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No Mercy No Malice

Facebook & Tyranny

April 26, 2019

Tim Wu’s important book The Curse of Bigness is a cautionary tale about how ugly things can get when government turns from a countervailing force to private power and becomes a co-conspirator (hint: it involves concentration of power, massive income inequality, demonizing minorities, refusing to condemn domestic violence, the fomenting of bigotry, and trains to death camps). Except for the last part, I’m referring to present-day America.

This week, Facebook hired Jennifer Newstead, a talented lawyer who was the intellectual tonic to wash down the Patriot Act and other legislation that in large part was later deemed unconstitutional — after we tortured people and lost our moral standing in the world. Yay, she now works for Facebook. The company, which is spinning up violence faster than Sheryl Sandberg can say, “We’re proud of our progress,” now has the most adept legal mind in the world when it comes to assuaging lawmakers’ fears concerning threats to our moral compass.

Enhanced interrogation techniques, spying on people based on ethnicity, trafficking in content that inspires violence, maybe even genocide? No problem, Ms. Newstead has Facebook covered.

F*ck. Me.

Facebook also hired John Pinette, the billionaire whisperer who has managed the image of the world’s wealthiest men (Bill Gates, Paul Allen, Bill Ackman), ensuring we believe they are part of the solution and not the cause of the problem. John is an exceptional talent and friend. I’m confident he’ll do a great job, and we’ll all be worse off for it. (There goes my Christmas card.)

FTC: Co-Conspirator

But I digress. Back to Professor Wu. The FTC is Facebook’s latest co-conspirator. How? What would be ideal for Facebook right now? What could potentially head off regulation at the pass and give people the impression that Facebook had paid its dues, taken its medicine, and let it get back to the good work of spinning up more violence? I know, let’s set aside an amount of money in anticipation of a government fine that seemed gangster. Maybe billions.

After Facebook’s earnings call this week, headlines proclaimed, “Facebook Sets Aside $3 Billion to Cover Expected FTC Fine.” However, the more accurate headline would have read, “Facebook and FTC Collude to Create Illusion of Enforcement.”

This “record” fine amounts to 6% of cash on hand, or 2 weeks of revenue. Two in five Americans can’t cover a $400 emergency expense. But for a US household that’s making a shit ton, would a fine amounting to 2 weeks of household income change their behavior or approach to making money?

The “I’m not angry, just disappointed” FTC fine only emboldens Facebook and other firms, as $3 billion may seem like real cabbage to the FTC, but the set-aside is only 7% of the $40 billion increase in market cap the firm registered after hours due to a beat on earnings, and confirmation that the FTC action would culminate in almost nothing (see above: 2 weeks of revenue). Put another way, the FTC fine may have been one of the most shareholder accretive acts in Facebook history.

Lessons (Not) Learned

Anything resembling “lessons learned” would involve recognition by the social network it needed to be more transparent. More forthcoming.

Nope.

Facebook disclosed one of their most recent privacy snafus by updating a month-old press release (oops we accidentally mishandled hundreds of millions of Instagram passwords for years). The sleight of hand was attempted under the cover of darkness, the day before the Mueller report was released. In addition, Facebook has announced it’s going to begin bundling its user numbers to make growth, or lack thereof, opaque across properties. It’s disappointing that Facebook continues to operate in the shadows, and unforgivable how stupid they think people are (“dumb f*cks” — Mark Zuckerberg, 2004). Wait, they’re right.

Facebook’s stock will hit new highs this quarter. The government and its “record-setting fine” have now, wittingly or unwittingly, become the latest weapon of distraction. The fine is fabric softener for Facebook’s crimes against humanity and the compromise of elections worldwide.

What Needs to Happen

Just as traffic fines are doubled in construction zones, as irresponsible behavior can have more dire outcomes, shouldn’t the same be true of fines levied against firms that engage in activity that can catalyze violence, threaten democracies, even enable genocide? The FTC needs to add a zero to this number and make it $30 billion. Even that likely won’t produce the only real solution — firing Ms. Sandberg and forcing Mr. Zuckerberg to relinquish the role of CEO.

At the end of the movie Vice, Christian Bale, portraying Vice President Cheney, turns to the camera and says, “You chose me. Well, I did … what you asked.” Haven’t we, vis-à-vis the markets and our regulatory bodies, asked Facebook to “Don’t go changing”?

Prediction: By the end of 2019, the firm’s stock hits $250/share, and a Facebook executive is arrested and detained. The arrest will take place on foreign soil, where governments still believe there’s a need for a countervailing force to private power. That used to be us.

Life is so rich,

9 comments

  1. Michael says:

    Throughout history companies became rich and powerful as a result of people entrusting them with their money. “The Four” became “rich” as a result of people entrusting them with their lives.

  2. cat says:

    So we solve a problem by advocating an unequal punishment based on the wealth of a person or company? How is that American? Not sure what facebook has done as I turned off social media and their censorship a long time ago, and therefore care nothing about any of them. But I do not believe the justice system, which should be blind, should be implementing a progressive penalty system (fines, prison, etc) based on the income of a person, or any other attribute. Do we punish someone for their success? I don’t think so.

    • Mike McAtavey says:

      Proportions count here, not absolute figures. Fines are meant to create a negative sanction, and you can’t use the same dollar figures for a middle market company and a behemoth like FB and expect it to be effective. It’s not anti-American, it’s just common sense.

  3. Mohd Shahnawaz says:

    Love how u write waht you write and about whom. You write

  4. Marian says:

    I like it how the entire attention is diverted to users rights, users data, when the real damage is done by the neuroenhanced visual and cueing techniques to keep people glued to their screens in a neverending instant gratification mode.

  5. Joe says:

    You make a lot of sense most of the time, Prof but are you now putting Bill Gates and Paul Allen in the same basket as your bogey man Zuck? That doesn’t make much sense.

  6. Michael says:

    Nailed it!

  7. Lucas Cobb says:

    I have to say your musings make my day! Keep keeping it real my man.

  8. Frances Adburgham says:

    Well said.