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View from Washington: The times they are a-changing

Social media's FAT is about to get trimmed.

It was a horrible week for social media’s titans, the FAT of Facebook, Alphabet (Google) and Twitter. It may turn out to be their worst.

It began with record financial results but bruising hearings on Capitol Hill over Russian hacking, and events elsewhere pushed issues of not just resources but also executive competence into the spotlight. Worse for the FATs, it brought regulation that could undermine their business models much closer.

Among the lowlights in Washington alone:

  • For the first time evidence emerged that Russian trolls have not only been seeking to influence political discourse but also provoke civil disorder in the USA via social media.
  • The FAT companies were forced to admit that while they can target advertising precisely, they do not know who is actually buying the ads.
  • Facebook had to increase its estimate for the number of US voters reached by Russian-booked political ads from 126 million to nearly 150 million – and admit that it expects to find more.
  • Alphabet and Twitter, for their part, are yet to convince Washington politicians that their own investigations have done much more than lazily piggy-back on Facebook’s findings.

Then there were further revelations in the real real-world. The Paradise Papers leak revealed that both Facebook and Twitter have had significant investors with links to the Kremlin. And there was the 11-minute shutdown of President Donald Trump’s Twitter account by, according to the New York Times, a contractor. Yes, not a staffer – a contractor.

But let’s get back to Washington. Because it is the US government’s ability to subject social media to tighter regulation that the companies fear most. Right now, they are not responsible for posted content. If that changes….

That is probably why Facebook, Alphabet and Twitter sent senior lawyers to face two days of Congressional scrutiny rather than their CEOs. A big mistake, but more of that later.

The first takeaway from the hearings is that while Republican and Democrat politicians differ over how much influence Russian cyber warfare had on the result of the 2016 Presidential election, both sides are fed up with the FATs and their response to the broader issue of Muscovite meddling.

A second is that the FATs came under the most scathing attacks from politicians normally considered tech-friendly.

To illustrate the degree to which irritation with social media is bipartisan, go back to the original list of lowlights.

It was Republican Senator Richard Burr who drew the line between two ads placed by Russian cyber-agents provacateurs to provoke civil unrest in Houston in May 2016.

The ads targeted members of two troll-created Facebook groups, United Muslims of America and Heart of Texas. The aim of the first is obvious from its name; the second promoted the extreme position that Texas should secede from the USA. Both groups had more than 100,000 followers.

They were exhorted by the ads to attend rallies – one supporting the validity of Islamic thought, the other opposing the “Islamification of Texas” – at the same place and time. Total cost for both ads was $200.

Inevitably, confrontation followed, though thankfully mostly verbal. But with American memories of events in Charlottesville still fresh, Burr’s point was clear.

“You commented yesterday that your company’s goal is bringing people together. In this case, people were brought together to foment conflict, and Facebook enabled that event to happen,” Burr told Facebook general counsel Colin Stretch. “I would say that Facebook has failed in their goal. From a computer in St Petersburg, Russia, these operators can create and promote events anywhere in the United States in an attempt to tear apart our society.”

Similarly, it was another Republican Senator, John Kennedy of Louisiana, who forensically drew out Facebook’s failure to track its advertisers.

But it was two Democrats who expressed that annoyance most aggressively, and their backgrounds matter.

Diane Feinstein is California’s senior Senator and a former Mayor of San Francisco. The cred of Mark Warner, Virginia’s senior Senator goes even deeper: he made his first fortune in mobile communications and a second as a tech-focused venture capitalist.

Politicians who have an idea of how our business works. They do exist.

Feinstein let rip her frustration in direct terms, observing to the FATs’ lawyers that, “Gentlemen, we are not going away” and “You just don’t get it.”

Warner was equally blunt. “The idea that you had no idea that any of this [Russian interference] was happening strains my credibility,” he said. This is DC speak for, “Cut the BS.”

So, what now?

Congressional hearings always have a theatrical content. The difference with these is that the politicians’ concern is their own backyard, Russian disruption of American democracy. And they think Silicon Valley is taking the mick.

Cynical? Yes - this is Washington. Dangerous? For the FATs, certainly.

So over about nine hours of hearings, a new poison dripped into the subject: just how well are these companies managed?

Until last week, the FATs were totems of the American business model, the original ‘unicorns’. Now, they look set to get their horns sawed.

Their future is less about what they promise to do, and more what they should have done – Mark Zuckerberg’s dismissal of the idea that Facebook influenced the US election may prove one of the most foolhardy statements of all time.

These hearings started with, from the Valley’s side, a serious tactical mistake. They sent the lawyers. What Washington wanted was some contrite CEOs, not yet more lawyerly obfuscation - Sheryl Sandberg, Eric Schmidt and Jack Dorsey all screwed up. Bigly.

As they always do when they get CEO-snubbed, the politicians went for the FATs’ processes. Are you doing your job? And what they drew out is genuinely worrying.

There are abuses – and not just political – that should be being properly addressed. There are CEOs who should be more honest about the challenges they face. And until they are, can we trust the products they offer?

–Well, from where does a fish rot?

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