Zuckerberg's Sweet Talk

Forget regulation and help Facebook’s competitors

Facebook Inc. Chief Executive Officer Mark Zuckerberg Takes Out Newspaper Advertisements
Words are cheap and Mr. Zuckerberg knows it. Source: Bloomberg

Startups tend to be wary of politicians. After all, they are the source of regulations and laws that restrict a digital business’ normally uninhibited growth, a.k.a. they are bad for sales. Knowing this normal relationship between startups and politicians, always doused in a bit of skepticism, makes it all the more striking that Mark Zuckerberg, the founder of Facebook, is cozying up to lawmakers and authorities.

As the data scandal involving Facebook and Cambridge Analytica takes center stage, Facebook’s CEO is looking for friends. In his public apology for the scandal, which engulfed his company and sent his company’s shares plummeting, he said he was for stricter guidelines and stronger regulation of his company. But Mr. Zuckerberg is pulling a fast one. He knows best that regulation of the industry won’t harm Facebook, why else would he accept and even volunteer for it? It will, however, harm other smaller companies, limiting much-needed competition in the industry, which is great news for the social media giant.

Yes, more regulation would be annoying for Facebook. But that is it. Boiled down, all more regulation means is more paperwork. Facebook makes billions in profits every year; it can easily afford to dole out the comparatively insignificant funds necessary to wrap up reports.

Data privacy advocates, journalists and advertisers can sound the alarm and politicians can furrow their brows as much as they want. In the end, the fuss poses no threat to Facebook’s core business.

Even Facebook users affected by the scandal are not upset; the number of app downloads are as high as ever. The network is much too important to its users, having become deeply ingrained in the everyday lives of billions of people. Their friends are there, as are photos, birthday announcements, party invitations and the news.

Facebook’s dominance is overwhelming, and there is no real competitor in sight. WhatsApp and Instagram were also gobbled up by Mr. Zuckerberg’s empire, and Twitter and SnapChat are not as easy to use and have a smaller reach. It was perfectly predictable: The #DeleteFacebook campaign is causing a lot of excitement, but it is doomed to fail.

Users are still click-click-clicking away, but their confidence in Facebook is wavering.

In fact, more laws would likely cement Facebook’s status as the king of social media. The company, already a giant, can easily handle whatever regulations are thrown at them. Meanwhile smaller competitors are at risk of staying small, stunted by the regulations. The bigger question is how to reprimand Facebook if it violates rules. As the world is still coming to grasp the Cambridge Analytica scandal, the network is facing its next spat with users. Facebook supposedly collects data about phone calls and messages on Android devices if the Facebook app is downloaded. Though the company rejects the accusations, how can privacy invasion issues like this even be monitored?

The same question also arises in the Honest Ads act proposed by politicians in the US. According to the legislation, social networks would need to disclose how much money they receive from advertising, and from whom. The idea is that the user, who is aware of ad manipulation by companies like Cambridge Analytica, would no longer click. While the initiative is laudable, its efficacy is doubtful. A week after the biggest scandal in Facebook’s history, users are still click-click-clicking away. Their confidence, however, is wavering. Fewer than 50 percent of Americans believe Facebook follows privacy rules, according to a survey. This is much lower than trust in Amazon (66 percent), Google (62 percent) and Microsoft (60 percent).

Yet as long as there is no alternative to Facebook, users won’t be going anywhere, and neither will advertisers. The only solution is for more competition. But antitrust authorities have stood by as Facebook built its empire by buying up competitors. Maybe it is time for the authorities to watch more closely, intervening if necessary.

Viktor Mayer-Schönberger, the father of the “right to be forgotten” movement that became the basis of European data law, argues that technology companies above a certain size should have to share their data with smaller rivals. The idea is a step in the right direction. Data is currency in a digital age and that is the basis of Facebook’s advertising success. Instead of falling prey to Mr. Zuckerberg’s pie-crust promises about greater transparency and data protection, politicians should think twice. It might be more effective to make Facebook share. That is after all what they want their users to do.

To reach the author: weddeling@handelsblatt.com

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