Message to Zuckerberg: There Is a Better Free

This afternoon, Facebook’s Mark Zuckerberg is to appear in European Parliament to answer questions about the so-called data leaks connected to Cambridge Analytica. Zuckerberg should probably get used to these types of hearings, it is bound to keep snowballing until Facebook makes some fundamental changes. The problems around Cambridge Analytica, fake news, Alt.right, Macedonian troll farms, foreign involvement in elections, surveillance by government intelligence and the growing list of issues cannot be fixed with some added features or thousands of moderators. It is built into the business model. The free services in exchange for personal data mean that the company’s first loyalty will be to its paying customers: the advertisers. Not the users. This was always the case, and Mark Zuckerberg has been making apologies since day one. It’s just that those apologies have been growing to the point how that it’s EU-parliament scale. And they will continue to grow, because Facebook must continue to grow: that is the expectation of its owners. The current share price is based on great expectations for further growth*. Growth can theoretically come in three ways: more users, higher income per user (more ads or higher ad revenue) and expanded domain. All of these have problems, the domain expansion in particular. This is when Facebook absorbs new parts of our lives, such as the upcoming plans to start a dating service. As the scope of Facebook’s activities grows, so will the magnitude of the scandals, and so will the size of the apologies. Until something breaks. It could come from regulation, anti-trust action, user revolt, pressure from owners… even Facebook’s own staff protesting. We’ll see.

Facebook’s current line of defense – more moderators and more apologies – may buy time but will not change the fundamentals. Instead of seeing itself as a tech platform with little or no responsibility for what its users and algorithms do, Zuckerberg should embrace the criticism, become transparent and invite independent qualified scrutiny. In fact, another digital industry did just that.

Faced with criticism on controversial content about two decades ago, the games industry decided to make a content and age rating system called PEGI. A completely transparent process, operated by an organization independent of the industry, its rules set not by the companies but by a body of experts appointed by EU member states, with possibility to complain and appeal decisions both for consumers and businesses. The games industry pays for the system and informs about the ratings in all marketing and at all points of sales. The system has expanded to more and more countries and is so successful it is now integrated in a global system of ratings for many more sorts of digital content (IARC). This is the opposite of saying “it’s the algorithm”, this is doing something real. It goes further: I had a conversation with an executive for one of the major digital marketplaces for games. He explained his business ideals like this “we want our market place to be a safe and profitable environment for all involved, the game developers and their business partners, as well as the players”. Compare that thinking to the “we’re only a technology company”-refrain from Silicon Valley. No need for intermediary privilege, this game company saw being responsible as a business advantage!

But Facebook promises that it is “free and always will be” (free as in beer, that is) so how could it let go of the surveillance economy? Good news: there is a better free. One that does not require selling user data to the highest bidder. One that keeps the trust between the business and the customer intact. One that does not involve any third parties. Again, it is the games industry that came up with the answer. It’s called “free2play” and it means the service is free for all, but those who want can purchase items within the games by so-called micro-transaction. It has been successfully applied by scores of games companies, big and small and many have made a lot of money from it. It appears that there is a way to have the cake and eat it too. To keep the trust of the users while providing them with a free digital service. The principle of free2play should be possible to apply to digital consumer services outside the games industry.

So, dear Mark Zuckerberg: take a page from the games industry – embrace actual responsibility and change your business model. The other options will only lead to more headaches. And for the European policy makers – when you make policy for homegrown European digital champions, perhaps Silicon Valley is not the right place to go for inspiration. Perhaps there are better cases on your doorstep.

Netopia will cover the Zuckerberg hearing, feel free to follow our Twitter @netopiaforum starting at 18.15 today. Also, you might like to use the Zuckerberg Bingo Board again.

*) Facebook’s current share price to earning ratio (P/E) is 30.58 at the time of writing, much higher than the estimated 2018 average of 18.52 for all the companies traded on the NASDAQ exchange. This indicates investors expect better profits in the future.

This is Netopia’s Newsletter May 22nd 

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