It used to be that every newly-minted Harvard freshman was immortalized in a crimson-cloth-bound book of faces. Almost all of us were there with our nerdiest high school graduation portraits. Yo-Yo Ma was there, even though he was already a concert cellist, but Robert F. Kennedy Jr., was not, maybe because he was already a Kennedy. Regardless, this college artifact was known to all on campus as the facebook.
In 2004, a later group of Harvard undergrads got their facebook and thought it would be cool to put it on steroids. Why not make the photo and pedigree computer accessible? And while we're at it, why not make it so you can leave each other messages, and say stuff that will draw attention to yourself? A facebook, in other words, that you could converse with. A facebook that you could even argue with. What could go wrong?
At least a half-dozen undergrads worked on this idea in their dorm rooms back then, of whom Mark Zuckerberg became the most famous. The college facebook became everyone's Facebook. The rest you know.
Facebook now owns Instagram and WhatsApp, too. If you use it (and 68% of us do), it knows more about you than you imagine. It knows who you hang out with, and who you'd like to hang out with. It knows what you like and what you dislike, both publicly and in the recesses of your heart. It knows which of your buttons to press for what effect. Meanwhile Google, which also owns YouTube, knows all that we're curious about, what we lurk for when no one is looking. And Amazon knows what we're interested in buying before it even dawns on us that we might be.
These are the three dragons of Big Tech. They watch every move we make, the most socialist of social media. We willingly feed them our information and our idle hours, and they grow fat and sinister. And sloppy. Their missteps in protecting user data and in facilitating Russian cyber-provocateurs have made us look on them with new-found wariness. We distrust them even as we are addicted to them. Small wonder that regulatory eyes now fall upon them. https://www.wsj.com/articles/ftc-to-examine-how-facebook-s-practices-affect-digital-competition-11559576731.
Last month, Zuckerberg's college roommate and Facebook co-founder Chris Hughes wrote a long piece arguing that Facebook needs to be broken up.
When Google went public, we found it charming that its code of conduct began with "Don't Be Evil." I'm sure they meant it, but I'm not sure they understood it. No one sets out to be evil, or thinks they are. But the foreshadowing was there. Hughes writes, "From our earliest days, Mark used the word 'domination' to describe our ambitions, with no hint of irony or humility." Soon Hughes had an epiphany: "It's never going to stop. The bigger we get, the harder we'll have to work to keep growing."
Perhaps had Zuckerberg not dropped out of college to become a billionaire, he might have paused long before uttering "domination" to describe his ambitions. Christ said that the love of money is the root of all evil, but that's not quite right. He wasn't crucified for profit. The love of money for its own sake doesn't make one evil; it makes one a pathetic miser. The root of all evil is something else.
As Mark would have learned in a few literature courses, all bad conduct stems from one person's desire to impose their will upon another or the world. Ahab is driven by his need to master the whale. Sauron craves the One Ring so he can bend all of Middle Earth to his will. Voldemort seeks to subjugate the world and Palpatine the galaxy. It's all the same old stuff. Shakespeare would have taught Mark "They that have the power to hurt and will do none . . . they rightly do inherit heaven's graces." The common theme of evil is domination -- which at its extreme becomes enslavement. When Zuckerberg made domination his ambition, he turned to the dark side without even realizing it.
The recently concluded Game of Thrones followed the same pattern. I am amused that over 1.5 million viewers have petitioned HBO to reshoot the final season, complaining that a show with walking corpses and dragons wasn't true to life. Many are upset that their hero, the Dragon Queen Daenerys, wouldn't have burned a city in a pique of anger. The best retort I've heard to that was SNL star Leslie Jones's, in her hilarious commentary on the last few episodes. She's worth quoting verbatim:
"Listen, I've had bad Mondays, ya know what I'm sayin'? Bitch can't get an Uber. Mo'fucker didn't' have the cinnamon raisin bagel. I forgot my fuckin' ID. Bitch locked myself outside the house. That can make any mo'fucker call for a dragon."
That's absolutely right. If Daenerys only had an AR-15, she would've used that. And if any of the lunatics shooting up people with AR-15s had a dragon, imagine then the consequences of their rage. So maybe it's a good thing they only have AR-15s, even if that's not a good thing at all. Dante would see all that as just animal rage writ large, deserving a mid-level spot in hell, but not its depths. No, the real evil appears not with dragon fire, but in that quiet moment when Daenerys calmly proclaims that she alone knows what's good, that all others "don't get to decide."
Facebook officially responded to Hughes's critique by arguing that they are a force for good in the world. "What matters is not size but rather the rights and interests of consumers," writes Nick Clegg, Facebook's mouthp . . . , er, I mean VP for Global Affairs and Communication. https://www.nytimes.com/2019/05/11/opinion/facebook-nick-clegg-chris-hughes.html. He brags how Facebook employs 38,000 people, serves 2 billion users, hosts 90 million small businesses and non-profits that raise money and promote their causes "across 200 countries and in every time zone." Don't break up Facebook, he says. Rather, because (channeling Spiderman) "with great success comes great responsibility," regulate it.
So now I'm back in familiar waters. Regulation is one of those things that sounds better than it usually turns out to be. As UVA Law School Dean Paul Mahoney demonstrates in his Wasting A Crisis: Why Securities Regulation Fails, regulation tends to favor the big players who can best lobby to shape it. Regulations have a "tendency to reduce competition and increase industry concentration by eliminating diverse market practices in favor of the 'best' practice, which is often the preferred practice of the leading firm." So, of course Facebook wants to be regulated. I'm guessing it won't be enough. Seehttps://www.theatlantic.com/technology/archive/2019/05/chris-hughess-call-break-facebook-isnt-enough/589138/.
Clegg ends up arguing that Facebook's size shouldn't matter because antitrust law's main purpose is to save consumers money. By that logic, Facebook, whose services are free, is beyond reproach. But beware the free lunch. While it is true that low consumer prices have been the test of anti-trust since the 1980s, it wasn't so at first. In the beginning, anti-trust leaders like Louis Brandeis, Teddy Roosevelt, and Woodrow Wilson understood that the real issue was in fact size -- that economic power concentrated in a few private hands, beyond the reach of elected institutions, was a threat to democracy itself. That old way of thinking is making a tentative comeback. Seehttps://www.nytimes.com/2019/05/21/opinion/facebook-google-monopolies.html and https://www.vox.com/recode/2019/5/3/18520703/big-tech-break-up-explained.
Aegis Frumento is a partner of Stern Tannenbaum & Bell, and co-heads the firm's Financial Markets Practice. Mr. Frumento represents persons and businesses in all aspects of commercial, corporate and securities matters and dispute resolution (including trials and arbitrations); SEC and FINRA regulated firms and persons on regulatory compliance issues and in SEC and FINRA enforcement investigations and proceedings; and senior executives of public corporations personal securities law and corporate governance matters. Mr. Frumento also represents clients in forming and registering broker-dealers and registered investment advisers, in developing compliance policies, procedures and controls, and in adopting proper disclosure documents. Those now include industry professionals looking to adapt blockchain technologies to finance and financial market enterprises.
Prior to joining the firm, Mr. Frumento was a managing director of Citigroup and Morgan Stanley, a partner and the head of the financial markets group of Duane Morris LLP, and the managing partner of Singer Frumento LLP.
He graduated from Harvard College in 1976 and New York University School of Law in 1979. Mr. Frumento is a frequent author and speaker on securities law issues, and is often quoted in the media on current securities law developments.
NOTE: The views expressed in this Guest Blog are those of the author and do not necessarily reflect those of BrokeAndBroker.com Blog.