When people turn over data to "pay" for Facebook's services, are they getting a good deal?
Since 1914, the Federal Trade Commission has had one mission: to protect consumers by promoting free and fair markets. The implementation of that mission, however, has evolved substantively over the years—and it looks as though it’s about to change again.
Although agency leadership has acknowledged that “consumer welfare” will continue to be the means by which the FTC assesses a company, technological innovation has forced a new conversation about how to assess that welfare. We must take a serious look at how consumers are impacted by major tech companies and consider if our current approach remains relevant.
The best indicator of that shift came during Facebook CEO Mark Zuckerberg’s hearing before the Senate Commerce and Judiciary committees, when Senator Lindsey Graham asked the Facebook CEO a telling question.
“Who is your biggest competitor?”
“Let me put it this way—if I buy a Ford and it doesn’t work well and I don’t like it, I can buy a Chevy. If I’m upset with Facebook, what’s the equivalent product that I can go sign up for? ... Is there an alternative to Facebook in the private sector?”
The Facebook CEO pointed to other platforms, but Graham wasn’t having it.
“You don’t think you have a monopoly?” he asked bluntly.
“It certainly doesn’t feel like that to me,” responded Zuckerberg, eliciting skeptical chuckles from the room.
It’s a highly illuminating exchange. Consumers can easily compare what a Ford costs and what a Chevy costs and determine which car offers them the better deal for their money. But Facebook and other social media platforms are free and provided via an ad-based platform. Instead, consumers "pay" for these services with personal data. This means that, unlike with car purchases, consumers have no real sense if the benefits they’re receiving are worth the data that they’re “paying.”
The European Union has taken an aggressive approach toward Facebook and other companies like it. Not only did they bring Zuckerberg before the European Parliament to field questions, but they’ve also implemented a groundbreaking new privacy regulation framework that outlines the rights of European citizens with regard to their own data, known as the General Data Protection Regulation. GDPR has forced major platforms to make changes to their privacy and terms of service to comply.
In the U.S., however, FTC regulators are still struggling to figure out how to navigate the vulnerabilities that users face. Consumer welfare might still be the standard that the FTC uses—but because we’re exchanging data instead of dollars for services, gauging risk and injury is fraught with complexity.
Leaders at the state and federal levels have pushed for the investigation of major tech companies like Facebook and Google—and slowly but surely, the FTC is responding. In recent months, the agency has been discussing these issues, specifically focusing on the need to protect consumer privacy. The agency held a workshop in December 2017 on informational injury, followed by PrivacyCon 2018 in February. At this latter event, Maureen K. Ohlhausen, then-acting chairman of the FTC, discussed the complex nature of quantifying consumer harm and developing a workable regulatory framework to protect user privacy.
"[N]ot everything that can be measured matters, and not everything that matters can be measured,” she said. “But we ought to measure the things we can and think hard about how to objectively and consistently evaluate the things we cannot. After all, if we cannot measure—or even estimate—the injury we are trying to address, how can we tell if we are directing government action effectively?"
How indeed? Facebook has generated around $100 billion for the U.S. economy and done a great deal of good, from helping raise funds for hurricane relief to allowing long-lost friends to reconnect.
But the fact of the matter is that transaction, exchange and consumption mean something completely different than they did 15 years ago. Our leaders cannot let the great benefits of Facebook and other online platforms distract them from their mission. By delving into this issue and paying close attention to consumer concerns, the FTC and other leaders can develop a standard by which we can hold tech companies accountable.
Doug Pollack, CIPP/US, is chief marketing officer at ID Experts.
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