Ideas

Facebook May Suddenly Find Itself Without A Business Model

There's simply no way for Mark Zuckerberg to fix the fake news and data abuse problems without destroying his social network's business model.

Mark Zuckerberg in 2017
Leonid Bershidsky

I think I understand why Facebook Chief Executive Officer Mark Zuckerberg hasn't publicly responded to the Cambridge Analytica scandal. He's stuck in a catch-22. Any fix for Facebook's previous big problem —​ fake news — would make the current big problem with data harvesting worse.

As a media company and one of Americans' top sources of information, Facebook's de facto anonymity and general lack of responsibility for user-generated content make it easy for propagandists to exploit. Making matters worse, it isn't willing to impose tighter identification rules for fear of losing too many users, and it doesn't want to be held responsible in any way for content, preferring to present itself as a neutral platform. So Zuckerberg has been trying to fix the problem by showing people more material from friends and family and by prioritizing "trusted publishers' and local news sources over purveyors of fake news.

"Making sure time spent on Facebook is time well spent," as Zuckerberg puts it, should lead to the collection of better-quality data. If nobody is setting up fake accounts to spread disinformation, users are more likely to be their normal selves. Anyone analyzing these healthier interactions will likely have more success in targeting commercial and, yes, political offerings to real people. This would inevitably be a smaller yet still profitable enterprise, and no longer a growing one, at least in the short term. But the Cambridge Analytica scandal shows people may not be okay with Facebook's data gathering, improved or not.

People are angry at Facebook​.

The scandal follows the revelation (to most Facebook users who read about it) that, until 2015, application developers on the social network's platform were able to get information about a user's Facebook friends after asking permission in the most perfunctory way. The 2012 Obama campaign used this functionality. So — though in a more underhanded way — did Cambridge Analytica, which may or may not have used the data to help elect President Donald Trump.

Many people are angry at Facebook for not acting more resolutely to prevent CA's abuse, but if that were the whole problem, it would have been enough for Zuckerberg to apologize and point out that the offending functionality hasn't been available for several years. The #deletefacebook campaign — now backed by WhatsApp co-founder Brian Acton, whom Facebook made a billionaire — is, however, powered by a bigger problem than that. People are worried about the data Facebook is accumulating about them and about how this data is used. Facebook itself works with political campaigns to help them target messages; it did so for the Trump campaign, too, perhaps helping it more than CA did.

The anger over the CA incident is akin to the more benign anti-Facebook outbreak in 2014 after revelations that Facebook had been running secret psychological experiments on users, attempting to alter their mood by tweaking their newsfeeds. People may give up personal data easily for the sake of convenience, but they hate being turned into guinea pigs.

Is there a Zuckerberg response that would reassure users that this is not going to happen to them? In theory, sure. Zuckerberg could say his platform would reject all political advertising, take measures against all data scraping and provide no data to political actors. That, however, would be a slippery slope; nobody wants to be a guinea pig for big corporations, either. Give users a finger and they'll bite off the whole arm, destroying Facebook's painstakingly built microtargeting-based business model. Or if they don't, they'll take precautions, disguise themselves, and delete or obscure much of their personal data.

Would the world be a worse place without Facebook?

Smaller sacrifices, however, may be useless against the critical mass of popular disapproval that has accumulated while Zuckerberg struggled with his minimalist solution to the fake news issue. What do people want from him, anyway? Do they want an environment that produces lots of quality data or do they want Facebook to stop collecting data? Perhaps both? But then, how would Facebook make money?

Or perhaps even neither? Would the world be a worse place without Facebook? What would we lose? People can always have an uncivil conversation with bots about divisive politics on Twitter. They can stay in touch with friends, family, neighbors and co-workers on any of the numerous messenger apps. Young people are giving up on it, and Germany"s new digital minister Dorothee Baer recently teased it for turning into "a senior citizens' network." But what's keeping the older generations on it except inertia?

Zuckerberg, who is expected to break his silence soon, probably won't make any radical moves. But what if he did?

Sometimes, dreams help clarify reality. I have this picture of him in my mind, framed as a self-launching video. Quietly and choking up a little as he speaks, the Facebook CEO makes an announcement. "We've come so far from that dorm room at Harvard," he says. "Perhaps too far. I'm sad to announce that today, we're closing the main Facebook app and website: It's clear that it's been abused by anyone and everyone, including ourselves, and you folks no longer want it. We'll still help connect the world through Instagram, Messenger and WhatsApp. We promise they won't turn into another Facebook."

Would there be many people — except perhaps the remaining Facebook shareholders — who wouldn't heave a sigh of relief? I know I would.

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Economy

European Debt? The First Question For Merkel's Successor

Across southern Europe, all eyes are on the German elections, as they hope a change of government might bring about reforms to the EU Stability Pact.

Angela Merkel at a campaign event of CDU party, Stralsund, Sep 2021

Tobias Kaiser, Virginia Kirst, Martina Meister


-Analysis-

BERLIN — Finance Minister Olaf Scholz (SPD) is the front-runner, according to recent polls, to become Germany's next chancellor. Little wonder then that he's attracting attention not just within the country, but from neighbors across Europe who are watching and listening to his every word.

That was certainly the case this past weekend in Brdo, Slovenia, where the minister met with his European counterparts. And of particular interest for those in attendance is where Scholz stands on the issue of debt-rule reform for the eurozone, a subject that is expected to be hotly debated among EU members in the coming months.

France, which holds its own elections early next year, has already made its position clear. "When it comes to the Stability and Growth Pact, we need new rules," said Bruno Le Maire, France's minister of the economy and finance, at the meeting in Slovenia. "We need simpler rules that take the economic reality into account. That is what France will be arguing for in the coming weeks."

The economic reality for eurozone countries is an average national debt of 100% of GDP. Only Luxemburg is currently meeting the two central requirements of the Maastricht Treaty: That national debt must be less than 60% of GDP and the deficit should be no more than 3%. For the moment, these rules have been set aside due to the coronavirus crisis, but next year national leaders must decide how to go forward and whether the rules should be reinstated in 2023.

Europe's north-south divide lives on

The debate looks set to be intense. Fiscally conservative countries, above all Austria and the Netherlands, are against relaxing the rules as they recently made very clear in a joint position paper on the subject. In contrast, southern European countries that are dealing with high levels of national debt believe that now is the moment to relax the rules.

Those governments are calling for countries to be given more freedom over their levels of national debt so that the economy, which is recovering remarkably quickly thanks to coronavirus spending and the European Central Bank's relaxation of its fiscal policy, can continue to grow.

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive.

The rules must be "adapted to fit the new reality," said Spanish Finance Minister Nadia Calviño in Brdo. She says the eurozone needs "new rules that work." Her Belgian counterpart agreed. The national debts in both countries currently stand at over 100% of GDP. The same is true of France, Italy, Portugal, Greece and Cyprus.

Officials there will be keeping a close eye on the German elections — and the subsequent coalition negotiations. Along with France, Germany still sets the tone in the EU, and Berlin's stance on the brewing conflict will depend largely on what the coalition government looks like.

A key question is which party Germany's next finance minister comes from. In their election campaign, the Greens have called for the debt rules to be revised so that in the future they support rather than hinder public investment. The FDP, however, wants to reinstate the Maastricht Treaty rules exactly as they were and ensure they are more strictly enforced than before.

This demand is unlikely to gain traction at the EU level because too many countries would still be breaking the rules for years to come. There is already a consensus that they should be reformed; what is still at stake is how far these reforms should go.

Mario Draghi on stage in Bologna

Prime Minister Mario Draghi at an event in Bologna, Italy — Photo: Brancolini/ROPI/ZUMA

Time for Draghi to step up?

Despite its clear stance on the issue, Paris hasn't yet gone on the offensive. That having been said, starting in January, France will take over the presidency of the EU Council for a period that will coincide with its presidential election campaign. And it's likely that Macron's main rival, right-wing populist Marine Le Pen, will put the reforms front and center, especially since she has long argued against Germany and in favor of more freedom.

Rome is putting its faith in the negotiating skills of Prime Minister Mario Draghi, a former head of the European Central Bank. Draghi is a respected EU finance expert at the debating table and can be of great service to Italy precisely at a moment when Merkel's departure may see Germany represented by a politician with less experience at these kinds of drawn-out summits, where discussions go on long into the night.

The Stability and Growth pact may survive unscathed.

Regardless of how heated the debates turn out to be, the Stability and Growth Pact may well survive the conflict unscathed, as its symbolic value may make revising the agreement itself practically impossible. Instead, the aim will be to rewrite the rules that govern how the Pact should be interpreted: regulations, in other words, about how the deficit and national debt should be calculated.

One possible change would be to allow future borrowing for environmental investments to be discounted. France is not alone in calling for that. European Commissioner for Economy Paolo Gentiloni has also added his voice.

The European Commission is assuming that the debate may drag on for some time. The rules — set aside during the pandemic — are supposed to come into force again at the start of 2023.

The Commission is already preparing for the possibility that they could be reactivated without any reforms. They are investigating how the flexibility that has already been built into the debt laws could be used to ensure that a large swathe of eurozone countries don't automatically find themselves contravening them, representatives explained.

The Commission will present its recommendations for reforms, which will serve as a basis for the countries' negotiations, in December. By that point, the results of the German elections will be known, as well as possibly the coalition negotiations. And we might have a clearer idea of how intense the fight over Europe's debt rules could become — and whether the hopes of the southern countries could become reality.

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