Article by Niall Ferguson in Bloomberg
Blind to History, Facebook Is in the Trustbusters’ Crosshairs
I tried to warn Mark Zuckerberg that he risked becoming part Rockefeller, part Hearst. But the rest of us don’t have a good solution for what his platform has become.
I have met Facebook chief executive Mark Zuckerberg only once and it did not go well. It was at a dinner in July 2017, in the aftermath of Donald Trump’s presidential election victory, and controversy was raging about Facebook’s political role. I had the temerity to warn him that he increasingly resembled a cross between John D. Rockefeller and William Randolph Hearst. By that I meant that Facebook was in danger not only of going the way of Standard Oil, the favorite target of the trustbusters of the Progressive Era, but also of becoming as politically toxic as the Hearst newspaper group became in the heyday of yellow journalism.
He did not click “Like.” I wasn’t surprised. He hadn’t taken any of my classes when he was at Harvard, either. Though he recently professed an admiration for Augustus Caesar, the Facebook founder has never struck me as seriously interested in history.
Here’s the history that’s relevant to Facebook. Standard Oil was originally cheered for raising industrial efficiency and lowering the price of kerosene as its share of the U.S. oil market rose to 90%. But muckraking investigative journalism, especially Ida Tarbell’s “History of the Standard Oil Company,” stirred up public outrage.
Antitrust actions were a response to what Supreme Court Justice Louis D. Brandeis termed “the curse of bigness.” Outsized firms, Brandeis argued, were bound to treat employees and business competitors unfairly. This was the basis for the 1911 landmark judgment in Standard Oil Co. of New Jersey v. U.S., which broke Standard Oil up into 34 separate companies.
Hearst’s newspaper group suffered a worse fate. A Harvard dropout like Zuckerberg, Hearst was given the San Francisco Examiner in 1887 as a gift from his wealthy father. Hearst invested in superior printing technology and hired star writers such as Mark Twain to transform the paper into “The Monarch of the Dailies.” In all, he founded or acquired 42 newspapers, including at least one in every major American city. At their peak in the mid-1930s, Hearst’s papers reached 20 million readers a day — one in four Americans.
Hearst papers appealed to the urban working class, mixing populist and progressive politics with nationalism, xenophobia and later isolationism. In the 1890s, Hearst backed the populist Democratic presidential candidate William Jennings Bryan. But his methods in pressing for the Spanish-American War (“the Journal’s War”) were unscrupulous: Yellow journalism was the fake news of those days. Orson Welles’s film “Citizen Kane,” released in 1941, immortalized Hearst’s rise and fall. (Welles’s screenwriter, Herman J. Mankiewicz, had fallen out with Hearst earlier in his career.)
Contrary to popular belief, Mark Twain never said: “History doesn’t repeat itself, but it does rhyme.” What he wrote was: “History never repeats itself, but the Kaleidoscopic combinations of the pictured present often seem to be constructed out of the broken fragments of antique legends.” Zuckerberg today is Rockefeller plus Hearst seen through Twain’s kaleidoscope.
Facebook Inc. is very, very big and it makes a ton of money. According to a Pew Research poll of U.S. adults in February, 69% are Facebook users. Worldwide, Facebook has 2.8 billion users, 60% of all people on Earth with an internet connection. Counting Instagram, WhatsApp and Messenger — all Facebook apps — a staggering 3.14 billion people use Facebook, close to half of humanity.
Small wonder its market capitalization is just short of a trillion dollars. It offers the biggest reach and highest precision in the history of advertising. (As Mark Zuckerberg once had to explain to Senator Orrin Hatch, Facebook’s service is free because “We sell ads.”)
Economies of scale are a key feature of capitalism. These are especially powerful in the case of network-based businesses. Perhaps the real curse of bigness is the negative press that “scaling” inevitably attracts.
For the past five years, raking Facebook’s muck has been a path to prominence for many an ambitious journalist, for the obvious reason that traditional media companies loathe Facebook for eating their lunches. (Once upon a time, all those ad dollars went to them.) The Guardian’s Carole Cadwalladr made her name by revealing that Facebook had released data on tens of millions of users to the political consultancy Cambridge Analytica. Last month, it was the turn of Jeff Horwitz of the Wall Street Journal.
In a series of stories billed as “The Facebook Files,” Horwitz and his colleagues revealed, first, that Facebook had a secret, two-tier system of enforcing its rules, cutting slack to celebrities like the Brazilian soccer star Neymar and Trump, who were just two of 5.8 million users who were granted “XCheck” status. “Unlike the rest of our community,” an internal review stated, “these people can violate our standards without any consequences.” This appears to have been concealed from Facebook’s internal oversight board.
Second, Facebook knew Instagram was worsening "body image issues" among teenagers. According to the company’s research in March 2020, 32% percent of teenage girls “said that when they felt bad about their bodies, Instagram made them feel worse.” Among teens who reported suicidal thoughts, 13% of British users and 6% of American users traced the desire to kill themselves back to Instagram.
Third, Facebook’s decision in 2018 to change its News Feed algorithm to emphasize “meaningful social interactions,” or MSI, had the perverse effect of driving a spike in online outrage and anger. Zuckerberg had claimed it was a sacrifice to shift from helping people find relevant content to helping them interact with friends and family, but the company soon realized that “publishers and political parties were reorienting their posts toward outrage and sensationalism” — and not only in the U.S. However, the company pressed on because — according to Kevin Roose of the New York Times, another raker of Facemuck — MSI was all along “an attempt to reverse a yearslong decline in user engagement.”
The Journal’s fourth installment looked at the company’s role in organized crime and human rights abuses in the developing world, which revealed that a Mexican drug cartel was using Facebook to recruit, train and pay hit men; that human traffickers in the Middle East used it to lure women into abusive employment situations; and that armed groups in Ethiopia used it to incite violence against ethnic minorities.
Finally, Facebook turned out to be playing a key part in spreading misinformation about Covid-19 vaccines. More than two-fifths of comments on English-language vaccine-related posts risked discouraging vaccinations. One post that had 53,000 reshares and three million views said vaccines “are all experimental & you are in the experiment.”
For all this, it turns out that the Journal had a single source: Frances Haugen, a Facebook product manager who left the company in May after working on democracy, misinformation and counterespionage issues. Whereas Ida Tarbell was an outsider — her father had been a victim of Standard Oil’s rapacious expansion — Haugen is an insider, whose position gave her access to tens of thousands of pages of internal documents. Not content with passing them to the Journal, she also gave “60 Minutes” an interview (Sunday), testified before a Senate Commerce subcommittee (Tuesday), and fired off a succession of letters to the Securities and Exchange Commission’s whistleblower office.
In her own words, Haugen is saying nothing new. As she told Scott Pelley of “60 Minutes”:
Facebook makes more money when you consume more content. People enjoy engaging with things that elicit an emotional reaction. And the more anger that they get exposed to, the more they interact and the more they consume … Mark has never set out to make a hateful platform. But he has allowed choices to be made where the side-effects of those choices are that hateful, polarizing content gets more distribution and more reach.
If you read Antonio Garcia Martinez’s seminal “Chaos Monkeys,” you’ve known this for five years.
But the letters to the SEC go further, because they explicitly accuse Zuckerberg of “misrepresenting” Facebook’s research on the platform’s impact on teenagers in his sworn testimony before Congress; misrepresenting “core metrics to investors and advertisers”; “materially misstating” the extent to which it “proactively removes … hate speech”; and — though this isn’t really a matter for the SEC — overstating its efforts “to combat misinformation and violent extremism relating to the 2020 election” and the Jan. 6 Capitol insurrection.
Money quote: “Facebook knew its algorithms and platforms promoted this type of harmful content, and it failed to deploy internally recommended or lasting countermeasures.” These are serious charges, and some of them must be giving Facebook’s lawyers sleepless nights.
Well, I never. On Monday, at 11:39 a.m. EDT, just as this great tsunami of muck was breaking over Hacker Way — what a coincidence! — Facebook suddenly crashed and stayed down for six hours. And not just Facebook. Instagram, Messenger and WhatsApp services were also down, as was the virtual reality service Oculus.
“It was as if someone had ‘pulled the cables’ from their data centers all at once and disconnected them from the internet,” according to the website security company Cloudflare. The disruption also hit the company’s internal tools and systems, including Workplace, hampering recovery efforts.
Facebook blamed a “faulty configuration change” that had interrupted traffic flowing between its data centers and caused a “cascading effect.” (For incomprehensible details see here and here.) According to one respected internet security analyst, “someone at Facebook [had] caused an update to be made to the company’s Border Gateway Protocol (BGP) records,” the mechanism by which internet service providers share information about routing traffic. Evidently this update went a wee bit wrong.
There are two possible interpretations. Either this illustrates the extreme folly of centralizing a large part of the internet in the hands of a single company that has inadequate operating procedures, or it illustrates the extreme folly of centralizing a large part of the internet in the hands of a single company that tells fibs.
Consider the facts. On Sunday, Nick Clegg, Facebook’s vice president for policy and global affairs, appeared on CNN to defend the company, saying the platform reflected “the good, the bad and ugly of humanity” and that it was trying to “mitigate the bad, reduce it and amplify the good.” To call his defense feeble would be an understatement. Clegg was an ineffectual politician who almost destroyed Britain’s Liberal Democrats by taking them into coalition with the Conservatives. Was this his attempt to destroy Facebook?
Then, on Tuesday, came a more combative defense from Zuckerberg himself. The massive outage, he said, was “a reminder of how much our work matters to people. The deeper concern … isn’t how many people switch to competitive services or how much money we lose, but what it means for the people who rely on our services to communicate with loved ones, run their businesses, or support their communities.”
Did it not occur to him that this was like a line from Marlon Brando’s Don Corleone? “A reminder of how much our work matters to people”? Shows our importance to “the people who rely on our services to communicate with loved ones”? And you wouldn’t want that to happen to your loved ones again, would you? Remind me: What’s “Move fast and break things” in Italian?
The contrarian position, to which I am often attracted, is to side with Facebook. I have a certain admiration for those who have taken Zuckerberg’s side in the last week, notably Robby Soave, author of “Tech Panic: Why We Shouldn’t Fear Facebook and the Future.” He writes: “We’ve been here before, a thousand times over, with video games, pinball machines, the television, the radio, the telephone, the printing press, and even the written word. Each of these technologies forced society to confront some very real problems, but they also dramatically improved the lives of the average human being.”
The problem is that not one of the innovations on this list achieved the kind of central warehousing and mining of personal data that Facebook has. And not one of them sought to monetize data by selling ads targeted on the basis of that data. And, consequently, not one of them had Facebook’s incentive to maximize user engagement, regardless of the adverse social consequences.
In his brilliant and influential book, “The Revolt of the Public,” which I missed when it was first published by Amazon in 2014, Martin Gurri argued that Facebook was a key vehicle for populist uprisings against the old elites of the world, from the Arab Spring to the Ukrainian “Euromaidan” revolution. We were witnessing, he argued, the “collision of two modes of organizing life: one hierarchical, industrial, and top-down, the other networked, egalitarian, bottom-up.”
The best historical analogy was with the impact of the printing press on Europe after the 15th century. Unbeknown to him, I was making the same argument at that time, too. and it became the basis of “The Square and the Tower.”
As Antonio Garcia Martinez noted on Substack last week:
The printing press analogy (unlike lots of these big-picture analogies) actually gets better the more you dig into the history of 15th and 16th century Europe. There are so many parallels with that time in history, it’s almost like there’s a one-to-one mapping from Gutenberg to Zuckerberg, the monks in the scriptoria to the New York Times, and the Church to the US Congress … If you’d asked a Bohemian burgher in 1618 — the first year of the Thirty Years’ War, and the bloodiest European conflict until WWII — if the printing press was a good idea, what would he have said? Very likely, he’d have replied with a thundering “no!” Before the Enlightenment, science, liberal democracy, human rights, antibiotics, and all the rest of it, that invention seemed as big a threat to the social order then as Facebook seems now.
Yet Gurri and I both missed a fundamental difference between the printing press and the internet. The former stayed, to a remarkable extent, decentralized; the latter did not. Even the likes of Hearst never had a share of the global public sphere remotely comparable to the one that Zuckerberg has achieved, much less a knowledge of his readers’ every reaction.
Here are some more examples of why Facebook is so different from the printing press, from sources other than Haugen and from this year alone:
According to the Washington Post, Facebook “disproportionately amplified vaccine-hesitant voices over experts,” and then, in a quarterly report about its most-viewed posts in the U.S., sought to conceal that its most popular link had been an article from the Chicago Tribute on the death of a doctor who had been vaccinated.
According to MIT Technology Review, Facebook’s most popular pages for Christian and African American content in the run-up to the 2020 election were run by Eastern European “troll farms.” To quote Facebook’s internal report, troll-farmed “content was reaching 140 million U.S. users per month — 75% of whom had never followed any of the pages. They were seeing the content because Facebook’s content-recommendation system had pushed it into their news feeds. In October 2019, all 15 of the top pages targeting Christian Americans and ten of the top 15 Facebook pages targeting African Americans were being run by troll farms.”
According to Brian Boland, who left Facebook last November after 11 years, “the most senior leadership in the company does not want to invest in understanding the impact of its core products.” Moreover, he told the Times’s Roose, “it doesn’t want to make the data available for others to do the hard work and hold them accountable.” His role had been at CrowdTangle, a Facebook-owned search engine that allowed users to analyze Facebook user engagement. Facebook management rapidly soured on CrowdTangle when its results showed that conservative commentators like Ben Shapiro and Dan Bongino were getting much more engagement on their Facebook pages than mainstream news outlets. (Last week, according to The Verge, CrowdTangle CEO Brandon Silverman announced that he was leaving Facebook.)
According to Cody Buntain, an assistant professor at the New Jersey Institute of Technology interviewed by the New York Times, Facebook “undermined trust researchers may have” in the company by omitting the interactions of about half of Facebook’s U.S. users in the dataset it made available to him and his colleagues.
According to the Wall Street Journal, Mark Weinstein, the founder of the ad-free social network MeWe, has “changed his mind” and is now prepared to tell the Federal Trade Commission — which is leading a 46-state antitrust investigation of Facebook — that the company is a monopoly.
I could go on and on, because (as you may have guessed) I collect this stuff. To my mind, the most shocking of all the recent Facebook stories has been the evidence of its role in amplifying the malign influence of the antivaccine conspiracy theorists — in particular, members of the so-called Disinformation Dozen (such as Robert F. Kennedy Jr.), who have accounted for a staggering proportion of the antivax content shared online. By the time NPR caught up with this story in May, Facebook had removed 16 accounts from Facebook or Instagram and placed restrictions on 22 others. But we have known about Facebook’s antivax problem since before Covid. In May of last year, Neil Johnson and Rhys Leahy published a study in Nature showing that, during the 2019 measles outbreak, the antivax communities on Facebook outnumbered the pro-vaxers three to one. h
That same month, the Wall Street Journal revealed that in January 2017 Facebook had hired Carlos Gomez Uribe, the former head of Netflix’s recommendation system, to lead its news feed integrity team. One proposal Uribe’s group came up with, “Sparing Sharing,” was designed to reduce the influence of hyperactive Facebook users — super spreaders of viral content, analogous to the super spreaders who disproportionately passed on the Covid virus. However, Facebook policy chief Joel Kaplan opposed the idea, which was internally nicknamed “Eat Your Veggies.” Zuckerberg’s decision was, according to the Journal, “Do it, but cut the weighting by 80%” — and don’t bring me any more ideas like that. Uribe left Facebook within a year.
See what happens when a virus gets an assist from viral content arguing against vaccines against the virus? How many Americans have died prematurely this year because they believed the magical thinking promoted on one of Facebook’s apps? As nearly all the Covid deaths that have occurred since vaccines became generally available were of unvaccinated people, the number could be in the tens of thousands.
So it’s not quite enough to say, as Ben Thompson tweeted last week, that “the menace comes from frictionlessly connecting all of humanity,” or that Facebook simply “refracts our entire view of the world and provides a warped look at ourselves” (Garcia Martinez again). Johannes Gutenberg didn’t connect all the printing presses, harvest readers’ likes and dislikes, and then monetize them in a way that incentivized him to spread the theory that bubonic plague was airborne or that Europe was full of witches.
Yet in one important respect I agree with Facebook’s defenders. The company’s critics have got no credible reform proposal. Clearly, the FTC aspires to break up Facebook, and I can well imagine that, many months from now, Zuckerberg will be ordered to restore the independence of Instagram and WhatsApp (and that he’ll say it’s technically impossible). For the other big tech companies, Facebook would perform a valuable service as the sacrificial victim of the “antitrust hipsters” led by FTC chairwoman Lina Khan, just as Standard Oil took the hit for an entire class of robber barons in 1911.
But there is a reason that Haugen did not send her documents to the FTC. In a video posted last Sunday, she said she did not believe breaking up Facebook would solve the problems her leaked documents revealed. This is also the view of Mark Weinstein. And, as I have argued elsewhere, I agree.
So what’s the alternative? Those, like Haugen, who argue that Facebook needs to be more tightly regulated appear not to have noticed that investing ever-more power in federal regulators has rarely had the intended outcome. Turning Facebook into a utility, with federally mandated powers to censor hate speech, sounds like a disaster. You either end up with Orwell’s Ministry of Truth or with the social media equivalent of Amtrak or, best case, regulatory capture and the status quo (see banking, Big Pharma).
The third option, which I’ve proposed in this column before, is to repeal or significantly edit section 230 of the 1934 Communications Act, as amended by the 1996 Telecommunications Act, which is the Catch-22 of internet regulation, allowing Facebook to be a mere platform when it’s caught hosting harmful content and a publisher when it’s limiting free speech. The catch is that, unless you simultaneously created some kind of First Amendment for (non-curated) cyberspace, you would simply increase censorship if you scrapped 230, because the tech companies would suddenly face the same liabilities for their content as traditional media companies.
In short: We know there’s a problem with Facebook, but we really haven’t figured out how to fix it. The twist in the tale is that maybe the market takes care of this problem for us. After all, as former Alphabet Inc. chairman Eric Schmidt used to say when defending Google’s near-monopoly on search, “competition is just a click away.”
The irony of Haugen’s charge-sheet against Facebook is that one half alleges excessive power, while the other half alleges concealed decline. As Roose noted in September, “Facebook is in trouble.” It is in fact suffering the “kind of slow, steady decline that anyone who has ever seen a dying company up close can recognize.” Facebook use among teenagers in the U.S. has been declining for years. Now Instagram is losing market share to faster-growing rivals. “Facebook is for old people,” as one 11-year-old put it.
The problem is that the company eating Facebook is none other than ByteDance Ltd.’s TikTok, which last year surpassed Facebook Messenger to become the most downloaded social media app in the U.S., according to data from App Annie. TikTok also overtook Facebook as the most downloaded social app worldwide. I explained last year why the triumph of a data-harvesting Chinese app is a bad thing.
The other piece of advice I gave Mark Zuckerberg in 2017 was to give up portraying Facebook as a “global community” and instead to make a virtue out of being an American company. When they come after you, I suggested, you want to be able to tell them to be careful, as you’re Big Tech USA, and you’ve got your work cut out competing with Big Tech PRC. To date, however, Zuckerberg has made this argument only half-heartedly. “Break Up FB?” read one of his talking points when he was testifying in Congress in April 2018. “U.S. tech companies’ key asset for America; breakup strengthens
“We still need to make it so that American companies can innovate,” he told senators at that time, “or else we’re going to fall behind Chinese competitors.” And: “Chinese Internet companies [are] … a real strategic and competitive threat that, in American technology policy we … should be thinking about.” In July last year, he described Facebook as “a proudly American company” that believes in “values — democracy, competition, inclusion and free expression.”
Yet somehow, “What’s good for Facebook is good for America” doesn’t have the same ring as it did for General Motors. Right now, U.S. legislators and a rising proportion of American voters think, with some justification, that “What’s bad for Facebook is good for America.” If the ultimate beneficiary of that disenchantment with the world’s biggest social network turns out to be China, the blame will lie squarely with Mark Zuckerberg. And he can’t say I didn’t warn him.
