What Zuckerberg Didn't Say In His Op-ed Calling For More Government Regulation

Submitted by Nicholas Colas of DataTrek Research

Facebook’s Mark Zuckerberg published an Op-Ed in the Washington Post over the weekend calling for greater government Internet regulation. Notably absent was any mention of breaking up the company. His implicit message: "one Facebook would be easier to control than lots of smaller competitors”. Fair enough, but we also wonder what Facebook has up its product development sleeve that allows it to so vocally call for increased regulation and the costs that will inevitably entail.

The bottom line is that Facebook is now actively asking for global government involvement in regulating the Internet. Right at the top of the second paragraph: “I believe we need a more active role for government and regulators.” He breaks down the issue into 4 suggested policy initiatives:

  1. Consistent codification of what constitutes “harmful content”. Zuckerberg said “I’ve come to believe that we shouldn’t make so many decisions about speech on our own”. Companies like Facebook should follow policies set by governments that draw the line between “free speech” and that which is “harmful”.
  2. A more detailed standard for what is acceptable in political advertising. Candidate ads are fairly well regulated, at least in the US. But Zuckerberg notes that “divisive political issues” have much less regulation and Facebook has seen “more attempted interference” in this arena.
  3. A “globally harmonized framework” for effective data privacy and protection. Zuckerberg endorses the EU’s General Data Protection Regulation initiative, but only if it is widely and consistently applied across other regions.
  4. Enhanced data portability protections. Users should have a transparent and regulated pathway to move personal information between platforms.

Now, it is easy to dismiss Zuckerberg’s comments as simply trying to get ahead of inevitable US regulation while simultaneously highlighting the obviously fractured nature of DC politics. Will this Congress or the next really come to an agreement on defining “harmful content” or rewriting the laws on political advertising? The short answer is obviously “no”. Ditto for harmonizing regulations on privacy or data portability with the European Union.

At the same time, we had three other thoughts about all this:

  1. The harsher the regulation, the more protection it can afford companies in the future. The first US health warning labels on cigarettes appeared in 1966 (“Cigarette smoking may be hazardous to your health”). In 1998, the tobacco companies settled with US states for illnesses caused by their products, many of which predated those warnings. Anyone who picks up smoking now has very little claim against these companies – the warnings are right on every box.
  2. Zuckerberg ignored the question of whether Facebook should be broken up, but there is a coded message in that omission. His implicit argument (at least to our reading): one big company called Facebook would be a lot easier to regulate than a bunch of smaller ones who wouldn’t care as much about the views of DC lawmakers.
  3. If I were a Facebook board member or major shareholder, I would have one question for Zuckerberg: “All this is fine, but what’s your plan for making greater profits with these new constraints?” No doubt the Facebook management team has an answer for this, and it must revolve around new technologies and products not yet on public display. If incremental regulation can limit the future liabilities of government fines and/or the costs associated with compliance, then bring them on. Facebook is playing the long game here.

To read Mark Zuckerberg’s Op-Ed, click here