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Mark Zuckerberg Is Calling for Regulation of Social Media To Lock in Facebook's Position

Break out your public-choice primers, folks.

Pete Souza, White HousePete Souza, White HouseSo now Mark Zuckerberg, the founder and head honcho at Facebook, is going all in on government regulation.

"The question," he told Wired's Nicholas Thompson, "isn't 'Should there be regulation or shouldn't there be?' It's 'How do you do it?'" On CNN, he said, "I actually am not sure we shouldn't be regulated. I think in general technology is an increasingly important trend in the world. I think the question is more what is the right regulation rather than 'yes or no should we be regulated?'"

What gives? I'd like to suggest that Zuckerberg's response has little or nothing to do with civic-mindedness in the wake of ridiculously overblown panics over Russian trolls buying campaign ads showing Jesus wrestling Satan, or still-cresting fears that Cambridge Analytica used Facebook data to deny Hillary Clinton her rightful role as first woman president.

Rather, Zuckerberg is using these incidents as a way to cement Facebook's centrality in a radically volatile social-media landscape. It was only a few weeks ago, after all, that we were treated to a spate of stories about how Facebook was losing younger users by the millions. From a representative account at Inc.:

Last year alone, the social network lost more than 1.4 million users in the 12 to 17-year old demographic, according to new report from research firm eMarketer. That represents a decline of nearly 10 percent, or roughly three times what analysts had predicted. Notably, 2017 was the first time that analysts expected the company to see a drop in usage for any age group. Overall, Facebook lost 2.8 million U.S. users under the age of 25, the data found....

2018 isn't shaping up to look any better. EMarketer predicts another 5.6 percent decline in users between 12 and 17 years old, and a 5.8 percent decline for those between 18 and 24. That likely has executives worried about the long-term dominance of the social media platform.

Only the paranoid survive in Silicon Valley, right? Zuckerberg may be young (he's just 33) but he's old enough to remember MySpace and Friendster. And he's certainly aware that Facebook's "pivot to video," brief emphasis on live events, and push for "insta-articles" didn't work out well for his company, publishers, or individual users. He hangs around with people who don't just remember AOL and Netscape but also invested in them. The history of business is a cemetery of whales, of "too big to fail" juggernauts who are barely remembered these days. The supermarket chain A&P once had bigger market share in its sector than Walmart does today. It revolutionized the buying and selling of groceries and has passed away, little-remembered and little-missed. Only 60 companies that appeared in the 1955 version of the Fortune 500 were still there in last year's list, economist Mark Perry reminds us. More important for the current conversation (emphasis in original):

At the current churn rate, about half of today's S&P 500 firms will be replaced over the next 10 years as "we enter a period of heightened volatility for leading companies across a range of industries, with the next ten years shaping up to be the most potentially turbulent in modern history" according to Innosight.

Go ask your kids if they're still playing Minecraft and get back to me. Zuckerberg surely understands all this better than most of us. And he's surrounded by folks who, despite libertarian bona fides, recognize a corollary too: Regulation often isn't forced upon leading firms in an industry but welcomed and even demanded by them, as a means to fix the market when they're in a particularly good position. This is part of the insight that guides the public-choice school of political economy, but it's not just libertarians such as Nobel laureate James Buchanan who think this way. Forty years ago, the socialist historian Gabriel Kolko rewrote the received interpretation of the Progressive Era along the same lines. By looking at how regulation unfolded during the Gilded Age, Kolko concluded that railroad tycoons and other robber barons actively sought out regulatory regimes that would keep them at the table. As Roy Childs, writing in Reason in 1971, summarized it: "Facing falling profits and diffusion of economic power, these businessmen then turned to the state to regulate the economy on their behalf."

More recently, we saw a variation on this rent-seeking theme with Uber. The disruptive company had barely stolen market share from taxi cabs in American cities before it started lobbying for rules that would benefit it while limiting new competition. As the Mercatus Center's Matt Mitchell told Reason in 2014, "They sort of stepped inside this regulatory velvet rope and then put it up right behind them." In the autonomous-vehicle race, Uber and other ride-sharing companies are already pushing for a ban on individuals owning their own self-driving cars.

So goes Facebook. By not simply relenting to regulation but actively embracing it and, more important, shaping it to his company's maximum benefit, Zuckerberg might just make sure that Facebook sticks around far longer than it would otherwise. In the parlance of historian Burton W. Folsom, the "market entrepreneur," who makes a fortune by providing a new or improved service at a great price, almost inevitably evolves into the "political entrepreneur," who uses regulation and other connections to stay on top. This predictable but dispiriting two-step may well be the greatest challenge to libertarian economics. It certainly is one of the toughest problems to fix.

Photo Credit: Pete Souza, White House

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  • Berresford||

    Absolutely right. The old Bell System welcomed regulation to protect it from populist politicians and give itself a de facto exemption from the antitrust laws. That worked for about 50 years.

  • Scarecrow Repair & Chippering||

    It won't work for FaceBook. Telephones were easy to define and compartmentalize and fence off. Social networks not so much. FaceBook may get themselves regulated, they may even get a few other social networks thrown into the mix, but the definitions will be so sloppy and defective that all it will do is suffocate those social networks. People will migrate to the unregulated ones.

  • Berresford||

    You may be right. I hope you are.

  • hello.||

    You'r so fucking stupid it's almost unbelievable.

  • MatthewSlyfield||

    The old Bell System was never unregulated. Their monopoly was created by the use of government force in the first place.

  • DajjaI||

    Yup. Might as well install that revolving door for the people who cycle between "Social media oversight czar" in Washington and "Director of Compliance" in Menlo Park. And of course all the twitter kids are excited and outdo each other in bloviating why it's necessary to save the planet because that's their dream job and they all literally think they have a shot at getting it.

  • sharmota4zeb||

    Our newly elected congressional representative for NJ-5 started as a speech writer for Bill Clinton during his time in the white house. Then he worked for a big tech company. I think it was Microsoft. Then he ran for congress.

  • SIV||

    Hmm "elephant graveyard"?

    *checks thesaurus*

    a cemetery of whales

    "that's better"

  • Hugh Akston||

    "galliformes boudoir"

  • AlmightyJB||

  • ||

    Richard McKenzie should re-write his lecture on rent-seeking with this performance as motivation.

  • AlmightyJB||

    Lol

  • Half-Virtue, Half-Vice||

    You know what? This is a great article. Gillespie knows how to write persuasively towards non-libertarian leaners.

    Even though Reason doesn't defend free speech anymore (British news, American journalists detained) I will still share this article with proggie friends, they will ignore of course but I'm still doing my part, Nick! Stop breaking my heart Reason.

  • Mickey Rat||

    I am not sure with journalists being detained by the UK Reason can credibly maintain the narrative that Trump is the gravest threat to free speech.

  • Rossami||

    The UK never recognized a right to free speech in the first place. I'm not seeing how their policy is any more a threat to US free speech now than it ever was before.

    On the other hand, the acidic combination of Trump's bloviating and the turn of the academic Left against free speech is a change and does pose a threat to US free speech.

  • UnrepentantCurmudgeon||

    Yes, Trump bloviates. Please name the last President who refrained from doing so.

  • Elston G||

    Trump does bloviate.

    What you refer to Trump doing as mere bloviating, sugarcoats the fact that he lies as easily as he breathes.
    No other president in the modern era even comes close to the level of untruths Trump bloviates.

  • Azathoth!!||

    Reason unironically refers to them as 'journalists'.

  • Scarecrow Repair & Chippering||

    This would backfire so well, I look forward to it. Not only will it suffocate FaceBook, it will eliminate all that gun-banning alt-right-banning non-pc-banning they are so proud of. And the definition of social-network-as-utility will be so poor that new social networks will spring up and thrive without all that bureaucratic suffocation.

  • sharmota4zeb||

    Group text messages might replace social media within a decade anyway.

  • hello.||

    Great. An even more centralized network that's ALREADY under government regulation.

  • Elston G||

    Is it a Libertarian principle to defend autocratic or fascist foreign regimes and their sociopolitical agenda generated fake news, designed
    to misinform and confuse American political discourse?
    Is it somehow "libertarian" that rogue entities be allowed the same platforms as credible news sources that use traditional journalistic standards of facts and Truth?
    If it is, libertarianism will never achieve any legitimacy.
    Ever.

  • GILMORE™||

    There are multiple dimensions to, and various parties interested in regulating social-media:

    1) FB is interested in the idea of potential regulation because

    a) its probably inevitable, and b) they'd like to shape/control how it works. Just like Philip Morris does the FDA's tobacco-policy.

    2) The prestige news-media world (broadcast networks, cable-news, newspapers) want Facebook regulated because

    a) money: they see it sucking up market share in a sort of 'insult-to-injury' kick to the nuts after 2 decades of constantly declining revenues and clicks. Social media could be a last nail in their coffin; or it could potentially be something they could use to their own benefit, if given the right levers.

    and b) "messaging": prestige media, consciously or not, have a huge herding-influence in shaping/controlling public perceptions, and they are infuriated that the wild-west of social-media undermines their control over 'what gets discussed'. the fact that shit goes viral, and they're forced into 'react-mode' rather than control/spin-mode, irritates them.

    3) Politicians love idea of regulating FB for reasons similar to prestige-media: it threatens traditional campaigning, undermines the bazilions they spend (see: Trump). Also presents tempting opportunity for pols to create 'permanent constituents' out of social-media networks. there's a goldmine in there, & they want to be first to stake claims.

    and there's plenty more angles not even considered here.

  • GILMORE™||

    * I think its also sometimes hard to see where the line between "opposition to regulation" and "attempting to control potential regulation" lies.

    Meaning: many companies in industries facing threats of regulation *pretend* to want to play along w/ regulators because they hear in back channels that the main politicians leading the charge mostly just want to use them as whipping boy;

    e.g. "bow and scrape and say 'its a concern' and tell the politicians how smart and right they are, and they'll probably leave you mostly alone"

    its a dog+pony show, basically. they go through the motions because it gives the pols the opportunity to appear that they're "doing something" about stuff voters seem to care about. and the public-companies play along because the worst thing would be to tell the politicians, =

    "What? No, you're stupid. that's stupid. and here's 100 lawyers much better at law-stuff than you to explain why."

    So they dance around and make qualified remarks suggesting that 'reasonable measures' are possible.

    Unless you've got an insider line (e.g. this is where Wall St analyst commentary can help) its hard to really get a handle on what the real state of affairs is. You can't get it straight from the news media reporting

  • Diane Reynolds (Paul.)||

    All of this is true, but in the end the goal is the same and simple: Shape the regulation so it benefits your operations, or at minimum, does the least harm to your sector.

    Unfortuantely, while one might be able to make a weak-tea case in regards to regulating ISPs-- the data carriers-- I don't even understand the argument to regulate social media. What... exactly are we regulating?

    We're talking about websites that allow users to post messages on the internet that other people can see. Some of these sites work entirely differently-- even though at the core they're doing the same thing. What sites would be included? My establishment media newspaper allows comments from users-- is that social networking? I haven't even heard a definition of terms on what it is we're regulating.

  • GILMORE™||

    ""in the end the goal is the same and simple""

    not really. my (first) point was that its a confluence of various goals from various parties.

    its not a single-motivating-interest, which is how Nick presents it. Lots of parties have their own agendas.

    my second point was that FB's superficial statements can be read multiple ways; many industries pretend to hug regulators while angling to ensure 'real' regulation never happens. If you assume its 100% rent-seeking and pursuit of regulatory capture, i think you misunderstand the dynamics.

    as an example - see: NRA statements in wake of mass shootings. Purists freak the hell out because they see conciliatory gestures as NRA welcoming new gun-regulation. That's not necessarily what's going on. Half of it is jawboning, and trying to take wind out of sails of the pitchfork-wielding types.

    I don't even understand the argument to regulate social media.

    that's probably because news media (see #2 above) don't want there to be any argument any more coherent than, "They are too-powerful!" and "they abuse your data".

    They don't want the public debate to be about any rational question, like "what is in the best interests of consumers"?; they want it to be entirely pathetic-appeal, pandering to fears, and simply *assume* that 'if the govt controlled this, it would be better'.

  • GILMORE™||

    *an example of the level at which calls for regulation of Facebook happen

    (The speaker is the "inventor of the world wide web" (the www. prefix))

    ""if companies work with governments, activists, academics and web users we can make sure platforms serve humanity. 3/9""

    note that the vision of "how things should work best (i.e. 'serve humanity') "....

    ....involves sticking 3 (or more) groups like 'governments, activists, and academics'.....

    ...in between the relationship 'companies' have with 'web users' (aka customers)

    Because everyone knows markets work best when you've got a lot of meddling middlemen with competing interests mucking around between producers and consumers.

    the argument, which you note is so sorely lacking, is basically the same one it always is: "unregulated" is bad by default.

  • hello.||

    'web users' (aka customers)

    Here's where you went wrong you fucking halfwit. Web users are not the customers of social media platforms. Advertisers are.

  • Diane Reynolds (Paul.)||

    I think we're saying the same thing. I agree that Facebook might not be (at this early moment) consciously trying to secure market share through regulatory capture, but my point was broad and includes your argument: "Shape the regulation so it benefits your operations, or at minimum, does the least harm to your sector."

    I obviously don't know what rattles around in Zuckerberg's little brain, but from what I've seen, for all the so-called libertarian-leanings of the tech sector, Zuckerberg seems to very star-struck by establishment power and technocrats, and seems to see himself as one of them.

    Barack Obama and Angela Merkel are trying to make the world a better place from the public sphere, he's doing the same from the private sphere. It's my opinion that Zuckerberg truly believes that rural poor in undeveloped countries having access to Facebook and the internet will improve their lives.

    To Zuckerberg, Facebook isn't just a place for people to post family dog pictures, Facebook is akin to a government ministry whose mission is to do good works. The fact that he's willing to partner with regulators is evidence of that.

  • hello.||

    To Zuckerberg, Facebook isn't just a place for people to post family dog pictures, Facebook is akin to a government ministry whose mission is to do good works.

    Facebook is a means to an end for Zuckerberg. He doesn't give a fuck about anything but being part of "the elite" and wielding power and has never made any illusions otherwise.

  • Elston G||

    Baseless assertion. You don't know Zuckerberg from Adam.
    Don't even pretend you do.

  • UnrepentantCurmudgeon||

    You need to remove your rose-colored glasses. Barack Obama and Angela Merkel are pursuing their agenda, benefitting their cronies and trying to drive their opposition into the cold, harsh winter. It has nothing to do with "making the world a better place", but making their power as absolute as it can be.

  • UnrepentantCurmudgeon||

    You miss the point. The purpose of regulating in this scenario is not to benefit operations or do little harm, it is to make competition impossible because of the mare's nest of regulations that one must now step through.

  • Elston G||

    Credibility, integrity, facts, truth nor righteousness never even enters the libertarian mind when contemplating a reason a private platform like Facebook might want to eradicate blatant foreign propaganda, misinformation and bad actors with a rogue agenda.
    The libertarian mindset continues to astound.
    My question to you.
    Do you wonder why libertarianism, as espoused by you clowns, has zero legitimacy?

  • $park¥ leftist poser||

    Go ask your kids if they're still playing Minecraft and get back to me

    Since you asked, my 17 year old son was playing it a couple nights ago with a few friends.

  • Don't look at me.||

    That was a cover story for the beer soaked party that they went to.

  • $park¥ leftist poser||

    I'm sure I would have noticed my son drinking beer in my living room.

  • Half-Virtue, Half-Vice||

    Missing any tide pods?

  • BestUsedCarSales||

    Yeah, that was a weird comment. Minecraft is still quite popular with kids.

  • Half-Virtue, Half-Vice||

    He should have said Destiny 2. But props to old folks for trying.

  • sharmota4zeb||

    Do you guys still play Sim City?

  • Diane Reynolds (Paul.)||

    I would fucking unsubscribe facebook right now... if I actually had an account on the platform.

  • Ken Shultz||

    Facebook probably couldn't have supplanted MySpace with the kinds of regulation Zuckerberg is talking about, and, yeah, why would he want competition from whatever comes next?

    I guess it's the fate of libertarians to defend things we don't like. Yeah, I oppose regulating Facebook for a number of reasons--because I despise Facebook among them.

  • Ken Shultz||

    P.S. Facebook's acquisition of WhatsApp is also a disgrace.

    Seeing Facebook buy out the go-to end to end encrypted, secure communication service is like seeing a glue factory buy out a horse farm.

    Why would anybody trust a secure messaging application owned by Facebook?

  • Don't look at me.||

    Facebook idiots will.

  • Diane Reynolds (Paul.)||

    Facebook is already too big a company to innovate. Their only choice is to buy innovation.

  • Ken Shultz||

    But the attraction of the service is compromised by the fact that it's owned by Facebook.

    One of the things I want from a secure communication application is to make sure Facebook doesn't see anything!

    I understand foxes are now offering free overnight stays to hens in the hen house chain they bought.

  • GILMORE™||

    People should be reminded that, when Microsoft integrated email encryption into Outlook, the first thing they did was hand over the keys to it to the Feds

    Also: when you google for detailed reporting on that 2013 story, you'll find 100 things in the UK press, and on tech-industry websites, etc. ... but little in the way of hot-reporting from WaPo, NYT, CNN, etc. sure, yes, they covered the subject - but close inspection of things like 'where their stories were featured' (front pages? or back, tech section) or 'how far beyond they went from merely reporting the same things other people were disclosing, or doing their own original investigations'... you'll find they mostly dilute the topic, and tend to position the story as a "everyone in silicon valley was doing it" sort of thing.

    in short, Prestige-media mostly serving as damage-control for the companies colluding w/ govt.

  • Diane Reynolds (Paul.)||

    But the attraction of the service is compromised by the fact that it's owned by Facebook.

    No disagreement there.

  • Ken Shultz||

    It's like Scientologists buying out a website that caters to people who need help in escaping Scientology.

  • Diane Reynolds (Paul.)||

    The constant stream of Zuckerberg pictures rubbing elbows with the world's elite politicians tells you everything you need to know about where Zuckerberg wants to be.

  • BestUsedCarSales||

    He'll always be a nerd, it's a hard realization to have to deal with, and I think he hasn't had it yet.

  • jelabarre||

    Ah, you mean the same Zuckerberg that bribes county executives and legislators to tear up a perfectly-functional tourist railroad so that he and *maybe* three friends will have a rail-trail to ride bikes on? I can tell you where **I'd** like him to be right now.

  • IceTrey||

    Everything he said should be regulated are things that the company could just go ahead and do without any regulation. If he thinks people's data should be protected protect people's data. If he thinks certain data shouldn't be sold don't sell it. It's not that not hard.

  • UnrepentantCurmudgeon||

    All of which maybe tells you that these things are not his real concerns. If you thought about it, that is

  • MarkLastname||

    Zuckerberg is a Progressive, and as such instinctively favors more regulation of anything that can be regulated. That may be the simplest explanation.

  • hello.||

    Reason simply can't fathom that possibility because Silicon Valley is a never ending font of good and righteousness as far as they're concerned.

  • Number 2||

    Interesting. I was not aware that Facebook was losing millions of young users.

    On Bloomberg radio in the morning, the drop in Facebook share prices has been attributed entirely to the controversy over Trump using user information to reach voters. The loss of young users, which clearly has an impact on Facebook's future income stream, would seem to me to be a more likely cause of the drop in the share price.

  • Diane Reynolds (Paul.)||

    Interesting. I was not aware that Facebook was losing millions of young users.

    I had no data on this, but there was lots of circumstantial evidence all around. A couple of years ago, I started to note that my kids/daughter/nieces/nephews didn't use facebook. Not one. And when I joked with my daughter about "facebooking", she looked at me and said, "Facebook is like... for old people, Daddy."

    Literally. That was the perception.

    Also I was noticing more and more accounts on Facebook had no updates in the last couple of years. It's like I could sense this fatigue among facebook users.

  • sharmota4zeb||

    Snap Chat and Kik are the new popular brands from what I hear. I don't want to buy shares in either, but if I had to choose, I would pick Snap Chat. Porn stars have Snap Chat accounts. It's a VHS vs Betamax thing.

  • UnrepentantCurmudgeon||

    I stopped regular posting on FB at least a couple of years ago. My account stays up because it is the way that people can reach me if they don't have my phone number (very few do) or my address (even fewer do). I do my best to keep my life private knowing all the while that, like Canut, I'm sweeping back the waves with a broom.

  • Diane Reynolds (Paul.)||

    Oh, and everyone's talking about Trump using user information to reach voters, but the Obama campaign bragged about it for the 2012 election, and there was even a TED talk about it.

    It seemed that Obama was the "social networking president" which was spoken of in glowing terms by the media.

  • mtrueman||

    "It seemed that Obama was the "social networking president" which was spoken of in glowing terms by the media."

    You have a problem with that?

  • hello.||

    He didn't say he did you fucking idiot, can you read?

  • Diane Reynolds (Paul.)||

  • UnrepentantCurmudgeon||

    More than that, they lionized him for it.

  • Diane Reynolds (Paul.)||

    I feel that the big social networking companies-- and Google/Youtube et al are possibly seeing the peak of their dominance now. They're now being scrutinized from both ends. One group of people see Facebook as a problem because they helped Trump win through negligence and lack of policing of their content. The other group of people see Facebook as becoming an active agent in promoting a certain political outlook or trying to create a politically motivated narrative.

  • UnrepentantCurmudgeon||

    So the left sees FB as a problem because, against all their instincts, FB actually allowed its platform to function in some vague way something like an open political forum? Got it.

  • Alcibiades||

    Never understood the fascination with FB.
    Terrible, cluttered page layouts etc.

  • flyfishnevada||

    Sounds like sound business strategy. Gazillionaire with plenty of funds to spread around to congressional campaigns (one way or another) worked with Congress to regulate his industry. Innovation slows, new rivals find it difficult to enter the market and FB's market share is assured for decades. I thought this was how business was done in a heavily regulated free market. Companies and industries grow until they're big enough to ask Uncle Sam for protection.

  • ||

    At least we know the money didnt change him, Zuckerburg was a douchebag before he got his.

  • vek||

    I hope Facebook, YouTube etc fall flat on their face. Their censorship all of a sudden, out of the blue, as soon as conservatives and libertarians were starting to gain traction on their platforms is shameless and horrible. I've always hated social networking anyway. YouTube is cool as an actual platform for real media, but who wants to hear about every dumb sandwich their friends eat for lunch, or the new puppy your friend from middle school just got?

  • Marcus Aurelius||

    You know who else had a 'progressive' regulation plan?

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