Regulators need the power to protect us from Facebook’s ‘Californication’
When the Welsh cultural critic Raymond Williams went to Stanford University as Visiting Professor of Political Science in 1972, Silicon Valley had barely gained its nickname. Williams referred to the San Francisco Bay Area when he wrote about it. The final injunction he was given is worth stating:
“This is the moment to recall what an intelligent Californian said as we were leaving….: ‘Don’t let them californicate the world’.”
Today, Silicon Valley is both a place, geographically set in the area around San Francisco Bay, (although technically, California’s hi-tech environment spills out beyond Silicon Valley itself) and a shorthand description for a set of values, ideologies, practices and narratives.
Facebook has benefitted at all stages from a particular section of Silicon Valley venture capital, colloquially known as the Paypal Mafia, after their online payment system, one of the first stock market successes of the period after the dotcom crash of 2000.
Professor Shoshana Zuboff sees Facebook as a pivotal player in the development of ‘a deeply intentional and highly consequential new logic of accumulation’ that she calls ‘surveillance capitalism’. She says that each era of capitalism has developed ‘a dominant logic of accumulation’, based on data, extraction and analysis.
Data become ‘a new asset class’ and these ‘surveillance assets’ attract investment which can be called ‘surveillance capital’. In this new system, power, as so often, is asymmetrically held. The data monopolies like Google and Facebook know more about the data subjects than citizens do about themselves.
Facebook, which Zuckerberg said in 2013 was ‘producing this living database of all of this content and the stories of people’s lives’, is one of the largest operators within surveillance capitalism.
In April 2018, questioned by a United States Senator about how Facebook made money, a bemused Zuckerberg said ‘Senator, we run ads’. Advertising has been central to Facebook’s revenues from the beginning. The potential of mining the data of Facebook for micro-targeted advertising at specific groups, which became central to the debates on the Trump election of 2016, began quite early on with the targeting of cheerleaders for a Gwen Stefani song in 2005.
At the end of 2018, 2.7 billion people were using Instagram, WhatsApp, Facebook or Facebook Messenger every month, and more than 2 billion using them every day. Its mobile advertising revenue has increased from $470 million in 2012, to $50 billion in 2018. Along with Google, Facebook dominates global digital advertising revenue, and media companies across the world are losing out.
Facebook’s advertising model has developed over time but only became turbo-charged in the period around its stock market launch in 2012. Facebook moved rapidly to work out how to link data from different sources, including from data brokers, in a way that was valuable to advertisers and also political campaigns.
Facebook advertising is based on the programmatic advertising model which has evolved over the last twenty years. Mark Zuckerberg told the Senate in 2018:
“we basically calculate on – on our side which ads are going to be relevant for people, and we have an incentive to show people ads that are going to be relevant because we only get paid when it delivers a business result, and – and that’s how the system works….we get paid when the action of the advertiser wants to – to happen, happens.”
The majority of online advertising is now sold through automated real-time ‘programmatic advertising’ or ‘behavioural targeting’.
Facebook allows advertisers to micro-target an audience based on 98 or so characteristics including demographics, location, interests and behaviours, including purchasing and device usage. In Congress Zuckerberg was vague about this. Facebook may use up to 52,000 different attributes to categorise Facebook users, provide some 29,000 categories on Facebook users to ad buyers, and hold 1,500 data points on average on non-Facebook users.
Facebook offers a free service in exchange for people’s data and their attention, which enables Facebook to charge advertisers for user engagement. Facebook has said it never sells users’ data, but the release of internal Facebook e-mails led the House of Commons Digital, Culture, Media and Sport Select Committee to say earlier this year:
“We consider that data transfer for value is Facebook’s business model and that Mark Zuckerberg’s statement that ‘we’ve never sold anyone’s data’ is simply untrue.”
Further emails released show that Facebook conceived a ‘dollars for data’ programme; and that Zuckerberg thought of Facebook as an information ‘bank’. These issues have been contested by Facebook.
Following the Cambridge Analytica exposure in 2018 by award-winning Welsh journalist Carole Cadwalladr, legislators, regulators and governments around the world have begun to dig into Facebook’s operating model in more detail. The UK Information Commissioner has said her inquiry is the biggest of its kind anywhere in the world.
The Federal Trade Commission recently fined Facebook $5 billion and along with the US Department of Justice now has an anti-trust investigation open into Facebook. The Irish Data Protection Commissioner, as the EU-wide data regulator for Facebook, said at the end of 2018 that it had ten cases outstanding against Facebook and its subsidiaries.
The German competition authority has essentially ruled that Facebook’s data-targeting advertising model is illegal. The Australian Competition Commission is investigating Facebook and Google’s dominance of the digital advertising market, and a similar competition inquiry has just commenced in the UK.
Of course, competition issues are not the only regulatory challenges facing Facebook at the present time. Facebook is under regulatory and political scrutiny around the world. A significant range of regulatory proposals has been advanced.
- Regulation of the digital advertising systems that support Facebook and others, including programmatic advertising
- Changes to electoral laws to reflect the realities of digital advertising
- Further requirements to govern take-down of hate speech, terrorist-supporting material and child pornography, and other material in some cases including disinformation or fake news, supported by fines
- Action to make Facebook pay a greater share of taxation.
Facebook now wants to move into cryptocurrency, based on an encrypted messaging platform, potentially threatening banking, stock market and currency exchange laws internationally.
Regulators need the powers to act to protect international financial systems from Facebook’s imperial adventurism, otherwise we could be completely ‘californicated’.
Facebook, the Media and Democracy by Leighton Andrews, on which this article is based, is published by Routledge. More details can be found here.