Friday, October 8, 2021

The Best Way To Curb Big Tech's Influence Is To Limit Its Number of Users Until A Proper Investigation Is Carried Out

Frances Haugen, The 'Facebook Whistleblower' Testifying Before a Senate Subcommittee

The allegation that Facebook was pursuing profits rather than curbing hate speech leaves two questions for institutions: do the social network's actions merit a regulatory response and, if so, what should it be? One answer to the second question could be to limit the company's ability to register new users.

Critics of Facebook and other tech companies are increasingly vocal, and politicians are on alert. In some ways, this is a variation on an old song. Top industry executives have testified multiple times before Congress, and the FTC fined Facebook a record $5 billion over privacy issues in 2019.

Still, the profit machine continues to hum. Facebook's second-quarter revenue soared 56% year-over-year and it has 3.5 billion monthly active users across its family of platforms. YouTube's ad sales, with 2 billion monthly viewers, rose 84%. Amazon is also growing fast.

Tech regulators could take a cue from those on Wall Street. In 2018, after a wave of fake account scandals, the Fed ordered Wells Fargo to keep its assets below a certain level - just under $2 trillion - until it improved its governance and risk management. That unusual limit remains in place. A similar restriction on user or subscriber growth, should policymakers decide to do so, would have a quick effect. Those metrics are an obsession for Silicon Valley, as they fuel its influence and revenues, as well as its stock price.

China has already done this: its government in July banned VTC company Didi from recruiting new users pending an investigation into data security. In the US, Congress will likely have to legislate such a penalty and grant authority to a regulator like the FTC to enforce it. No easy task. But even the threat of such a measure could make big tech take its social impact more seriously.

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