Friday, May 7, 2010

Facebook - Too big to regulate?

Robert Scoble of the Scobleiezer blog expressed the opinion last week that it is too late to regulate Facebook. He raises some good points, but I think he is missing a couple of things, too. He raises several points, covering both what Facebook has done, and what governments might do to regulate it (and why it's moot to try).

For his discussion of what Facebook has done and why it's shaking up internet businesses that never expected Facebook to have any impact on them, read his post. It's interesting (and troubling), but for my purposes, what he says about the futility of trying to regulate Facebook is more important.

So what exactly does Mr. Scoble think governments can do to Facebook? Effectively, not much, because anything they do will have either no effect or the opposite of the intended effect. But he does list three things governments can do - four reasons it won't matter if they do - along with my comments in italics:
Well, first of all, what can government do?

1. They can force Facebook to switch its defaults on its new Instant Personalization program. The government could force Facebook to turn that feature off by default and make me “opt in” for you to see my Pandora music.

2. They could fine Facebook for its behavior.

3. They could call Mark Zuckerberg in front of Congress and call him nasty names.

But what else could the government do? I don’t see too many options. Do you?

So, why is it too late to regulate Facebook?

1. The damage is done. Well, let’s assume they made them switch Instant Personalization to opt in. Who cares? The damage is done. My Pandora already has all your music shared with me. Most Facebook members won’t change their privacy settings from what they already are. So, old users will keep sharing their music and only new members will be asked to opt in to these new privacy-sharing features.

Like he says, most people will never change their privacy settings, so this could actually be very effective. It's better if done quickly so as few people as possible notice, but until more services join up changing the settings from default-share to default-private will go largely unnoticed.

2. The regulation will come too slowly. Government never moves fast. Even when it’s motivated. So Zuckerberg has at least a few months to aggregate his power before Government slaps him on the hand. Government is not going to be able to prevent that top 50 website from putting Facebook’s new features into its service. Government will not keep me from using Pandora.

Unfortunately, this is very true. Governments act slow unless directly threatened (ie, Pearl Harbor or 9/11). Each month action is delayed action becomes more difficult.

3. The regulation will come after we get used to new privacy landscape. Already I’m finding I’m getting used to the fact that you all can see my data and that I can see yours. So, if Government comes along and tries to regulate that it will get pushback from me. Why? Well, I actually like the new Pandora features. I’m finding a ton of cool music because Zuckerberg forced you to give up some of your privacy. So what that I can see that you like Kenny G? Users will get addicted to these new features and they won’t take kindly to some government jerk taking away these new features.

Again, very true. The unfortunate truth is that users will decide they're willing to lose a little privacy for these nice features, but won't realize how much privacy they're giving up until it's too late.

4. Giving Zuckerberg a fine will not change Facebook’s behavior. If anything it will just push him to monetize these features more aggressively in order to pay the fine. Just wait until Cocacola icons show up next to all those Facebook like buttons. Government taxation, which really is what fines are, might have a negative effect long term.

Sadly, Mr Scoble knows what he's talking about. Fines will have as much effect as they did on Microsoft. The threat of being broken into three companies scared MS, not fines. And even that had little effect.

Robert is right. Of the three options he sees, only one has any chance of success. Government intervention could make some changes to the way Facebook handles user data, but unless it's done quickly, it will just be going through the motions. It's up to the users of Facebook to force Mark Zuckerberg to respect their privacy. Sadly, most don't realize the value of what they are giving up to him, so they are unlikely to do anything.