Sen. Lindsey Graham, a South Carolina Republican who is more pro-business than most, asked Mark Zuckerberg, CEO of Facebook, if he welcomes regulation of his business. “If it’s the right regulation, yes,” Zuckerberg said.
“Would you submit to us some proposed regulations?” Graham asked him.
This is how regulatory capture happens. This is the path by which Big Business and Big Government kill smaller competitors: pushing regulations that the big guys can afford and which the big guys are best positioned to shape, thus giving the big guys a competitive advantage far beyond what the marketplace would give them.
Liberals and reporters tend to assume that big business’s policy agenda is one of laissez faire. For instance, look at this report by the Center for Public Integrity on Facebook’s lobbying clout. It’s a good report, but it’s built entirely on the premise that Facebook will use this clout to prevent regulation. And nowhere in the piece do the reporters present evidence that it is Facebook’s agenda.
That matters a lot, because it isn’t Facebook’s agenda to avoid regulation. In fact, Facebook has repeatedly — in this hearing and before it — said it welcomes regulation. Why? For three main reasons.
1) Calling off the dogs
This is the only one that 90 percent of the media will get: If Facebook plays nice with politicians and praises their bills, the politicians will like Facebook. This is also the least important of the reasons Facebook will support regulation.
2) Facebook is the inside guy and thus can shape regulations
Graham literally asked Zuckerberg to help him write the regulations on social media a few seconds after Zuckerberg expressed how much pressure he feels from other tech companies. Don’t you think Zuckerberg will steer the regulation towards helping Facebook and hurting competitors? Don’t you think that impressive lobbying team and web of campaign donations means that Facebook writes the rules?
3) Facebook is the big guy and thus can afford the regulations
After Zuckerberg described new privacy rules, Sen. Amy Klobuchar, D-Minn., said she hoped Zuckerberg “would support some privacy rules, so that everybody’s playing by the same rules.” That is, she wants to mandate the business practices Facebook already employs. Let’s say those practices are expensive. Maybe they are valuable to consumers or maybe they’re not. If those practices are expensive, but not of much valuable to customers, how are they advantageous to Facebook? Because if Congress requires those practices for everyone, it is thus adding costs to Facebook’s competitors that Facebook itself has been paying all along. Not only does this hurt the competition, but it has the added benefit of discouraging new entrants to the market.
Zuckerberg has suggested regulations requiring social media platforms employ artificial intelligence to weed out hate speech. Separately, he’s noted that his company is already pouring tons of resources into this effort. You see how this works?
The most egregious part of it all is that the company that caused the whole problem in the first place is given the privilege of “fixing” the problem to its own advantage.
Republicans are going to say they don’t want regulations except for the “pro-business” ones that Facebook likes. Democrats are going to say they’re tough on business, except for the “well-behaved” businesses who say “regulate me.” Both parties are going to love it when Facebook starts hiring up more of their aides and lawmakers and donating more to their incumbents. The media is going to praise Facebook for being reasonable.
And government will get bigger, big business will get stronger, and competition will be thwarted.
