Facebook once more begs to be regulated

Like the data addict it is, social media giant Facebook feels it can’t be trusted to moderate its own habits and thinks state intervention may be the answer.

Reuters reports that Founder and CEO Mark Zuckerberg (pictured) would like Facebook to be regulated in a way that’s somewhere in between how we currently regulate media companies, on once hand, and telcos. He did so in the context of people moaning about ‘bad’ content and specifically political misinformation spread over social media.

Zuck clearly thinks treating Facebook as a traditional media organisation is a step too far as it doesn’t produce its own content. But in observing that you would never punish a phone network for the stuff that passes over it, he seems to think there should be some greater degree of accountability imposed on social media companies for the content they host.

So all he’s really saying is that Facebook’s accountability for the stuff it publishes should be somewhere between 1% and 100%. Very helpful. In essence Zuck is resharing the old platform versus publisher debate and saying social media companies are neither and both – i.e. somewhere in between.

But why should Zuck want Facebook to be regulated at all? Isn’t that just inviting the state to poke its nose into his company’s private affairs? The answer is that social media censorship is an impossible task and that Facebook will never be able to please all of the people all of the time. What Zuck wants to do is find the perfect balance for his company between offloading responsibility for censorship decisions and retaining core control.

You have to wonder, however, whether Zuck has been adequately briefed on the nature of telecoms regulation. Does he know, for example, that all kinds of other things get tinkered with, including what they can charge their customers. Facebook may think a little bit of regulation will solve its content moderation problems, but letting that genie out of the lamp could well create a bunch of new ones.

FTC starts turning the screw on Big Tech

The Federal Trade Commission (FTC) has issued Special Orders to five of the technology industry’s biggest hitters as it takes a more forensic look at acquisition regulation.

Under the Hart-Scott-Rodino Act, certain acquisitions or mergers are required to be greenlit by the regulatory authorities in the US before completion. This is supposed to be a measure to ensure an appropriate marketplace is maintained, though there are certain exceptions to the rule. It appears the FTC is making moves to combat the free-wheeling acquisition activities of Big Tech.

Under the Special Orders, Google, Amazon, Apple, Facebook and Microsoft now have to disclose all acquisitions which took place over the last decade. It appears the FTC believes the current rules on acquisition need to be reconsidered.

“Digital technology companies are a big part of the economy and our daily lives,” said FTC Chairman Joe Simons. “This initiative will enable the Commission to take a closer look at acquisitions in this important sector, and also to evaluate whether the federal agencies are getting adequate notice of transactions that might harm competition. This will help us continue to keep tech markets open and competitive, for the benefit of consumers.”

While authorities have already questioned whether some acquisitions are in the best interest of a sustainable industry, in fairness, Big Tech has done nothing wrong. Where relevant, the authorities have been notified regarding acquisitions, and they have generally been approved. If the FTC and its cousins in other regulatory authorities believe the current status quo is unappealing, they only have themselves to blame.

In general, an acquisition will always have to be reported if the following three criteria are met:

  1. The transaction would have an impact on US commerce
  2. One of the parties has annual sales or total assets of $151.7 million, and the other party has sales or assets of $15.2 million or more
  3. The value of the securities or assets of the other party held by the acquirer after the transaction is $68.2 million or more

All three of these criteria have to be met before the potential acquisition has to be approved by the regulators.

Interestingly enough, the Android acquisition by Google is rumoured to be for roughly $50 million, therefore the third criteria was not met, and the team did not need to gain regulatory approval for the deal. This is perhaps what the FTC is attempting to avoid in the future, as while we suspect there was no-one in the office at the time with enough foresight to understand the implications, the regulator might suggest it would not have approved the deal in hindsight.

One of the issues being faced currently, and this is true around the world not just in the US, is that authorities feel they have lost control of the technology industry. Companies like Google and Facebook arguably wield more influence than politicians and regulatory authorities, a position few will be comfortable with outside of Silicon Valley.

Aside from this investigation, the FTC is also exploring Amazon in an antitrust probe, while Google and Facebook are facing their own scrutiny on the grounds of competition. There have also been calls to break-up the power of the technology companies, while European nations are looking into ways to force these companies to pay fair and reasonable tax. Across the world, authorities are looking for ways to hold Big Tech more accountable and to dilute influence.

Interestingly enough, we don’t actually know what the outcome of the latest FTC foray will be. It will of course have one eye on updating acquisition rules, though as Section 6(b) of the FTC Act allows the regulator to conduct investigations that do not have a specific law enforcement purpose; it’s a blank cheque and the potential outcome could head down numerous routes.

The EU starts hassling US tech companies again

Facebook and Qualcomm look set for another round of scrutiny from the European Commission around their business practices.

According to the WSJ, Facebook is being asked to hand over internal documents to EU antitrust investigators so they can have a deeper look into whether or not it used dirty tricks against its competition. The allegation is that Facebook made use of its users’ data to skew the market in its favour by bribing partners to stay loyal.

That’s the sort of thing Qualcomm has got into trouble with the European Commission about in the past and, according to Reuters, lightning may be about to strike twice. Qualcomm revealed in a regulatory filing accompanying its recent quarterlies that the EU is investigating whether it abused its dominant position in radio frequency front-end chips.

It seems the EU is concerned that Qualcomm is using its near monopoly in 5G modems to strongly encourage customers to buy its RF chips too. Apparently sales of RF chips were a factor in issuing a better than expected forecast. As ever this will all drag out as lawyers and antitrust types get bogged down in the minutiae of it all, but it seems clear that the EU’s appetite for hassling US tech companies is undiminished.

The US election will test social media censorship to breaking point

Electoral losers are increasingly blaming social media for their failure, but this year will demonstrate that censorship is not the answer.

Democracy only works if the losers of elections accept defeat, but sadly few are inclined to do so these days. Now we have five stages of electoral grief that are directly analogous to the original Kübler-Ross model. We still have denial, anger and depression, but instead of bargaining we have litigation and acceptance seems to have been replaced with conspiracy theories in which social media plays a central role.

The central concern is that when the electorate votes for the other team it must be because they were mislead in some way, because no rational, fully informed person could fail to recognise the superiority of my team. In the past some blame could be attached to the mainstream media, something the UK Labour party still persists with. In the US, however, Donald Trump’s victory in 2016 despite having the support of no major media, would appear to render that theory obsolete.

Trump was able to prevail because politicians are no longer dependent on the old media to communicate directly with the electorate, thanks to social media. But this significantly lowered barrier to entry into the public sphere also provides fertile ground for electoral losers searching for mitigation and another bite at the cherry.

A favourite on both sides of the pond is to blame ‘the Russians’. While cold war fervour largely shifted its focus to China, Russia remains a strong source of bogeymen. Now it should be noted that there is plenty of evidence of social media bot farms originating from a number of countries, including Russia, that apparently seek to meddle in elections. What is much harder to prove is whether they had any effect on the outcome of elections whatsoever.

The small matter of evidence is never going to stand in the way of those refusing to concede defeat, however, and it has now become conventional wisdom that social media censorship is vital if we are to ever have untainted elections again. Since the US is in the middle of another of its interminable general election campaigns this year, the heat is being turned up on social media and they are being forced to respond.

Last week Twitter announced it was ‘turning on a tool for key moments of the 2020 US election that enables people to report misleading information about how to participate in an election or other civic event.’ The tweet implies the tool has a broader purpose than that, though, as it also includes intimidation and misrepresenting of political affiliation. Already you can see how a simple censorship objective becomes immediately and massively complicated under the weight of interpretation, semantics and generally chasing its tail.

Then you have Google and its subsidiary YouTube blogging about how much they ‘support’ elections, whatever that’s supposed to mean. Again a lot of this focuses on content that is intended to mislead voters, but since electioneering is biased by definition, surely all of it is intended to mislead to some extent. YouTube also reiterates its aim to promote ‘authoritative’ voices, which is code for establishment media and commentariat.

In contrast, Facebook Founder and CEO Mark Zuckerberg is increasingly pushing back on censorship, having tried and failed to walk that tightrope since the Cambridge Analytica scandal. Perhaps motivated by the prospect of an extra four years of Trump, who has made his feelings known on censorship, Zuckerberg is now turning all free speech absolutist on us. Whether that position will survive even the first engagement of the US electoral process remains highly debatable, however.

Early signs of the immense pressure these platform owners will come under are already appearing, with the Democrats mobilising supposed experts to ‘protect’ the electoral process. “Iowa’s first-in-the-nation caucus will mark the DNC’s greatest challenge so far in efforts to guard its presidential contenders from the same fate that befell Hillary Clinton in 2016 when her campaign was upended by a Russian-backed hacking and disinformation effort,” reports the Washington Post in depressingly partisan fashion.

If that WaPo piece is anything to go by everyone is going to be trying to manipulate not only the US Presidential election, but the Democratic primaries too, where non-establishment candidate Bernie Sanders is currently the front-runner. Presumably YouTube doesn’t intend to punish the country’s mainstream media for misleading the electorate, so it seems it will support democracy by censoring everyone else.

As ever, censoring free societies is a game of whack-a-mole, in which policy-making can never hope to keep up with the desire of its people to say what they want. Even if the social media companies are successful in their stated censorship objectives, which they won’t be, the team that loses will still blame them. So they might as well not bother and trust their users to sort the wheat from the chaff. Afterall, they’ve been doing that with mainstream media for years.

Facebook faces €5mn fine in Italy

The Italian competition authority, Autorita’ Garante della Concorrenza e del Mercato (AGCM) is intending to fine Facebook €5 million for ignoring its previous ruling.

Having already been fined €10 million in December 2018 for violating the country’s consumer code, the AGCM has followed up with another seven figure-fine for ‘non-compliance’. Facebook has seeming not made amends for the violations of yesteryear, by adequately informing the user of data collection, and will face another investigation.

The new investigation, which has been confirmed by the Regional Administrative Court of Lazio, will potentially fine Facebook an additional €5 million.

The issue which is at the crux of this saga for Facebook is ultimately one of transparency. While Facebook does not charge users for its services, the Italian competition regulator does not feel the social media giant is doing enough to make its users aware of how personal data is collected, store and analysed for commercial means.

Although Facebook removed the ‘it’s free and always will be’ tag from the website under orders from the regulator, it is now believed the social media giant failed to ‘adequately and immediately’ inform users on the data collection ambitions. Facebook also failed to publish the amending statement on the platform.

In addition to a €5 million fine, Facebook will have to publish an amending statement on the homepage of its website, the app and the personal page of each registered Italian user, should the proceedings find Facebook guilty.

While it will surprise few Facebook is finding itself in another spot of bother when it comes to transparency and honesty with its users, it is quite surprising the social media simply ignored the demands of the regulator. Although it is far from a good corporate citizen, it seems highly unusual the team simply didn’t pay attention to the Italian regulator in the first place.

Vodafone snubs Libra in favour of M-Pesa

Vodafone has withdrawn from Facebook’s digital currency initiative Libra, as regulators and bureaucrats circle overhead.

While Facebook might have become accustomed to sitting in the regulatory spotlight, it seems other companies are not as accepting of the attention. In an increasing tsunami of regulatory scrutiny, Vodafone has become the latest company to withdraw from the Libra initiative, joining the likes of Paypal and Mastercard.

“Vodafone Group has decided to withdraw from the Libra Association,” a Vodafone spokesperson said.

“We have said from the outset that Vodafone’s desire is to make a genuine contribution to extending financial inclusion. We remain fully committed to that goal and feel that we can make the most contribution by focusing our efforts on M-Pesa. We will continue to monitor the development of the Libra Association and do not rule out the possibility of future co-operation.”

After work on Libra initially started in 2017, Facebook plans to launch the digital currency this year. The plan is to peg the Libra token to the financial performance of commoditised assets in an attempt to avoid the volatility of other digital currencies. The likes of Bitcoin and Ethereum have dented confidence in the currencies to date, as while the idea is sound, the 2018 cryptocurrency crash, where the value of Bitcoin dropped 65%, shows the dangers.

The main issue with digital currencies is that this is a segment which is largely unregulated, leading to the challenge which is being faced by Libra today. The European Commission and European Parliament has said no to the likes of Libra until rules have been written, while other regulatory bodies have expressed similar disapproval.

PayPal, Mastercard, Mercado Pago, eBay, Stripe, Booking Holdings and Visa are some of the names to have withdrawn support, seemingly due to the regulatory pressure. With support dwindling and regulatory expectations an unknown for the moment, it remains to be seen whether Libra will continue on its current launch trajectory.

Although Vodafone has left the door open for the future, it will drive its efforts towards M-Pesa, the highly success digital currency which is setting the tone in Africa.

Founded by Vodafone in 2007, M-Pesa is a mobile phone-based money transfer, financing and microfinancing service. Initially launched for Vodacom and Safaricom in Kenya and Tanzania, the initiative has spread across several markets in Africa, to India, the Middle East and Eastern Europe. There is momentum for the M-Pesa initiative, so it hardly comes as a surprise Vodafone has dropped the controversial Libra.

Many would view M-Pesa as an underexploited asset for the Vodafone Group, though this is likely to change over the coming months. The team plan on expanding the service in the seven African markets it currently operates in, and even plans to launch in Ethiopia, a market where it does not currently manage a mobile network.

M-Pesa can already be used to pay salaries, settle invoices and pay for bus tickets today, but Vodafone is aiming to fill the void of traditional banking services, a major issue across much of the African continent.

The ‘unbanked’ challenge in Africa is not necessarily new news, the World Bank Global Findex suggest 62% of sub-Saharan Africans do not have a bank account, and digital currencies could fill the void. There is of course competition to be wary of, Orange Money or MTN Mobile Money for example, but M-Pesa has credibility in the market few could compete with.

With new infrastructure solutions gaining traction, OpenRAN, and a wave of new smart feature phones being released, the digital world is becoming increasingly accessible. M-Pesa is in an excellent position and Vodafone has a genuine opportunity to be a trailblazer for diversification into financial services alongside Orange. Perhaps it should come as little surprise the telco wants to distance itself from the increasingly under-fire Libra initiative.

Pelosi rips into Facebook for ‘shameful’ behaviour

Democrat Speaker of the US House of Representatives Nancy Pelosi has sent a tsunami of abuse towards Facebook, suggesting the social media giant has zero interest in serving its users.

Speaking during her weekly press briefing, the defacto leader of the Democrat party tore into Facebook’s policies of refusing to factcheck statements made by politicians, facilitating the sponsored misleading of voters by Russian parties during the last election, and cosying up to the current political administration for no other reason than for financial gain.

“I think the Facebook business model is strictly to make money,” said Pelosi. “They don’t care about the impact on children, they don’t care about truth, they don’t care about where this is all coming from, and they have said even if they know it’s not true, they will print it. They have been very abusive of the great opportunity which technology has given them.

“All they want are tax cuts and no anti-trust action against them, and they smooze this administration in that regard.”

Pelosi isn’t necessarily saying anything which numerous people are thinking. Facebook is a profit-making machine and has demonstrated on numerous occasions its executives put money before the privacy rights of customers or the experience of the platform. Pelosi coming out in such an aggressive stance against the social media giant is certainly an interesting twist though.

As a company, Facebook should be a bit nervous about any Democrat momentum heading into the November General Election. Although the Democrat candidate has not been named yet, there are plenty who have been very critical of Big Tech in general and Facebook in particular.

The bookies currently have Joe Biden as the favourite to win the Democrat nomination for the General Election, a man who recently said he would get rid of Section 230, the law that shields Facebook from liability for what their users post. Elizabeth Warren is another who is attracting attention, and she launched her campaign for nomination under the promise she would break-up Big Tech. Bernie Saunders and Pete Buttigieg, two more front-runners, has echoed Warren’s desire to dismantle Silicon Valley.

In years gone, the Democrat party was traditionally the side of the political sphere which would favour Silicon Valley and its disruptive residents. This is far from the truth today, as Big Tech is finding it has few friends sitting on either side of the aisle.

Facebook sets out to create its own OS

Facebook has reportedly hired ex-Microsoft employee Mark Lucovsky to oversee the development of its own operating system to reduce the dependence on Google’s Android.

While many have tried and failed to muscle in on the Android dominance in the OS world, Facebook has largely sat back to benefit from the success of Google. That said, according to The Information, in hiring the man who co-authored the Windows NT operating system Facebook is attempting to break-free of the Android shackles.

Although there is no official confirmation from the social media giant, it does make sense. Facebook is not going to be fighting Android for a share of the mobile OS segment, though it allegedly wants more control of its own fate when it comes to the Portal and Oculus portfolios.

“We really want to make sure the next generation has space for us,” Facebook’s Head of Hardware Andrew Bosworth said during the interview.

“We don’t think we can trust the marketplace or competitors to ensure that’s the case. And so we’re gonna do it ourselves.”

With the Portal smart home devices, VR head Oculus and AR glasses codenamed Orion, Facebook is creeping more and more into the physical world. It might not be the traditional stomping group for Zucks and co. though these are emerging environments where the rules have not been written yet.

What is worth noting is this is not the first time Facebook has attempted to create an OS. In 2013, Facebook launched an OS which ran on some HTC phones, but it should not be under-emphasised how much of a disaster this way. It was a catastrophic failure.

However, the playing field is slightly different now. This is not an OS which is trying to replicate the Android experience on mobile, Facebook is attempting to define its own experience on these devices and dictate its own product development cycle.

Facebook gets a thumbs-up from privacy officials

The Advocate General to the Court of Justice of the European Union (CJEU) has said Facebook is not in violation of privacy rules in transferring data to US servers.

In a rare sign of approval from privacy officials, Facebook has won the backing of Advocate General Saugmandsgaard Øe, who has confirmed Facebook Ireland is acting legally by sending data to servers located in the US. The opinion from Øe is in connection with a lawsuit filed by Austrian privacy advocate Max Schrems.

Removing all the legal jargon, Øe’s opinion is that there are adequate protections in place to ensure the rights of European citizens are maintained in the event data is transferred from Facebook’s Irish servers to be processed in the US. Agreements have been signed between the two parties which contain contractual clauses to enforce the privacy rights of European citizens.

Although this is the opinion of the Advocate General and not binding for the CJEU, it is a very positive (and perhaps surprising) note for a company which so often flirts with privacy controversy.

For Schrems, this is not the most encouraging of signs. The CJEU is not bound to Øe’s opinion, but the courts rarely hold a different view to such high-ranking officials.

The court case in question was initially filed by Schrems, the man largely responsible for the downfall of the Safe Harbour mechanism dictating trans-Atlantic data transfer, in 2015. Schrems argued that in light of privacy violations highlighted by Edward Snowden, the Irish data protection authorities were falling short of their own responsibilities. As it had been proven intelligence agencies were spying on citizens, Schrems argued it was not possible to maintain the privacy rights of European citizens if data is transferred to the US.

With the downfall of Safe Harbour, the mechanism that deems protections were being upheld in the US, big questions were being asked. Schrems suggested that even with the contractual clauses in place protections could not be maintained and there was little justification to transfer data to US servers in the first place.

Øe’s opinion disagrees with these assertions. Firstly, the ‘exporter’ has placed appropriate protections, and secondly, the US Government is entitled to process some data under the banner of national security.

Schrems has been fighting Facebook and other internet platforms for years in an attempt to stop the flow of information across the Atlantic. He and other privacy advocates suggest this information is being used to aide US intelligence agencies in snooping on European citizens. While his actions certainly were successful in bringing down Safe Harbour, he has been less successful in arguing the invalidity of the replacement mechanism, Privacy Shield.

Data protection is, and will continue to be, a significant talking point in the increasingly digital world, though this is a case which will add some confidence in the internet platforms so many people blindly trust. The new digital world needs people like Schrems to hold Big Tech accountable, though it does appear this is a case where the internet giants are on the right side of the line.

Facebook admits to tracking users even after opt-out

Two US Senators have gained the upper-hand over Facebook in a patient game of chess which could see further action from authorities.

Responding to a letter from Democrat Senator Christopher Coons and Republican Senator Josh Hawley, Facebook Deputy Chief Privacy Officer Rob Sherman has confirmed Facebook use geo-location data even if the user has used opted-out through the devices operating system.

The reason behind this disregard for consent; it wouldn’t be able to serve ads to the user if it didn’t have an idea of location.

“When location services is off, Facebook may still understand people’s locations using information people share through their activities on Facebook or through IP addresses and other network connections they use,” Sherman said in the letter to the Senators.

“By necessity, virtually all ads on Facebook are targeted based on location, though most commonly ads are targeted to people within a particular city or some larger region.”

There is a logic to the Facebook response, though that does not give the app the right to ignore the fact the user may have opted-out. Facebook can still serve ads to people based on other aspects of the profile, which might present a challenge for the team.

What Coons and Hawley have done here is play a very strategic political move. Politicians in the US have been attempting to hold Facebook accountable for years, though the social media firm always seems to wriggle out of tight spots. This time, however, the two politicians have forced Facebook to admit it is ignoring opt-outs from the user. Coons and Hawley have handed a half-tied noose to Facebook and asked it to finish the job.

That said, Facebook has seemingly escaped previous scandals without severe or long-term damage (is it that worse off after the Cambridge Analytica scandal?) and may well do so again. It’s PR and disaster management gurus are proving to be some of the most competent in the industry, though there are very well-practiced so perhaps this is unsurprising.

If you are someone who wants to make sure Facebook never tracks your location, there is a way, though it is difficult. Firstly, you will have to opt-out at OS level, then find the opt-out in the application. Secondly, you will have to make sure you never tag a location in your own posts or be tagged in a friend’s post which links to a location. And don’t even think about checking-in to that new, trendy restaurant, or searching for a bargain on Market Place.

Now thanks to AI, it would also be helpful never to have a photo with a recognisable landmark in the background, or business which can be tracked. With machine vision and image recognition improving significantly day-on-day, you might only need to be stood in-front of a semi-famous painting, or the coffee shop on the corner to give away your location.

After all this, it might also be worth downloading a VPN.

Facebook has been ducking and diving past the swipes politicians and authorities have been throwing in recent months, but Coons and Hawley have made it a lot more difficult. Facebook has admitted to ignoring opt-outs, removing a lot of wiggle-room.