Facebook CEO Mark Zuckerberg testifies before a House Energy and Commerce hearing on Capitol Hill in Washington, Wednesday, April 11, 2018, about the use of Facebook data to target American voters in the 2016 election and data privacy.Photo: AP
This week Mark Zuckerberg fronted the US Senate Commerce, Science and Transportation committee, like a misbehaving schoolboy being sent to the headmaster’s office. It is a moment of great risk: not necessarily for the future of Facebook, but for consumers and internet users.
A remote possibility exists that regulations will be passed that are so onerous they would be impossible for Facebook to comply with. However, this seems unlikely. After all, it is in both government’s and Facebook’s interest to agree on a set of workable regulations. Which, in this context, means controllable by government and exploitable for Facebook.
On the whole, we are terribly naïve in our use of the modern communications and technology. The old saying “if you aren’t paying for the product, you are the product” has more than a bit of truth to it, but at a more fundamental level it probably never occurred to most people to wonder why so much privacy had to be surrendered to access digital society.
In some ways, the whole point of the ‘product’ is an escape from anonymity. Abandoning privacy is simply the price of admission.
The internet is an odd mix of quaint collectivism and nihilistic individualism. It is viewed simultaneously as a lawless wasteland of scammers and conmen and an endless bounty that is expected to give to each according to his needs, free of charge.
It is easy to imagine someone thinking, without a hint of irony, both that “of course Facebook is free, that’s how things are online” and “of course scammers stole our data, you can’t trust anyone online.”
The point is not that Facebook is good or bad: it is simply a business. It is selli
ng a new product to be sure, but it is operating in accordance with the same incentives and pitfalls that have driven markets for millennia.
But governments too are driven by incentives. Government wants to be able to control how companies such as Facebook operate, and they want to stop those companies undermining the tax revenue base.
One way to do this is through regulation: imposing a compliance burden for the ‘social license’ to operate a business. The effect of this is to restrict competition, so it creates a bunch of monopolies or near-monopolies (think pharmacies and taxis).
In many ways, it’s much easier for governments to deal with monopoly providers: they have all the justification they need to continually intervene in the market, and they have the ability to tax the monopoly rents generated. The companies sure like it … they get monopolistic profits. It’s the consumers who lose out.
Technology has the ability to undermine these monopolies, which is why the battle over regulation of ride-sharing services like Uber is so important. The great risk to consumers is not that unregulated services like Uber are inherently unsafe, it’s that government will effectively entrench a model in law with an inbuilt cut for government, existing providers and unions.
So too with Facebook. Imposing a substantial compliance burden on social media companies to protect data and prevent abuse creates a barrier for new entrants. Suddenly Facebook not only has the advantage of incumbency, it also has the capital, infrastructure and staff to police their content where newcomers don’t.
How then should we deal with breaches of privacy? Or the very real issue of abuse of women online, not to mention the much less real problem of fake news?
The correct, but unsatisfying, answer is simple: if you don’t like how Facebook protects your data don’t use it. If people have the ability to regularly abuse you on social media, and the company running that platforms doesn’t respond, find one that does. If those platforms try to manipulate your feed, log off. One individual may not think they matter much, but if enough people do this it will be far more effective than government could ever be.
Businesses have an incentive to work around regulations, but they also have an incentive to work with customers.
However tempting is it to reach for comforting, old levers of control to deal with technology, this risks surrendering far more than the utopian vision of the internet. It surrenders the greatest power that consumers have — the ability to move their business elsewhere — in exchange for not having to protect yourself from harm. For consumers, that is a really bad deal.
Simon Cowan is Research Manager at The Centre for Independent Studies.
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