Grilling Mark Zuckerberg Doesn't Solve Facebook's Problems

(Bloomberg View) -- As so often in the past, Mark Zuckerberg found himself apologizing this week. Testifying before Congress, he offered hours of penitence and self-reflection. “I’m sorry,” he said. “I’m committed to getting it right.”

And just what would getting it right entail?

In questioning Zuckerberg, the assembled members of Congress voiced a long series of abstract anxieties -- about data collection and fair competition, privacy and polarization, hate speech and fake news, about the whole maddening frenzy of online life. What all these concerns have in common is that they result from a simple trade-off at the heart of the digital economy: exchanging data for services.

Facebook Inc. has capitalized on this bargain more than most. It has developed sophisticated tools to engage users, track them, collect their most intimate data, and show them highly targeted advertising. It’s a great success. The problem is that Facebook has never been entirely forthcoming about the arrangement. Its users don’t clearly understand the trade-offs they’re making.

Yet questionable advertisers and outright scammers understand all too well: As one marketer talking about Facebook to Bloomberg Businessweek put it, “They go out and find the morons for me.” In 2016, journalists found that the network’s tools could be used to block certain ethnic groups from seeing housing ads, in what would very likely be a violation of federal law. As of November, the company still hadn’t quite gotten a handle on the problem. It’s now facing a lawsuit.

All that is bad enough. But the data-for-services arrangement has other pernicious side effects. Those vaunted tools of engagement, for example, can also encourage filter bubbles and fake news. That powerful advertising engine may be worsening polarization. Facebook’s peerless data trove is attractive to all manner of actors -- good and bad -- and can be hugely damaging in the wrong hands.

What the congressional committees seemed to be searching for was a way to separate the benefits of this trade-off from its drawbacks. That won’t be easy; it may not even be possible. But in trying to grapple with these problems, Washington should keep two principles in mind.

One is that the digital economy would benefit from more price transparency. If Facebook users had the option of paying a fee in return for a guarantee of privacy, say, they could better gauge how much their data was worth and make more informed choices about what they’re willing to divulge. Although this would surely make Facebook’s advertising less effective, it might forestall worse consequences down the road. As one congressman put it, “If you don’t fix this, we’re going to fix it for you.” Zuckerberg’s evident willingness to consider the idea suggests he gets the message.

A second challenge is how to ensure that companies collect data responsibly without killing their business models. One possibility -- aired briefly in Tuesday’s hearing -- is to treat online service providers as “information fiduciaries,” with legal duties to protect sensitive information much the way a doctor or lawyer must. With proper incentives in place, this could prevent companies from using data in unexpected or harmful ways, while also encouraging security, improving transparency, mitigating shady advertising practices, and offering consumers a powerful recourse when their trust has been violated. It could also help ensure that companies don’t facilitate discrimination against protected groups, and expose them to liability if they do. 

None of these reforms would necessarily “get it right.” But as Congress considers its options, the goal should be making the data-for-services bargain fairer and more transparent. Facebook’s goal should be avoiding more apology tours. And the public should remember that, even on the internet, there’s no such thing as a free lunch.

--Editors: Timothy Lavin, Clive Crook.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

©2018 Bloomberg L.P.