Billionaire Mark Zuckerberg is under fire, so he’s running behind the Big Government barricade that has sheltered Big Businesses for decades.
“The question,” the Facebook CEO said in an interview with Wired this week, “isn’t ‘Should there be regulation or shouldn’t there be?’ It’s, ‘How do you do it?’”
No, that’s the reverse of the truth. The core question remains whether or not there should be regulation. Business embracing government is nothing new. We’ve seen this retreat to regulation before countless times, and the results aren’t pretty.
You may recall Microsoft in the late 1990s. Even as it became a software giant, its lobbying shop was little more than a cubicle in its Bethesda, Md., sales office. For this lack of attention to Washington, CEO Bill Gates was scolded by both parties.
“The industry had an attitude that government should do what it needs to do but leave us alone,” one congressional technology staffer complained at the time. “Their hands-off approach to Washington will come back to haunt them.”
Sure enough, senators summoned Gates before the Judiciary Committee and lambasted him, all while former President Bill Clinton’s Federal Trade Commission investigated the danger of Netscape taking over the browser market.
“If you want to get involved in business,” Sen. Orrin Hatch, R-Utah, explained to tech executives after the whole unpleasantness, “you should get involved in politics.”
Microsoft’s lobbying office is now in a gleaming new tower on K Street, and the company spends $8 million to $10 million a year on lobbying. Its in-house lobbying operation includes at least five former congressional staffers, and former senior officials at the State Department, the White House, and the Patent and Trade Office. The 24 lobbying firms Microsoft retains include dozens of public servants, including former Rep. Howard Berman (a Judiciary Committee alumnus).
These days, in addition to lobbying for federal funding and special tax credits for software, Microsoft supports regulations such as net neutrality, which freezes the current business model in place and prevents innovation.
Now, Facebook is getting an earful. Some of it is deserved, such as criticism for playing patsy with Russian President Vladimir Putin. Some of it is properly a matter of markets or courts. But Washington politicians, as they did 20 years ago with Microsoft, are coming calling on Zuckerberg. Hence, the retreat to regulation.
So, what regulations is Zuckerberg thinking about?
He suggested that “companies have a responsibility to use [artificial intelligence] tools to kind of self-regulate content …” That is, maybe social media platforms should be forced to have advanced software to detect and block the posting of “hate speech.” (That, of course, raises the specter — actually, it’s already a reality — of left-liberal dominated tech companies deciding what news and opinion they will allow customers to read).
This wouldn’t be too hard for Facebook, Zuckerberg explained. “We’re a successful enough company that we can employ 15,000 people to work on security …”
What about smaller companies that don’t have that sort of staff, or can’t afford artificial intelligence technology? Under Zuckerberg’s regulation, they’d be crushed.
This is the beauty of the retreat to regulation. Washington and most of the media applaud your embrace of it as a sign of “taking responsibility.” Meanwhile, you’re just strengthening your hold on your market and making it less competitive and therefore poorer at serving customers.
Philip Morris supported former President Barack Obama’s tobacco regulation. Mattel supported federal regulation on toy manufacturing. Goldman Sachs said of Dodd-Frank, “We will be among the biggest beneficiaries of reform.” H&R Block is still fighting for federal regulation on tax preparers.
We could go on for an entire editorial, but the point is this: When a big business starts helping build regulatory barricades, we shouldn’t applaud.
Regulation, by raising costs, acts as a barrier to entry. It rewards those who, like Microsoft and Goldman Sachs today, have the best lobbyists and the most access to power. In so doing, it protects monopolies and oligopolies.
The single biggest problem with Facebook, from a consumer perspective, is its sheer market power. Users who want more privacy don’t have anywhere else to go. Regulations that keep out competitors and thus cement Facebook’s position would be counterproductive.
Zuckerberg surely knows this. He remembers former titans of tech, such as Netscape and MySpace. He knows how fickle the market is. So, he is seeking safety today, behind the barricade of big government.
