Here Are Some Ways Washington Could Rein In Facebook: QuickTake

(Bloomberg) -- Congress has warned Mark Zuckerberg, the Facebook Inc. chief executive, that the era of self-regulation for social media is likely over, following Facebook’s data breach and Russia’s use of the social-media behemoth in its disinformation campaign during the 2016 presidential election. During hearings in the U.S. Senate and House, Zuckerberg agreed that some regulation is inevitable, even desirable, though he wouldn’t be locked down on specifics. Whether lawmakers can agree on anything, how far it should go, and the implications for Facebook’s $55 billion in projected revenue this year are far from settled. Here are some of the ideas floating around:

Follow Europe’s Lead

Tougher rules for companies that collect and use consumer data go into effect in the European Union next month, and the Facebooks, Googles and Twitters of the world are already figuring out how to comply. Zuckerberg said Facebook plans to extend some of those protections worldwide. The General Data Protection Regulation sets new standards for any holder of sensitive data, from Amazon to local government councils. They must post clear terms and conditions for users and get “unambiguous” consent. Consumers get to have some information erased under a “right to be forgotten.” Senators Amy Klobuchar, a Democrat, and John Kennedy, a Republican, have proposed a measure that tracks some of the EU rules. Enacting sweeping new privacy laws in the U.S. is a tall order, however. Many members of Congress, though they might not like Facebook, are still skeptical of regulation.

Create a Government Overseer

A few members of Congress raised the idea of starting a "digital protection agency" to police how Americans’ data is shared online. It would have the power to penalize companies for data breaches and set rules for what data corporations can collect and how they can use it. When Representative Raul Ruiz, a Democrat, broached the idea with Zuckerberg, the CEO said the idea “deserves a lot of consideration,” but he also wanted to give more thought to the details.

Make Online Ads More Transparent

Facebook and Twitter have come out in support of the Honest Ads Act, legislation co-sponsored in the Senate by Democrats Klobuchar and Mark Warner and Republican John McCain. It would extend to online political ads the requirements that now apply on TV and radio to disclose an ad’s sponsor -- though, as critics point out, groups can offer names that give little hint to who they actually are. Facebook already announced changes to advertising policies that it says will make it harder for rogue operatives to push divisive points of view. The Federal Election Commission is also moving toward requiring online political ads to show details of sponsorship. Meanwhile, Maryland is poised to become the first state in the country to require social media sites to quickly post public information about who bought advertisements, whom they benefit and how much was spent.

Establish a Right to Sue

Illinois has the only law in the country that offers users the right to legal action when a company fails to protect their data, including the likeness of their eyes, fingers or face. The unique law is being invoked in a lawsuit against Facebook that aims to collect as much as $5,000 from the social media giant for each instance in which a user’s image has been used without consent.

Hold Sites Accountable for Content

Trump on April 11 signed a bill to combat online sex trafficking that opens websites to liability if they knowingly facilitate such crimes. The measure is a first step toward holding internet companies responsible for their websites’ content. It was supported by Facebook and the Internet Association, a trade group that counts Facebook, Alphabet Inc.’s Google and Twitter Inc. as members. But several tech companies and trade groups worry the law harms innovation and puts them at risk for misdeeds by others using their platforms. The law could also be a harbinger of efforts to control other illegal activity online, such as the drug trade.

Break Up the Internet Giants

Some lawmakers have started to talk about reining in the size of the tech Goliaths. The 20-year dry spell in U.S. monopoly cases has led economists and even some tech experts to conclude that enforcement has been too timid, with negative economic effects. Facebook and Google control more than half of U.S. internet mobile ad spending. Facebook’s share of mobile social-media traffic, including its WhatsApp, Messenger and Instagram units, is about 75 percent, by one estimate. Senator Lindsey Graham, a Republican, pressed Zuckerberg during the hearing about whether his company has any competitors. “You don’t think that you have a monopoly?” Graham said. “It certainly doesn’t feel that way to me,” Zuckerberg responded.

The Reference Shelf

• QuickTake explainers on the Facebook-Cambridge Analytica data breach and the European Union’s coming privacy-protection rules.
• More QuickTake explainers on whether Facebook and Google are too big and should be broken up, addictive apps and the global backlash against big tech.
• A Bloomberg Intelligence analyst writes that antitrust is a bigger threat to Facebook and Google than EU privacy rules.
• A Bloomberg News article summarizes the big takeaways from Facebook CEO Mark Zuckerberg’s April 10 Senate testimony.
• A Bloomberg Government transcript of the April 10 hearing.
• A New York Times op-ed on regulating the big five tech companies as monopolies.
• What Bloomberg reporters gleaned from Zuckerberg’s notes left open at the Senate hearing.

--With assistance from Kartikay Mehrotra.

To contact the reporters on this story: Ben Brody in Washington at btenerellabr@bloomberg.net;Gerrit De Vynck in New York at gdevynck@bloomberg.net;Todd Shields in Washington at tshields3@bloomberg.net

To contact the editors responsible for this story: Tom Giles at tgiles5@bloomberg.net, ;Jon Morgan at jmorgan97@bloomberg.net, Elizabeth Wasserman

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