When Facebook Asks for Internet Regulation

Mark Zuckerberg, Facebook founder, is calling the world to regulate social media and broad internet. He is a brilliant man because regulating the web practically means Facebook dominance is assured in the social media space. This is the deal: if you have a privacy-focused law that says that Facebook cannot share data with another company, you have simply given it a passport to stand unopposed, legally. Yes, everyone will then have to fold inside Facebook since it will not share. If you make a law that platforms will be responsible for what their users post, on their ecosystems, only cash-rich companies like Facebook can live; startups cannot even try to build platforms anymore.

Mark Zuckerberg called for internet regulation. In an op-ed, the Facebook founder and CEO made the case (paywall) for new government rules around harmful content, election integrity, privacy, and data portability. It’s a sign that Facebook acknowledges such regulation is now inevitable and wants to shape it (paywall). (Fortune newsletter)

So, when you read these ICT utilities asking for regulations, do not be fooled: if you indeed regulate them as the politicians’ desire, you will take down all potential competitors for a long time. Of course, any regulation will only affect the American part of the Internet since China has its own part. Possibly, depending on how you do the regulation, the Chinese can, over time, expand into the American part. Not many American leaders will smile over that.

So, if U.S. breaks Facebook, one of those pieces can emerge to fill that void. Or another product from say China or India can emerge and become the world’s leader. It is a web business running on the aggregation construct. They are not structured to have 20 banks in Lagos. You expect to have one popular social media in Lagos for a specific sector. That one leader is what matters. If you break, the one that is best will grow (and win) because network effect will make it easier to attract users to it.

This is my take: U.S. will not regulate Facebook or its web companies at the level many are expecting [I expect nothing to change except cosmetics reporting of violations] because it knows that Chinese competitors which are also well-funded will go after Facebook users across the globe. And even if U.S. regulates Facebook by breaking it, the best surviving part will grow to dominate over time because of network effect where the best gets better and bigger. We just have to agree that Facebook is an ICT utilitiesand I was very happy when my editors in Harvard allowed me to use that against the company. You negotiate with your utilities [ electricity, water] because you have no alternatives. That is where we are with Facebook.

All Together

This is the deal: While it makes sense to regulate Google and Facebook and toughen privacy, we would make it legally possible for these entities to NOT share. And if they do not have to share, they have built a competitive moat which no one can overcome. Facebook’s suppliers are its users. It has been doing the external planet a favor by sharing their data. Now, it can keep ALL under the law, claiming privacy protection.

We would have the best user privacy but we would kill competition. Yes, Google and Facebook would continue to mine and collect all the data they want. The world of web belongs to Google robots. It has access to it. But now what it gets, it can easily keep inside.  The implication is that everyone would have to converge in their worlds. Why? They have the best data and the network effects work in their favor.

The old web has been bidirectional system where Google and Facebook collect data and then share with others in their ecosystems.

We need to be careful what we ask for as we march on this web regulation thing.

No Person or Government Can Effectively Regulate Facebook

LinkedIn Comment on Feed

Comment #1

1. Data monopoly – Facebook will effectively have hoards of data which only it can exploit. Others will starve and sell their firms for less cents per the Dollar. Facebook continues to optimise its offerings and platforms.

2. Platform efficacy – Facebook’s platform is already primed to meet such regulations. Others are.focused on features and light years away from meeting serious regulations reform standards – they shut down or sell off or go for scarce funds to scale to a regulatory compliant platform. Competition wise, Facebook dominates the landscape.

3. Processes & People – as an add on to no.2, unlike smaller firms, Facebook definitely has these 2Ps ready & good to go.

Comment #2

Mark simply wants to rope the politicians in, so that they can have first-hand knowledge on what it’s like to regulate the web. How many governments can deploy enough resources to police what people share on the web, without practically shutting down the web, in an effort to filter what qualifies as decent speech? Not an easy thing to do, because opinions vary; so Facebook wants the politicians to have a taste of it… The other day, one of the presidential hopefuls said she would ‘break’ the tech giants, if got elected. It simply showed her lack of understanding of how these digital natives operate.

In platform world, there is nothing like “fair competition”, not at all; you only have category-kings for each domain, because most users simply congregate on the ‘best’, with those lower on the ladder feeding on crumbs. The best they can do is change of name, in the name of ‘breakup’, because the next best one will still become a behemoth within a short time.

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