On Edge: Specter of D.C. Crackdown Looms

Facebook chairman and CEO Mark Zuckerberg faced questioning from lawmakers on Capitol Hill.

Facebook chairman and CEO Mark Zuckerberg faced questioning from lawmakers on Capitol Hill.

WASHINGTON — Facebook chairman and CEO Mark Zuckerberg was shown the Capitol Hill woodshed last week, and edge providers may never be the same.

“U.S. policymakers were so enamored by Silicon Valley over the last decade that they turned a blind eye to their abuses,” Roslyn Layton, visiting scholar at the American Enterprise Institute, said of what has become a bipartisan push for privacy protections aimed at edge providers.

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Edge providers, which include Facebook, Amazon, Netflix and Google, often referred to as FANG, use a customer’s internet service provider to deliver their service.

But whether they are “abuses” or, as Zuckerberg suggested in his testimony, online tools developed for good but hijacked by the bad guys, the eyes of Washington lawmakers are open and looking toward possible regulation or legislation to give online users — that is, most of us — some degree of control over where our personal data is going and what it is being used for.

Privacy on the Edge: Legislators' Questions

Zuckerberg made clear that Facebook does not sell data to advertisers, but it does depend on targeting ads based on user data to bring in the $40 billion in business it did last year.

Expect to hear the phrase “opt-in” a lot in the coming days, as policymakers try to come up with the best way to give users control of information. Ahead of the hearing, Sens. Ed Markey (D-Mass.) and Richard Blumenthal (D-Conn.) introduced the Privacy Bill of Rights bill with opt-in for everyone.

Opting In to Opt-In

ISPs have said they can live with a regime in which customers pro-actively opt in to share personal info, as long as it applied to companies like Facebook and Google, as well as Comcast and Charter Communications.

Zuckerberg said he also agreed in principle, though he frequently used terms like “generally agree,” “the details matter” or something “useful to discuss” to avoid definitive endorsements of any particular legislative or regulatory approach. He did signal that he thinks regulation is inevitable — likely one reason he was talking not about whether there would be regulation, but making sure it was the “right” regulation.

Zuckerberg tried to draw a distinction between ISPs and the edge — he said it is lack of ISP competition versus choice in platforms — and suggested regulation should take that into account. The Facebook CEO said he certainly did not think of his company as having a monopoly. But he was not getting a lot of agreement from the legislators in attendance, most of whom are on Facebook and rely on it to reach constituents.

Facebook and others are now tasked with figuring out how to make terms of service contracts clearer, another issue that drew a lot of attention last week and multiple calls for transparency.

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The scrutiny of Zuckerberg from both parties in both houses of Congress certainly felt like the final crash of a drumbeat that has been building, fueled by data breaches, fake news, election meddling and third-party monetization of online information.

ISPs and others have said there needs to be a shift in the attitude of Washington toward the garage innovators that have long since morphed into data-collecting behemoths that threaten privacy like never before.

Reckoning, and Rules, Draw Closer

That day of D.C. reckoning for Facebook and other edge providers seems close at hand, the Facebook chairman’s serial apologies notwithstanding. Perhaps the larger question, in the face of European regulators who have moved much more aggressively, is: Can a Congress so stifled by partisan rancor pass any meaningful legislation soon?

Rep. Jan Schakowsky (D-Ill.) cited a long history of mea culpas, which is why she said self-regulation just won’t work. Those included apologies from 2003, 2006, 2007, 2010, 2011, 2017 and 2018. On the subject of the protections that Zuckerberg said Facebook was supplying users at the point of decision, Schakowsky asked, “Who is going to protect us from Facebook?”

Zuckerberg spent almost 10 hours over two hearings on April 11 and 12 apologizing for breaching the trust of Facebook users, saying the company had taken many steps to correct the problems with data sharing and third-party access to data, and outlined some of the changes it has made. But that rang hollow with many legislators.

They pointed to the company’s 20-year, 2011 consent decree with the Federal Trade Commission, in which it promised to give users notice and opt-in control of sharing of their data with third parties.

Zuckerberg said he did not think that access to data by Cambridge Analytica — the data firm controlled by right-wing donor and President Donald Trump supporter Robert Mercer — in violation of Facebook’s policies violated that decree, but he did say it was a mistake not to inform the FTC about the incident. Reports in The New York Times and U.K. newspapers The Observer and The Guardian cited documents which said Cambridge Analytica used data improperly obtained from Facebook to build voter profiles.

The FTC is currently investigating Facebook over that incident, as are U.K. authorities.

Zuckerberg, sounding like an ISP CEO pitching a voluntary network neutrality regime, argued last week for voluntary measures to address the company’s various issues, like mistakes in taking down conservative and political speech that did not violate its community standards, the weaponization of the platform by foreign election-meddlers, better informing viewers of how their data was being used, and more. But he also did not rule out regulation.

Seeking the Right Rules

Zuckerberg said he was not opposed to new privacy regulations, but that they had to be the “right regulation.” He seemed at least open to the possibility of a law requiring user opt-in permission for sharing their data with third parties, but said the details of such legislation were important.

And while Republicans are generally on the side of voluntary industry initiatives, this issue could be an exception.

Republican Sen. John Kennedy of Louisiana put it bluntly: “Mr. Zuckerberg, I come in peace. I don’t want to vote to have to regulate Facebook. But, by God, I will.”

Rep. Greg Walden (R-Ore.) told Fox News Channel that he wasn’t ruling out calling Twitter and Google to Washington for hearings, and sought input from Zuckerberg as to which other tech CEOs should get an invitation to testify in Washington.

Republicans are especially concerned that the left political leanings of many Silicon Valley executives translate to a bias against conservative views, a point that Zuckerberg conceded was valid. That is why some Republicans are not ready to push Facebook and others to take more control of their online content.

Just how Facebook’s new artificial intelligence algorithms decide what hate speech is, and what news to place in user’s News Feeds, is a topic of ongoing discussion, but only one of many raised by Washington’s new interest in drilling down into the edge business model.

The Facebook CEO told Congress that examples of conservative speech being censored were mistakes that had been corrected. He said mistakes involving liberal speech were also made, but that there was no directive from corporate to weed out any speech based on its politics, only on whether it was hateful or threatening. There, too, Facebook could do a better job, Zuckerberg said.

But “we’ll do better” solutions to problems involving billions of interactions among billions of people are unlikely to stem the tide.

Regulation and legislation are now clearly on the table for the Big Four edge providers — Facebook, Google, Twitter and Amazon — as Americans come to the realization of just how much of their data is being harvested and shared online. There was talk last week about hauling Twitter and Google before Congress as well.

ISPs have been arguing that any legislation or regulation of the ’net needs to include the edge, which makes more money off of, and collects far more data, from users. That argument has clearly found an audience.

If the current climate in Washington is any gauge, the death of privacy is a hot-button issue, and fueling the outrage in this partisan city are details that the Facebook/Cambridge Analytica data-mining issue involved selling the information to the Trump presidential campaign.

But it goes beyond privacy to ad dollars, the ones Facebook and others are attracting with all those billions of eyeballs, and the data being mined and monetized by relatively unregulated edge providers while their broadcast and cable competitors for those ads dollars remain regulated.

The buzz inside and outside D.C. last week over Zuckerberg’s appearance certainly made it seem like a flashpoint in the policy battle between ISPs and edge providers, though the focus was on Web users and their data.

Issue in the Spotlight

News networks blocked out coverage, on-air and online, for Zuckerberg’s testimony. The Open Markets Institute even launched a website to live-stream the hearings, and an #AskZuck digital ad campaign to get the online public to suggest questions that they wanted answered, with representatives of Free Press and the ACLU on hand to provide input as well.

“Facebook is a corporate monopoly whose business model is surveillance and user manipulation,” Open Markets Institute executive director Barry Lynn said. “It is a threat to our democracy.”

The group also launched a petition to express the sentiment that the edge not be let off the hook after the hearing lights were turned off “and Facebook’s lobbyists flood in.” The institute’s advisory board includes Tim Wu, who famously coined the term network neutrality.

That “don’t trust but verify” sentiment was echoed by several legislators during the Zuckerberg hearings as well, though Rep. Billy Long (R-Mo.) warned Congress did only two things well, nothing and overreacting, warning Zuckerberg to expect the latter.

Facebook supporters weren’t waiting until after the hearing to stick up for the social-media site. The Information Technology & Innovation Foundation was trying to head off a stampede toward regulating the edge before Zuckerberg even took the stand. The group, whose board members include representatives of Apple, Twitter, Amazon and Google, said Congress should resist the urge to legislate “how tech companies design their services.”

Instead, it said, “Members of Congress and regulators should hold Facebook accountable for its public commitments and past promises, and ensure that the company [Facebook] continues its transformation into a more responsible corporate citizen.”

Congress has now made privacy an issue, and is unlikely to look away soon.

“Facebook failed us,” Sen. Bill Nelson (D-Fla.), ranking member of the Senate Commerce Committee, said bluntly. That’s something Zuckerberg has all but acknowledged, chalking it up to a young, idealistic company whose growth and reach raced ahead of its ability to address data protection. But to Nelson that sounded more like nails on the chalkboard than chalk.

“Not only did they fail to safeguard the personal information of millions of users, they concealed it from us — and this is not the first time the company mishandled user information,” Nelson said. “Only now are they coming clean and informing those who have had their information compromised and telling us they are going to make things right.”

“The startling consumer abuses by Facebook and other tech giants necessitate swift legislative action rather than overdue apologies and hand-wringing,” Sen. Richard Blumenthal (D-Conn.) said of the need for legislation to give users opt-in control.

Still, not everyone was on the “regulate the edge” bandwagon, particularly in the House, where several members in addition to Long warned of overreacting.

Rep. Greg Walden (R-Ore.), chairman of the House Energy & Commerce Committee, who presided over one of the Zuckerberg hearings last week, told an audience at the NAB Show in Las Vegas earlier last week that the CEO was an incredible innovator. He said he was more in favor of cleaning out the regulatory underbrush so that all flowers could bloom in that landscape of permissionless innovation and light-touch regulation.

Hill Democrats, at least, have fought hard against that approach and refused to take ISPs at their pledges to protect internet privacy and openness, pledges that can be enforced by the Federal Trade Commission. Many of them seemed similarly unwilling to take edge providers at their word, particularly given that litany of past transgressions and apologies.

Putting an extra urgency on U.S. policymakers to figure out how to treat online data collection and privacy is the European Union’s upcoming General Data Protection Regulation, which take effect in May.

“These will likely become the global standard unless the U.S. acts quickly,” Layton said.

John Eggerton

Contributing editor John Eggerton has been an editor and/or writer on media regulation, legislation and policy for over four decades, including covering the FCC, FTC, Congress, the major media trade associations, and the federal courts. In addition to Multichannel News and Broadcasting + Cable, his work has appeared in Radio World, TV Technology, TV Fax, This Week in Consumer Electronics, Variety and the Encyclopedia Britannica.