Facebook: An Annus Horribilis
Editor’s Note: This post first appeared in the Epilogues tab as the conclusion to The Curse of the Walled Garden – Facebook’s Inevitable Implosion Begins. To understand the complete context of the events mentioned here you might want to review that post in its entirety.
So, in the interests of wrapping things up, if you believe there’s no such thing as bad PR, it’s been a really great year for Facebook.
For all intents and purposes, Facebook’s fatuous altruistic mission of creating and enriching a globally connected community has been exposed by a litany of embarrassing fiascos, the likes seldom seen in techdom, to be little more than a greedy, conceited farce. Facebook’s total disregard for its users, the “dumb fucks” that earn them billions, proved completely commensurate with the managerial contempt and technical incompetence with which they treated their data; the kind of wanton arrogance that easily earned success often confers on the titans of technology. And how fitting that none other than the New York Times recently reported that Facebook retained some dark-side spin masters to insinuate that their woes were part of a broader, insidious, yet fictitious, anti-Semitic smear, a tactic right out of the Russian Handbook of Internet Trolling as issued by the Facebook Ministry of Misinformation and the veritable apex of unabashed and unembarrassed hypocrisy.
And yet, nothing untoward, no righteous retribution, has befallen Facebook.
The FTC hasn’t brought forward a fine even though there is abundant evidence that Facebook’s 2011 consent decree was violated. Congressional testimony hasn’t produced anything apart from a bunch of privacy induced hand wringing. Facebook management has declined to be interviewed by numerous government entities on four different continents with complete impunity. Sure, some users have elected to remove their data but materially fewer than the accounts that Facebook deactivated on its own after discovering they were just a bunch of bots and spammers. The stock price has gotten a bit of a hair cut. And the GDPR has proven to be little more than an annoying inconvenience causing the export of non-indigenous data and a superficial re-write of euro-centric user agreements rendering them even more opaque than the last iteration.
In many respects, it seems this lack of consequence has more to do with the perceived lack of injury to the party that is the primary component of Facebook’s business model, the users, than it has to do with the violation of more abstract notions concerning privacy in general. After all, exactly how are FTC or GDPR fines apportioned to the users whose privacy and data have been compromised? Are the damages awarded to the parties whose information was breached or are they awarded to the bureaucracies of sovereign entities whose policies have been violated? Under Article 82 of the GDPR individuals have the legal right to claim damages and seek compensation but exactly how this might occur is not clearly established and could prove prohibitively expensive for individual users. Further, there is little if any incentive to assign culpability to the parties who benefit most from the costless “externalities” that user data provides to social media sites, the advertisers. This asymmetric relationship of “stakeholders” to culpability and restitution seem to have allowed Facebook, Google, Amazon and others to fall into a largely consequence free crack, enormous profits for very little risk and even less responsibility.
What if the proposed fines for violations of privacy were levied on all of the parties who actually stand to benefit from this business model? Not just the social media, retailers and search sites who profit as the careless custodians of personal information but the brokers, middlemen and advertisers who seek to use that information to profitably engage those same consumers? It might be argued that any fine levied against a social media site would eventually be borne as a pass through to its customers. However, in the economic scheme of things, most of these fines would be little more than a rounding error for the likes of Google and Facebook and the same for many of the advertisers who employ them. Reputational damage, however, might be given greater consideration. What if under a globally harmonized privacy policy not only the media sites but all the parties in their paid-for-value-chain are equally fined and that those fines would, by law, have to be publically disclosed on those participants web sites as well as any public financial disclosures. Some UK MP’s recently raised this issue by implying that Facebook and Google advertisers have the moral obligation to boycott these platforms as a means to incentivize more appropriate behavior. Citing public interest and extraordinary circumstances, Parliament recently suspended any pretense to search and seizure protocols and raided the hotel room of Six4Three founder Ted Kramer to secure Facebook e-mails relating to changes in its privacy policies. Given favorable political conditions, moral obligations often find their way to legal ones.
An inkling of this thinking recently roiled the adtech world when French data protection agency CNIL issued a ruling against demand side platform Vectuary. CNIL’s judgment was that individual consent provided to a publisher, distributor or broker does not, through pre-existing contractual agreements, extend to any of its trading partners and that consent for the use of personal information by those parties would have to be obtained discretely and explicitly. The implication here is that the subsequent exploitation of personal information by trading partners without explicit consent is tantamount to a violation of GDPR rules protecting personal information. Facebook would be quick to point out that it doesn’t share personal information but employs an algorithm that “hashes it” in a way that allows demographic and profile information to be “discovered” for use in individually targeted advertising, a technical distinction that really doesn’t amount to a discernable difference. Like it or not, it appears that the culpability, and consequential liability, of violating personal information is about to extend throughout the entire adtech value chain.
Thus far, most governments have been reluctant to pursue these kinds of remedies, keeping faith that responsible business entities are best served by market conditions and conscientious internal governance. But here again, thanks to ownership issues, Facebook stands apart, and the board of directors, valley made titans who deeply understand the license that success confers on entrepreneurs, are hesitant to interfere in the on-going train wreck that Facebook has become. To the point where one has to wonder, exactly what constituency does Facebook’s board serve? Shareholders have lost 40% of their value, from $220/share to $131/share since the beginning of the year and by the looks of things, platform abandonment, slower user growth, advertising alternatives, that trend will continue well into 2019. And the governance at Facebook, if there is any, is entirely vested in its primary owner who just happens to be the Chairman and CEO. This isn’t necessarily a bad thing. Hundreds of private enterprises are owner led. But leading a publically traded entity, whose revenues are predicated on the public trust of personal data, is a challenge of much greater scope and responsibility and thus far the leadership of this organization has proven pathologically incapable of doing the right thing even when it pertains to the least of what really matters.
We started this thread by suggesting that Facebook’s end will not come with a bang but a whimper and this year was but the nascent sounds of such. Violating user trust, dissembling in front of Congress, eschewing transparency and honesty, unapologetically spying on user browser activity; just another Tuesday at Facebook. And, lets face it, all of management’s protestation and attestation that things are really different are wanting in almost every dimension but most especially credulity.
And why might that be?
The biggest thing Facebook has going for it is human nature, a bonfire of vanities so intense that it consumes any initiative for real connection and replaces it with the inauthentic glass gazing of envy and schadenfreude, the preferred crack of society’s status conscious twitterati. Ever wonder why Facebook’s endless incompetence and feigned concern never enrage dedicated Facebook users? Because, at bottom, they just don’t care. Steal my identity, compromise my values, poison my opinions, tempt my inhibitions, ruin my reputation but just let me keep on watching how the other half lives, regardless of which half that might be. The Truman Show on a wristwatch brought to you by the brands your friends most want to buy. Now that’s livin’!
Facebook’s other key advantage is that there really aren’t, at least not at this moment, a bunch of viable alternatives. So you download your data from Facebook. Then what? Jam it into Frenzy and hope that somebody can find it? Stand up an Amber from Latticeworks? Wait for Tim Berners-Lee to get Inrupt out of the garage? Maybe. But you had better have more technical chops than your average soccer mom if you’re gonna make this fly. Facebook has been notorious for acquiring its competition before they become a genuine threat but given the distain with which they have treated regulatory entities, this isn’t likely to continue much longer. So there will be an opening for competition to grow and prosper.
As far as governance goes, unless there is a complete change in leadership and culture, don’t bet on it. This entity is completely entwined with the founder’s ego that is admittedly modeled on the rise, but not the demise, of Julius Caesar. Its published culture of social altruism and technical acumen has nothing to do with its real one; the one so aptly captured in the title of the Times recent article, “Delay, Deny, Deflect”, a slogan that even the board finds hard to publically support or disown. Perhaps a mentor along the lines of a Bill Gates might gently persuade young Julius that a life of philanthropy would be a more noble legacy than the one he currently pursues, but again those odds are long and, given the ownership structure, few potential surrogates would relish the idea that they are only a whim away from being dispatched by a temperamental tyrant.
For those interested in watching the entire saga unfold pay attention to the harmonization of privacy policies between sovereign, globally connected, trading partners. Eventually, the US will move away from its laissez-faire privacy policies and move towards the principles out lined in GDPR. At that point the CNIL ruling on Vectuary will no longer be some obscure outlier but be accepted treatment of privacy issues in the adtech industry; custody and consent of personal information will matter more than the profits of Facebook, Google and Amazon. Along the way alternatives will emerge that will slowly siphon-off the value proposition of dominant, established social media players and usher in their final disposition.
In the end, all the current drama surrounding Facebook’s denouement will become a waste of time and when the moment finally comes, nobody, not even Facebook, will be watching.
Cover image, a fragment of the ‘Cesare Chiaramonti’, courtesy of the Musei Vatican all other images, statistics, illustrations and citations, etc. derived and included under fair use/royalty free provisions.
