely serve as a barrier to competition, protecting Facebook and other large internet companies from challengers. It might be that Mark Zuckerberg understands this, as he appears ready to embrace in concept all regulations that have been proposed, and maybe more. Enough regulation would make Facebook a protected yet unnatural monopoly.
The second reason is that regulatory proponents in Congress and elsewhere appear to be misdiagnosing the issue. They are treating this as an issue of unprotected privacy. While it is likely true that Facebook users didn’t mean for third parties to be able to download their birthdays, likes, etc., Facebook itself uses all the subscriber data that Cambridge Analytica obtained and more. What Facebook should do is openly explain to its subscribers the company’s real purpose; namely, to learn as much as it can about them so that Facebook can sell targeted access to third parties.
The greatest gift
The greatest gift Congress could give to Facebook would be new legislation that raises costs for rivals. The greatest gift Congress could give Facebook’s users is to continue to shine a spotlight on the company until its true self becomes more visible.
This blog is based on the author’s testimony before the Senate Committee on the Judiciary on May 16, 2018.
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