Facebook stands to win from a hasty government crackdown

Facebook stands to win from a hasty government crackdown
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Last week, Capitol Hill was abuzz as Facebook founder, CEO and Chairman Mark ZuckerbergMark Elliot ZuckerbergViolence in Myanmar poses major test for Facebook US, EU must work together in wake of Facebook data breach Hillicon Valley: Lawmakers press Apple, Google on data collection | 21M affected by Timehop breach | Zuckerberg passes Buffett on rich list | Latest on Twitter's bot crackdown MORE testified in two days of marathon congressional hearings. Many people hope that the hearings will ignite interest in heavily regulating tech companies. They’ll probably be disappointed.

Paradoxically, Congress’ laundry list of frustrations with Zuckerberg and Facebook suggests that bipartisan legislation will be difficult to pass, and that’s a good thing.

Hasty regulation is too often a cure worse than the disease, and useful regulation seems especially unlikely when there’s no agreement on what exactly the “Facebook Problem” is.

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As the hearings revealed, the problem is actually several distinct grievances that online policy advocates and members of Congress have with America’s largest tech companies: Russian interference in American social media, the spread of fake news, the political bias of tech company employees, abuses of market power and consumer data leaks.

 

The shared belief on both sides of the aisle that Alphabet, Amazon, Apple, Facebook and Microsoft are too big and powerful shouldn’t be confused with a consensus on the proper legislative response or type of regulatory intervention needed — the complaints are many and the offered remedies are often at tension or in contradiction.

Many Democrats, for instance, believe that social media doesn’t perform enough of a gatekeeping role and that the resulting free-for-all may have helped Donald TrumpDonald John TrumpReporters defend CNN's Acosta after White House says he 'disrespected' Trump with question Security costs of Trump visit to Scotland sparks outrage among Scottish citizens Ex-CIA officer: Prosecution of Russians indicted for DNC hack 'ain't ever going to happen' MORE win a close election in 2016.

Many Republicans, in contrast, believe social media companies perform too much of a gatekeeper role: Fake news proliferates while tech companies demonetize, demote or deactivate controversial-yet-sincere conservative personalities like Diamond and Silk. One party’s crackdown on fake news and hate speech is the other’s political censorship.

The Cambridge Analytica incident — in which an academic violated Facebook’s policies by selling millions of users’ information to a political consultancy hired by the Trump campaign two years later — was the trigger for this hearing.

Accordingly, reforming American privacy regulations received the most attention in the hearings. Some have held up the European Union’s complicated General Data Protection Regulations (GDPR) as a model for Congress to follow. 

However, GDPR-like privacy regulations would surely sacrifice some of the competition and innovation that has fueled America’s leadership in technology. Compliance with strict privacy rules would be damaging for fledgling tech startups and may entrench Facebook and Google’s strong market position in digital advertising.

Moreover, privacy regulations could conflict with the goals of antitrust activists, who have long argued that consumer data should be more “portable” so that smaller tech companies can gain a head start. Stiffer penalties for data leaks and breaches will cause firms to lock down their platforms more tightly.

Already, in a flip from previous company policies, Facebook has taken steps to make more of its valuable consumer data completely off-limits to third parties and to ramp up restrictions on how other apps use Facebook user data.

These changes mean less voluntary data porting between Facebook and other businesses and fewer opportunities for companies like Yelp, Spotify and new entrants to collaborate with and improve on the major social platforms. 

Finally, while Republicans wisely supported the repeal of invasive “net neutrality” internet regulations that deemed internet service providers public utilities, they’re now sending mixed signals by considering public utility regulation for social media.

Their desire to curb Silicon Valley’s political bias sometimes seems stronger than their commitment to light-touch regulatory orthodoxy. 

Bipartisan outrage paired with a false urgency to punish Silicon Valley is a recipe for government overreach and bad policy. Facebook’s openness to some regulation should be viewed skeptically.

Its stock rose over 6 percent during Zuckerberg’s testimony, so traders either believe that no punitive regulation will pass or that Facebook and other large companies would benefit if it did.

America’s pro-experimentation attitude toward technology and telecommunications is one of the great success stories of the 21st century. It’d be a mistake to conflate our various frustrations with technology companies, both real and imagined, as a consensus that we need to abandon that attitude.

Brent Skorup is a senior research fellow and Michael Kotrous is a program associate with the Mercatus Center at George Mason University’s Technology Policy Program.