Just two months ago, comparing Facebook to cigarettes was a confronting and jarring suggestion when it was made by technology billionaire Marc Benioff.
The founder of cloud computing company Salesforce was arguing for more regulation of social media companies and was blunt when asked how he would do this.
“You’d do it exactly the same way you regulated the cigarette industry,” he said on the sidelines of the World Economic Forum in Davos.
Like cigarettes, he said, Facebook was “addictive”, “not good for you” and there were “all kinds of forces trying to get you to do certain things.”
“There’s a lot of parallels,” he said.
As a suggestion it met with awkward gasps in January, but now it appears oddly prophetic, even if there was a little tech rivalry involved in Benioff’s assessment of Facebook.
This rapid change in public opinion is mainly due to revelations this week that Cambridge Analytica, a political consulting firm with ties to Donald Trump’s election campaign, had obtained and exploited the personal data of 50 million Facebook users, one of the largest data leaks in history.
Previous scandals
The social media company has weathered privacy scandals before, but this latest one hit particularly hard, wiping as much as $US50 billion ($65 billion) off its market value, sending founder Mark Zuckerberg into hiding for four days and sparking a global debate about data privacy.
It has also kicked off the #DeleteFacebook campaign as people expressed horror at the exploitation of their digital lives. Among the people to exit the platform this week was American actress and singer Cher, who took offence the data collected was used in an effort to aid the election of Donald Trump.
Adrian Turner, chief executive of Data61, the CSIRO’s data science outfit, says this backlash against Facebook could potentially take on the momentum of the #MeToo campaign, which sprung up in response to endemic sexual harassment.
“We never had the conversation about the consequences of an internet with an advertising-driven business model that relied on profiling,” Turner says.
“We never stopped to have that conversation. When the internet started, the hippies in California wanted it to be free. That saw the rise of advertising-sponsored content and the unintended consequence of that was the development of sophisticated capability in the socio-economic profiling of people.”
Turner says that meant companies could build a profile around people’s individual biases, gaining important information about what they responded to and using that to keep them online for longer or to buy certain products or, in the case of an election campaign, vote for the desired candidate.
“The thing I grapple with is that we knew this profiling was happening so why didn’t we care,” he says.
One reason people overlooked data collection was the sheer convenience and connectivity of Facebook.
Quickly became indispensable
Families and friends living on opposite sides of the world could keep in touch. Entrepreneurs could launch their businesses by cheaply promoting goods and services via the platform. Busy executives could corral colleagues for the office Christmas party and protest organisers could rally the troops.
Launched in 2004 by Zuckerberg and his Harvard college buddies, Facebook quickly became indispensable to its users. In just four years it boasted 100 million registered users. By 2010 it had passed the half-billion mark.
Today there are more than 2 billion users, or more than a quarter of the world’s population.
In Australia the platform boasts 16 million users, or 60 per cent of the population, with the bulk of these in the key advertising demographic between 25 and 39.
“They should have a greater sense of responsibility and accountability which corresponds to the power they have,” says Turner.
“If Facebook skates through this it will be instructive about how powerful these monopolies are and it will increase the calls for greater regulation. I hope what doesn’t happen is that we completely back off thinking about how technology can contribute to humanity.”
The regulation is already starting to happen.
In Europe, a new set of data privacy rules will take effect on May 25, restricting the type of personal data technology companies can collect and share. The new regulations include the “right-to-be-forgotten” law so people can ask companies to remove online information about them as well as parental consent rules.
In Australia, the landscape is also moving quickly towards greater regulation, even if that’s an unpalatable word for the federal government.
Control own data
The responsible minister Angus Taylor, whose portfolio covers cyber security and law enforcement, said the government expects to bring its Consumer Data Rights legislation to Parliament later this year.
“The basic principle is that people control their own data and it is only used in a way they consent to,” he told AFR Weekend.
“I don’t think it’s radical legislation; it’s simply in line with community expectations.”
The banking sector is the federal government’s first target under this new legislation and it provides a model for how Facebook and other social media platforms might find themselves regulated.
In an effort to engender competition and foster innovation, Treasurer Scott Morrison is looking to break the stranglehold of Australia’s “big four”, through what he is calling “open banking”.
This should eventually allow consumers to safely and easily share their transaction history and loan records with another institution or fintech player, which could use such data to offer better terms to the customer.
“Granting third-party access to a customer’s data will allow rival providers to offer competitive deals,” Morrison said in a statement on February 7.
The basic principle behind this proposed reform is the government decreeing data is owned by the consumer, rather than the bank.
It took this same approach to mobile phone numbers in 2001, when legislation decreed these didn’t belong to the operator but rather the consumer, thereby allowing people to change providers while still keeping their old number.
Heart of platform economics
This same principle could be applied to Facebook and other social media platforms.
Using a similar “open” model, the government’s new legislation could mean any data captured by a platform is ultimately owned by the individual rather than the company.
A consumer could then decide who, if anyone, they wished to share their user history with.
Such a move, which will be fiercely resisted by the big tech firms, would not only stop the likes of Cambridge Analytica accessing user data, but go some way to breaking Facebook’s overall dominance and might also impact on how Google deploys data.
This goes to the heart of platform economics and Facebook itself.
One of the biggest drawcards is the so-called “network effect”. If friends and family use a particular social media platform then people can feel compelled to join to stay in touch.
Platforms like Facebook also take the information they glean from people and use that data to target content, and more importantly, advertising in their direction.
This keeps a user coming back but also makes it harder for other platforms to offer the same tailored content and advertising as they don’t have access to the data and user history.
Powerful position
In addition that data allows the big platforms to vertically integrate – remember when Amazon just sold books – and use their superior analysts to wipe out the competition.
“These platforms are not about capitalism, they are about feudalism,” says Turner.
“They’re landlords and that’s an extremely powerful position because they’re setting the rules for engagement. They should really be public private partnerships.”
Depending on how far legislation in Australia and other parts of the world goes, this could see the likes of Facebook resembling a regulated utility, like an electricity provider.
Breaking the monopoly these platforms have over data is the first step and should also help curtail their competitive advantage in using such data to move into other industries and becoming even more dominant.
And while the focus is on Facebook today, this attention could quickly switch to the dominance of other platforms like Amazon and China’s Alibaba, as they move further down the value chain and morph from being retailers to looking more and more like farmers or food processors.
“Amazon and Alibaba talk openly about building global trading networks,” says Turner from Data61.
The issue is how to prevent all the value in a sector like agriculture accruing to the platform owner, like it has in the media space to Google and Facebook.
Basic responsibility
Tighter regulation is the obvious answer, an outcome Zuckerberg was peddling hard to avoid during media appearances this week.
He said the company had “made mistakes” and would double the number of staff working on security and was building technology to stamp out propaganda.
“This was a major breach of trust, and I’m really sorry that this happened,” he said.
“We have a basic responsibility to protect people’s data.”
That is unlikely to be enough for Facebook users or law makers, who are moving quickly to curtail the power of the large platforms, which account for seven of world’s 10 most valuable companies.
“I could be wrong but I think this is big enough and enough of the market feels like technology companies are arrogant and they want to hold them to account,” says Turner.
That’s the type of public sentiment which eventually saw cigarette companies regulated in the 1980s
source:-afr.
