This is The Business We’ve Chosen

Given the current furor over Facebook — and the use of FB data by political campaigns and firms like Cambridge Analytica — I had planned to the topic of regulating tech giants like FB and Google.  But Shoshana Weinstein, critiquing Irwin Stelter’s “There’s No Such Thing as Free Data,” has helpfully tweeted many of the points I would have made, though I’ll have some additional thoughts below.

Outside the points Stelter makes in The Weekly Standard, I would note that there are certain lines of business in which Facebook and Google wield the sort of monopoly power that might be worthy of scrutiny by regulators.

Moreover, Stelter’s suggestion that FB and Google should be made to police content like pre-internet media companies has two significant flaws beyond the practical one Weissman identifies (which would be solved the way Craigslist recently did — by shutting down its entire personals section in response to potential legal liability for sex trafficking).

First, anyone looking at FB’s recent history of trying to police content would notice that it has not been fair or neutral and would inevitably advantage the political preferences of these companies.

Second, the question of content is separable from the question of how companies use customer data.  And — particularly if one accepts Stelter’s description of FB as a media company — it must be noted that FB’s competitors have been in the business of selling advertising space based on their audience’s aggregate data for decades before the internet existed.  It’s what newspapers, magazines, and television networks do.  If you work in media, this is the business model you’ve chosen — unless you try to live on subscriptions alone (good luck with that).

Indeed, the traditional media companies publishing critiques of FB are almost always trying to harvest similar data themselves:

One of the odd things about Stelter’s article is that, while asserting FB is a media company, he bases his case for regulation by comparing the issue to the problems of an unregulated banking system.  Extending that metaphor, we would have to look at the history of banking regulation and note (e.g., Dodd-Frank) that the likely regulatory scheme would favor the already dominant actors while imposing anti-competitive costs and barriers to entry on smaller competitors.  This is generally the history of federal regulation, going back to the regulation of slaughterhouses and meatpackers during Teddy Roosevelt’s administration: the big companies helped write regs that burdened them acceptably while disadvantaging smaller (usually kosher) competitors.

There’s no reason to believe that Big Media — including FB — would not exercise political influence to obtain a similar market advantage in this situation.  That’s why — for now, anyway — I would suggest that those concerned about FB look at a more conventional, carefully targeted, antitrust enforcement-based approach.

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