Facebook’s challenges demonstrate it is time to level the regulatory playing field

This week’s joint senate hearing on Facebook’s privacy and transparency policies raised the question, does the public expect Facebook to act like a information utility? Reactions on Facebook to Mark Zuckerberg’s testimony before the U.S. Senate’s commerce and judiciary committees ranged from calling the 33-year old CEO a “shitbag” to praising him for confidently addressing questions from a 44 senators, a significant number of whom gave the impression that they had no clue as to what Facebook’s model is.

Consumers have been bitching and moaning about Facebook for years, expressing displeasure whenever the company changed the configuration of its pages, added or subtracted icons, or changed its algorithms in order to present what it thinks is more pertinent information to its users. Most users access Facebook’s content at no out-of-pocket cost to them and I personally know of no one who clicks on the ad links that pop up along the right hand side of our timelines. Yet, a significant number of users have expectations about how Facebook treats them, especially when they get put in “Facebook jail” for stating positions that may not be in keeping with the Facebook’s “righteousness police squad.”

If any senator yesterday came close to summarizing my personal sentiments on Facebook it was Orrin Hatch, Republican of Utah. The 42-year senate veteran, in the five minutes allotted to each senator, was able to get across that Facebook was not a utility; that if people were not satisfied with the product that they could go elsewhere on the internet. I don’t view Facebook as a necessity although I admit I probably spend too much time posting there albeit not as much eleven years ago when I was invited to join the Facebook community.  It can see where it can be addicting, but in the end it is not a utility.

With a utility there is an understanding that in exchange for a service generated with the use of natural resources purchased by the utility, you the consumer will compensate the utility for the generation and distribution of said service. And if that utility is regulated, the regulator is following a mandate to balance the consumer’s interest in fair and reasonable rates and consumer protection with the utility’s interest in maximizing its shareholders’ wealth. The senators that seemed adamant about Facebook not being considerate of its user community seemed to come very close to wanting to treat Facebook like a utility, but were very far from considering Facebook’s investor needs.

If Congress wants to regulate Facebook like a utility, it will have to come to terms with the fact that Facebook has only one set of consumers; the firms that purchase its advertising services. The users that Congress is so concerned about are the fuel for Facebook’s advertising platform, specifically the information attached to each user. The user is extracted, organized, and packaged as a fuel cell for advertisers, creating the eyeballs to which company advertising is targeted.

Unlike coal, oil, or natural gas, the fuel for Facebook delivers itself voluntarily over broadband access infrastructure. Whether by wired or wireless access, these transmission pipes are a necessary part of Facebook’s “information utility” business. No fuel, no eyeballs for advertisers. As former Federal Communications Commission chairman Tom Wheeler argued, the consumer experience on the internet should be seamless. Consumers should be able to access websites like Facebook without broadband access providers throttling speeds or otherwise determining which websites would get access to the consumer at certain speeds and vice versa. Also, to create the seamless experience, broadband access providers had to exercise a great degree of transparency regarding their management practices while protecting the privacy of data used to fuel the information utilities, such as Facebook, that deliver services on the edge.

The problem with the Wheeler approach is that the framework balkanized regulation of the internet. Wheeler and other progressives favored archaic transparency and privacy of information rules based on the Communications Act of 1934 applied to broadband access providers. Edge providers, like Facebook, Google, and Twitter, were to remain outside of this regulatory framework where they would be allowed to innovate and not have their information utility business model threatened by AT&T, Comcast, or Verizon. But Facebook’s current dilemma, Russian use of its platform and the trade in its user private data by unauthorized third-parties, demonstrates that if policy makers and elected officials want a seamless internet that projects transparency, all stakeholders will have to be placed on a level regulatory playing field.

Transparency can’t end at a broadband access provider’s point of presence and then enter an edge provider’s black hole.  If consumers want their data to stay private and advocate for policies that keep that data private along and throughout the internet, policymakers will have to ensure that privacy policies extend from the modem in the consumer’s home to the servers that store the data that social media collects on its users. If Congress cannot deliver seamless regulation, then yesterday and today’s hearings will equate to the mindless twerking we see on Instagram.

Is broadband access less about connectivity and more about individuality?

My sister recently experimented with Whole Foods‘ delivery service. As an Amazon Prime member, she could take advantage of no cost delivery to her home in the West End. This is a smart move on the part of Whole Foods to deliver to the West End, an area where the median household income is lower than the rest of Atlanta’s sectors. My observation has nothing to do with the wishful thinking that Whole Foods is practicing altruism, but the probability that Whole Foods is betting on the continued gentrification of the area; that it makes sense to plant a flag in the area so that when higher-income, cheap rent seeking young white couples move into the area, Whole Foods will be there to greet them. And while increasing the area’s investment value may not have been on the top of Whole Foods’ agenda, current property holders can at least tell their friends living in other areas of the city that they have not been left out of high-end food delivery options.

Going online and ordering your groceries is an example of what the long-term purpose of broadband connectivity is all about, especially for those with capital. If we accept the Facebook model of broadband and the internet, then we support the argument that broadband and the internet are about connecting people for the sake of creating a larger global community that leads to more democracy, peace, and understanding. This is one of the premises underlying net neutrality; the creation and maintenance of an open internet.  Two billion people connecting on Facebook may be deemed evidence that the globe is demanding this type of connectivity and community development on the world wide web, but such a view fails to account for the “politico-economic physics” of broadband and the internet. I believe the true value of broadband access lies in the empowerment that broadband access creates in the individual. The universe revolves around her and not the other way around.

The internet, at least for those with capital, is about bending the four-dimensional characteristics of space time and enhancing her sovereignty; creating a self-sufficient lifestyle for her. High value individuals don’t see the platforms upon which they move through space and time as flat or linear. The platform is geodesic; a curved line that provides the shortest distance between two points. In this case, between capital and the products and services that capital can acquire. The closer broadband technology brings her to sources of goods and services, the tighter her enclosure around her. She is not creating inclusiveness, or a bigger tent. In actuality, her tent becomes tighter, filled with other high value resources including friends and business associates. Creating a sovereignty blocks out the noise that the internet is becoming increasingly known for.

I would argue further that as her capital and value grows the more space-time bends around her. She creates a gravitational pull attracting even more resources, income, and opportunities. Those who argue for equality and democracy on the internet overlook this important value element. High value, capital holding consumers on the internet bend space-time toward them and high value content and service deliverers will point their commercial starships in the direction of high value.

How should policy react? It can either acknowledge the individual’s use of broadband to create a sovereign individual while transmitting her consumer energy into her tight commercial space or it can regulate her relationship with the points of commercial light within her internet space and risk forcing her to engage with value deficient “black holes” that threaten to reduce her incentive to engage in e-commerce or change her engagement in such a way that the value she receives and transmits is reduced. Policy should opt for protecting her choice for engaging with the value providers of her choice.

Happy anniversary, World Wide Web. Now, let’s go back to 1988

On 12 March 1989, Tim Berners-Lee publishes a proposal to link hypertext with transmission control protocol, the basis for the world wide web. On 6 August 1991, he launches the first web page. Prior to his proposal, the internet was pretty much a niche hideout for academics and military researchers. Berners-Lee’s proposal helped introduce ‘democracy’ to the original dark web of interconnected computers.

Democratizing digital information via open network architectures unleashed the digital demons that Mr Berners-Lee would like to see regulated today. We went from a relatively simpler system where Dr James Haywood Rolling Jr could send Dr Marshall Shepherd samples of research that could add artistic flavor to the otherwise drab depiction of weather patterns, to the current system where an 18-year old dressed in psychedelic garb can do the booty clap in front of a smartphone and send the images live from Accra. Using this information, the Digital Daemons, i.e. #Facebook#Google, and #Twitter, can create profiles based on every ‘like’ the booty clapper receives and market services and products to consumers.

Closer inspection of the history of the world wide web and Mr Berners-Lee’s criticism of today’s social media/social network companies exposes a downside of the premise that the Digital Daemons are negatively impacting global connectivity via the internet. Mr Berners-Lee is concerned that the one-half of the planet currently not connected to the internet may be at a disadvantage culturally and economically and that connecting to the Flying Spaghetti Monster that is the world wide web may be the developing world’s salvation.

Ironically, it is that arrogant premise that the world needs to be connected to a single standard that drove European colonial expansion across the globe and spawned a global financial system anchored by the Bank of International Settlements, the World Bank, and the International Monetary Fund to replace the colonizer when Europe entered its post-World War II decline. Whether he realizes it or not, Mr Berners-Lee’s liberal position on digital connectivity is steeped in the European DNA for conquest.

If Mr Berners-Lee and other progressives are so bloody concerned about the negative impact the Digital Daemons are having on access to and distribution of information, they should push for an internet that existed pre-1989 where communities of value-based information exchangers created their own databases, and protocols and criteria for membership in these groups. Ironically, under that type of scenario, application of net neutrality rules based on Title II of the Communications Act would be valid because the administrators and owners of the databases could more easily be defined as consumers of telecommunications in some type of corporate form.

Sometimes you have to go back to your past to find a solution to a current dilemma. Happy Anniversary, World Wide Web.

Free Press and Public Knowledge are getting a taste of big tent progressive politics

Brian Fung of The Washington Post put out a great piece this morning describing a growing rift between two factions on the progressive side of the net neutrality debate. Grass roots groups such as Free Press and Public Knowledge believe that supporters of the Federal Communications Commission’s 2015 Open Internet Order should aggressively push the Congress to overturn the Commission’s 2017 repeal of the Order.

Corporate supporters of the Commission’s Open Internet Order such as Facebook and Google are taking a more centrist approach. While they apparently still support applying net neutrality rules based in Title II of the Communications Act of 1934, they are now signaling that a bi-partisan Congressional approach via a new law would help resolve the net neutrality dispute once and for all.

Based on Mr Fung’s writing, the big tent has a few holes in the tarp, as meetings hosted by the Internet Alliance and attended by both net neutrality factions are growing in the number of attendees and an increasingly diverse level of issues are sprouting. Free Press and Public Knowledge are finding the hard way a couple important lessons about any corporations true mission and that diversity is an empty narrative.

First, the corporate mission. I hesitate to say that the good people at Free Press and Public Knowledge are naive (but I wouldn’t hesitate to say that their 4 million pro net  neutrality followers are), but both groups seem to have fallen for Google’s and Facebook’s silly mission statements about doing no evil and connecting the world for connection sake.

Google and Facebook created and maintained dominant positions in internet search and social networking by first optimizing their business models to maximize shareholder value, a lesson the lawyers at Free Press and Public Knowledge failed to remember from the business associations classes in the second year of law school. “Russiagate” has raised the ire of Congress and Google, Facebook, and other social networking and internet portal companies are gathering their wagons around their revenue streams and profit centers from potential government attacks. They cannot afford any regulatory volatility that will arise from the uncertainty of how net neutrality principles will be applied to broadband access providers. They are realizing that compromise legislation passed in the immediate term is good for long term growth.

While Google and Facebook play in the “attention economy”, Free Press and Public Knowledge play in the “agitation economy.” To stay relevant as a grass roots advocate leader, they must tear up the astro turf regularly. Settling the net neutrality tennis match via a bi-partisan bill means 4 million pairs of eye balls not looking their way because the show will be over. Nothing else to see here. Problem solved.

As for diverse voices, that narrative does not work. The bigger your tent, the further off course the original message drifts. Sooner or later the money bags step up and start setting priorities and those priorities will place those with the least coin ahead of the pack. The 4 million three huggers are going to have internet access no matter their personal beef with their broadband access provider. Most have access to two or three providers whether wireless or wireline. Facebook and Google cannot take comfort in any certainty. As big as they are in digital space, the wilderness is huge and there is always a young predator getting ready to spring out with new technology and the hunger and thirst to match.

Facebook and Google’s profit motives and needs are no different than the broadband access providers Free Press and Public Knowledge rail against. Facebook and Google will take control of the circus under the big tent and call for some grown up behavior that protects their revenues and profits.

 

.@facebook’s role as a digital archive threatened by #Russia and itself…

Robert Mueller’s indictment of thirteen Russian nationals for defrauding the United States by using fraudulent means to leverage social media in order to spread during the 2016 campaign season doesn’t intentionally pick on Facebook as a villain. Members of Congress are asking how the Russian-based Internet Research Agency using 100 or so employees, could have circumvented 22,000 Facebook employees and introduce their “digital political hack” into American cyberspace.

Members of Congress have been acting since last fall when Facebook provided documentation that its platform via paid advertising had been used to send targeted messaging via certain Facebook pages to divide the electorate. For example, H.R. 4077 is a bill designed to increase the amount of transparency in electioneering communication.  Introduced in October 2017, the bill aims for accountability and disclosure of who is behind the financing of paid social media users or, as they are affectionately called, “trolls.”

A companion bill, S. 1989, was introduced at the same time in the U.S. Senate.

S. 625, introduced in the U.S. Senate in March 2017 provides the Unites States Attorney General with investigative tools to flesh out foreign agents using social media to disrupt U.S. elections.  The bill requires prosecution of social media users failing to make this disclosure.

Congress hasn’t gone directly (yet) at Facebook or other social media properties. For the political left, especially members of the net neutrality posse, passing any legislation that hints at slowing down the growth of the very same edge providers that they have been protecting would send a message that they are as dysfunctional as some of the electorate already thinks. Facebook, along with Google and Twitter, has been a proponent of net neutrality rules. They have, to various degrees, built their business models on advertising driven by the free content and personal information that they “hack” from consumers. They make their advertising services available globally and unfortunately for them, their social media levers were pulled expertly by Russian nationals.

Facebook, probably inadvertently, has become a digital archive of America’s thoughts and opinions. Instead of having to rummage through personal libraries in order to learn about what Americans are thinking, historians now have access to digital living history, ironically made open by the openness of the internet. Crackdowns on social media would do more damage to openness than poorly forecasted bad gateway behavior of internet access providers. Net neutrality proponents wouldn’t have to worry about degraded access to content. They would have the bigger problem of congressional regulation of content.

Mr Mueller’s indictment has surmised that the digital hacking of the United States’ electoral system is continuing. Russian nationals may have done some adjusting since 2016 to better avoid detection, problem via some more openness themselves by complying with foreign agent registration laws. As for Facebook, changes in its business model may be on the way.

Opt-in, Opt-out policy appropriate for addressing online privacy

In May 2017, U.S. Representative Marsha Blackburn introduced H.R.2520, the Browser Act, a bill designed to provide consumers with some control over the use of their personal information. Specifically, consumers that use broadband access services or websites or applications providing subscription, purchase, account, or search engine services are provided, depending on the sensitivity of personal information, the choice to opt-in or opt-out of policies used by these services to manage consumer information.

For sensitive information, opt-in approval must be expressly granted by the consumer. Sensitive information includes:

  • financial information;
  • health information;
  • information about children under the age of thirteen;
  • social security numbers information;
  • information regarding a consumer’s geo-location;
  • web browsing information: or
  • information on the history of usage of software programs or mobile applications.

Consumers must be provided the opportunity to give opt-out approval for non-sensitive information.

Mrs Blackburn’s intent with the legislation is to equalize broadband access providers and edge content providers under the eyes of the Federal Trade Commission, the federal agency responsible for consumer protection and anti-trust law enforcement. In my opinion, this is not a far off from former Federal Communications Commission chairman Tom Wheeler’s goal of openness and transparency throughout the entire internet ecosystem; from consumer to broadband access provider to websites provided by edge providers.

What Mrs Blackburn’s bill also does is address information asymmetries, where edge content providers are viewed as having more knowledge on the value of consumer information that they extract from websites than the consumer does herself. The consumer cannot answer the question, “Is the value of the information I receive from online, x, greater than the value of the information that I give up, p, where that information is private?

It is not readily apparent whether H.R.2520 was also designed to save the consumer from asking this question: ” Why should I pay for an economic good i.e. privacy that isn’t Google’s to sell in the first place?”

Professor Caleb S. Fuller of Grove City College describes privacy as an economic good, something that the consumer wants more of. Most consumers are not willing to pay to protect this good, even though they know that firms like Google are collecting this information for free. For example, according to Professor Fuller’s research, 90% of Google’s users know that their “mouse droppings” are being tracked.While 29% of Google’s users don’t mind being tracked, 71% do. Their reasoning, according to Professor Fuller includes the fear of price discrimination based on their information; the receipt of spam advertising; the risk of identity theft; and the “dis-utility in just not knowing who knows what.”

One equitable solution, in my opinion, would be for Google and other edge providers to pay their subscribers to provide private data. Google could provide an offering schedule based on the sensitivity of the information it wishes to purchase. Consumers would have to consider the value of the privacy they give up in exchange for the value obtained from accessing web content. I wouldn’t expect every consumer to sell their data. Google will wisely set limits on its offers and a significant portion of consumers unable to get a price they want will settle for the old private data for access exchange that they have been conducting for two decades.

The opt-in, opt-out policy mitigates the work that the consumer should put in to determine the value of her data, but gives her the final say over how her private data can be used. Unfortunately this is also the down side where the market won’t be used to truly determine the real value that can be sold.

When the #internet was just for #academics….#broadband

Democrats are wary of Facebook, Google, and Twitter. Hillary Clinton’s loss in the November 2016 elections allegedly compounded by a misinformation game played by the Russians via social media has the Democrats in Congress asking themselves if a little more transparency i.e. regulation of social media practices is necessary in order to prevent any more shenanigans from Russia.

In the net neutrality debates, Democrats and grass roots progressives have taken the position that due to their gatekeeper position, internet access providers such as AT&T, Comcast, and Verizon are in a position to negatively impact the innovative internet portal and social media services that Facebook and Google provide. Democrats argue that we don’t want to discourage the creation of the next Facebook by allowing Comcast to throttle speeds from potential upstarts or block a consumer’s access to the new Twitter. Now these members of Congress appear a bit wary of the cat that they have been snuggling up to; being scraped by the FANGs (Facebook, Amazon, Netflix, Google) is not fun.

What I find ironic is that these congressmen were no where to be found as the FANGs were busy building a business model on acquiring consumer data from the droppings that consumers leave all over the internet. This data collection didn’t impact the politicians, who thrive on political intelligence so having a master information collector or two on their donor page didn’t hurt. It wasn’t until the FANGs messed with the source of a politician’s livelihood i.e. the vote, that the FANGs fell under deeper scrutiny.

It is up to the individual to choose whether to use FANG services. I have little to no use for Facebook myself. Amazon, Google, and Netflix deliver pretty much what they promise: logistics and content. What’s amusing is that highly educated, professionals in the Congress have yet to figure out the business model that social media relies on for its survival.

I think it is best that the internet go back to what it was meant to be: a way to connect information seekers with data. The irony is that internet service providers have been providing their networks as a part of the larger data transmission scheme for over two decades but seem to be catching the most heat from congressmen that support the companies providing the most abuse.