Zuckerberg faces the music

Thursday, 12 April 2018
Melbourne, Australia
By Ryan Clarkson-Ledward

  • Roll up, roll up! Welcome to the hearing
  • Throwback Thursday
  • Personalising personal information

Nowhere to run, nowhere to hide.

Surely this time there would be consequences — Right?

Over the past two days, Facebook Inc [NASDAQ:FB] CEO and creator Mark Zuckerberg was put under the microscope.

The world was watching and they wanted answers. And a joint US Senate committee was set to turn up the heat on Zuckerberg.

This was the perfect opportunity to really dig into what Facebook is doing. A chance to gleam something, anything, about what goes on behind the wall of ‘likes’ and ads.

At least that’s what I thought the hearing was meant to be about.

Turns out I must have gotten confused somewhere along the lines, because what I watched yesterday was nothing short of a joke.

I expected hard hitting questions that demanded tough answers. I expected to see Zuckerberg sweat a little. I expected the people asking the questions to at least know what the hell they’re talking about…

Instead what I got was 44 uninformed senators struggling to understand what Facebook even is.

Take this gem, from Senator Orrin Hatch for instance:

How do you sustain a business model in which users don’t pay for your service?

To which an awkwardly smirking Zuckerberg replied,

Senator, we run ads,

What a farce.

But before we explore the full spectacle of the circus let’s take a look at the markets. 

Markets

The Dow Jones Industrial Average fell overnight, closing 218.55 points lower, or 0.9%.

The S&P 500 closed down 14.68 points, or 0.55%.

In Europe, the Euro Stoxx 50 index closed down 19.07 points, netting a 0.55% loss. Meanwhile, the FTSE 100 fell 0.13%, and Germany’s DAX index fell 0.83%.

In Asian markets, Japan’s Nikkei 225 is down 38.42 points, or 0.18%. China’s CSI 300 is down 0.67%.

In Australia, the S&P/ASX 200 closed 13.2 points lower, or 0.23%.

On the commodities market, West Texas Intermediate crude oil is US$67.13 per barrel. Brent crude is US$72.27 per barrel.

Gold is trading for US$1,349.8 (AU$1,742.8) per troy ounce. Silver is US$16.68 (AU$21.54) per troy ounce.

The Aussie dollar is worth US$77.5 cents.

Bitcoin is US$6,963.23.

Roll up, roll up! Welcome to the hearing

Let me just start out by highlighting how this hearing was planned.

Before anyone even had the chance to ask or say anything meaningful, things were going downhill.

Each of the 44 senators had less than five minutes to ask questions. Five minutes to try and delve into a topic that has been debated for the past 14 years…

I can barely describe what happened during my day in five minutes. How they expected to get anything valuable out of Zuckerberg in that timeframe baffles me.

There was no room for follow-ups, no room for extrapolation, and no chance of any real discussion. Some important topics were touched upon, but they weren’t fully explored.

These are issues that can’t be wrapped up and solved in a matter of hours. People that believe otherwise are kidding themselves or don’t understand the heart of the matter.

For the senators asking the questions, it was clearly a case of the latter though.

We had Senators asking why they are seeing ads about chocolate. Or whether Facebook is spying on their WhatsApp emails. It was frankly, embarrassing.

Even when tougher questions (that still didn’t address the heart of the matter) popped up they were quickly brushed aside.

Senator Lindsey Graham wanted to know if Facebook was a monopoly, directly asking Zuckerberg:

Is there an alternative to Facebook in the private sector?

Zuckerberg tried to dance around the question, listing companies like Google, Apple and Microsoft as similar to Facebook. Citing email, text messaging, and other apps as ways we all communicate nowadays.

Facebook just so happens to own a few of the more direct competitors though, like Instagram.

Which is probably why he was finally squirming, and so Graham pushed again, asking Zuckerberg directly if he thought Facebook was a monopoly. To which Zuckerberg finally chuckled nervously,

It certainly doesn’t feel like that to me,

Causing laughter to ripple through the room, as he wriggled himself out of trouble once again…

Throwback Thursday

What we did get from Zuckerberg was an apology,

We didn’t take a broad enough view of our responsibility, and that was a big mistake. It was my mistake, and I’m sorry,

But while the Senators may not be exceptionally tech-savvy, they certainly aren’t dumb. That’s why one astute Senator quickly pointed out that this isn’t the first apology Zuckerberg has issued.

In fact, his streak of mea culpas go all the way back to his days at Harvard in 2003. Back when the then 19-year-old Zuckerberg faced a Harvard disciplinary board for his first creation, ‘Facemash’. A website which let students vote on the attractiveness of their peers via photos.

Long story short, Zuckerberg got these photos from the internal network at Harvard. Photos that he then used for his site without the school’s, or the individual’s, permission. But when Facemash went viral students were outraged, and so Zuckerberg had to apologise, commenting

Issues about violating people’s privacy don’t seem to be surmountable,

The question we should all be asking then, is whether Facebook is any different.

Right now, most people are worried. A recent Gallup poll shows that 43% of people are ‘very concerned’ about Facebook invading their privacy.

But, this isn’t some silly student side-project. This is a US$480 billion company, they have the power to change. They just have to want to do it, or someone has to make them do it.

That’s what this hearing should have been about…

Unfortunately, we ended up with this ‘Facebook for Dummies’ mess.

As you can probably tell, I’m pretty upset by all of this. Honestly everyone should be. But, I want to be clear that my frustration isn’t levelled entirely at the Senators themselves.

I don’t even believe Zuckerberg deserves to take all the blame. Though he certainly does need to be doing more to stop these incidents from happening.

Instead I’m blaming you, and me, and everyone else. We just don’t care enough to force Facebook to change.

But I predict change is coming.

Personalising personal information

The whole root of this Facebook problem, if you haven’t guessed it, is data. It’s the fuel that keeps the Facebook machine running — digital oil.

Facebook is only free because you’re handing over all your data. And while some people are starting to realise that we’re getting ripped off, most of us are oblivious.

If Facebook started charging money to use their site now, people would probably leave in droves. We’re perfectly happy to part with our data, but not our hard-earned money it seems.

Most of us just don’t get the value trade-off that’s happening.

But if I could show you, I expect more people would finally revolt. And if I told you that you could make money by selling your own data then I imagine just about everyone would be floored.

Well, it’s all theoretically possible with the power of the blockchain. The technology behind cryptocurrencies like bitcoin.

Whether you’ve heard of the blockchain is irrelevant, though if you haven’t I’d urge you to try and learn about it. The important thing to note though is that it puts the power in your hands.

A blockchain powered Facebook could let you share and sell your data as you wish. The entire economy of social media would be turned on its head.

Advertisers would pay you to watch their ad.

If you’re unfamiliar with blockchain and crypto it may all sound a bit crazy. To be fair it probably is a little crazy — but we should be embracing it.

The challenge is making it happen. Facebook and Zuckerberg won’t change if they don’t have to.

As the US senators have so plainly demonstrated, the world doesn’t care enough about data. But people will always care about money.

It’s time to show them, that they are one in the same.

It’s time for a crypto revolution.

Regards,

Ryan Clarkson-Ledward,
Junior Analyst, Revolutionary Tech Investor