Silicon Valley has invested billions of dollars in the digital economy and the resulting innovation has sparked ethical and legal questions without clear answers. Although venture capitalist Peter Thiel once seriously explored the prospect of seasteading — effectively, creating a floating libertarian utopia that would circumvent economic controls — many tech executives remain open to reasonable and clear regulation.
Given the financial stakes, imagine the horror felt in C-suites across the nation back in April, when executives watched the live feed of Mark Zuckerberg’s testimony and slowly began to realize that many powerful politicians fundamentally misunderstand the way that technology works. Most notably, 84-year-old Senator Orrin Hatch asked, “How do you sustain a business model in which users don’t pay for your service?” Zuckerberg blinked, perhaps in shock, before responding, “Senator, we run ads.” A smirk briefly appeared on his face.
An edited video titled “Zuckerberg explains the Internet to Congress” went viral. CNN ran with the headline “How the Senate’s tech illiteracy saved Mark Zuckerberg.” DMN mentioned the issue as one of its key takeaways from the hearings.
Motivations vary in Silicon Valley. It’s not unusual for technologists to harbor idealistic notions about changing the world. There is also a widespread desire among VCs to discover the next “unicorn” and swiftly monetize its magic. Intelligently-crafted regulation would allow progress to be made and profits to be reaped, but there is declining faith that lawmakers in D.C. are up to the task.
To be clear, restrictions of any type will slow things down. But that isn’t necessarily a bad thing. Maximum speed should not be your chief concern if you are going at 200mph toward a cliff. To the contrary, moderation is essential to survival.
Of course, this view disagrees with the creed by which Zuckerberg founded and grew Facebook. “Move fast and break things,” the now-billionaire CEO told his underlings as his social network spread across the planet. Zuckerberg has since revised that philosophy to add on emphasis on stable infrastructure.
GDPR is one attempt at applying the brakes on irresponsible tech industry practices. The EU law allows users to better understand the data being collected on them and requires prompt notification of data breaches, in addition to other protections. GDPR and the Facebook-Cambridge Analytica scandal have prompted digital companies to update and clarify their privacy policies and to reconsider their own practices. Reactions to GDPR have been mixed.
Silicon Valley is worried because extensive regulations could interfere with investments and over-complicate operations. Massive amounts of capital are being poured into untested technological ideas with nascent regulations. For instance, the total aggregate market cap of all crypto-assets has now reached $800 billion, according to PitchBook’s 2018 Venture Capital Outlook. Wall Street Journal analysis revealed that the venture landscape is also being altered by
Chinese money. “Asian investors directed nearly as much money into startups last year as American investors did — 40% of the record $154 billion in global venture financing versus 44%,” the Journal found. Suffice it to say, innovators everywhere have a lot of skin in the game.
But so too does the public. Data breaches impact real lives, and citizens also need to brace themselves for the destabilizing economic impact of AI, which could be aggravated by regulatory recklessness or ignorance.
Technology is poised to fundamentally change the global economy, with or without the influence of government. Political change will not be incidental; it is built into the architecture of current innovation. Some of the latest disruptive technologies are explicitly designed to automate entire job sectors, upend the monetary system, strengthen mass surveillance, replace soldiers with robots, and harvest personal data for commercial and political purposes.
The implications here are daunting enough, but this list leaves out dozens of other politically significant initiatives. Consider these life-changing (or ending) ripple effects, and then think about the fact that Facebook failed to match the public’s expectations when it came to app permissions, a relatively benign issue given this widened context.
Some politicians feel that tech companies aren’t being held accountable. British Conservative MEP Syed Kamall complained that Mark Zuckerberg’s evasiveness during the recent European Parliament hearings amounted to a “get-out-of-jail-free card” and said that regulators are now left trying to “cure a disease without knowing what the illness is.” To some extent, this diagnostic failure could also be attributed to lawmakers themselves. Mark Zuckerberg is neither the doctor nor patient in this scenario. He’s the CEO of a for-profit company.
During that same hearing, Zuckerberg apologized and said, “We didn’t take a broad enough view of our responsibility.” But why would he? It’s the government’s responsibility to take a broad view. It’s Zuckerberg’s job to keep users engaged and, as he told Sen. Hatch, to run ads.
Belgian politician Guy Verhofstadt candidly stated that Zuckerberg’s own legacy is at stake and he could either choose to be in the pantheon of computer greats alongside Bill Gates and Steve Jobs, or be forever known as the genius responsible for creating a “digital monster” that is destroying society. While it’s unknown whether this appeal to Zuckerberg’s ego will be personally impactful, Verhofstadt’s more concrete observations set a good benchmark for the awareness level that is a prerequisite for effective lawmaking.
Verhofstadt said he is frightened by Facebook’s plans to scrutinize content and decide what to keep and take away. He said that if Facebook doesn’t adequately address politicians’ questions in a written form, the European Union should strengthen its rules so that they are even stronger than GDPR. He mentioned that if companies like Facebook continue to abuse their access to data, then affected users have a right to monetary compensation.
Verhofstadt also threatened to activate the European anti-trust authorities to break up what he characterized as a Facebook monopoly on digital social contacts. All of these recommendations are controversial. However, they are at least rooted in sufficient understanding.
Clearly expressed public opinion could also serve to influence any new technology regulations. A Ponemon Institute survey, conducted shortly after the scandal broke, reflected a loss of public trust in Facebook and indicated that many people thought that Facebook had an obligation to provide financial compensation to users whose personal data was mishandled. However, this professed loss of public confidence has not translated into an abandonment of the social media platform.
The reality is that there is no master plan overseeing the development of technology and its smooth integration into society. Right now, we are all just winging it. This elaborate act of improvisation sometimes requires the reworking and reinterpretation of old laws. For instance, courts have found that Facebook messages are admissible under traditional evidence rules, but in a move that is shocking by modern standards, a judge in 1999 mentioned concerns about hackers, declared that “any evidence procured off the Internet is adequate for almost nothing,” and concluded, “Instead of relying on the voodoo information taken from the Internet, Plaintiff must hunt for hard copy back-up documentation in admissible form.”
This same haphazard legal adaptation and reinterpretation has been evident in the net neutrality debate, wherein much legal authority rests upon The Communications Act of 1934, which was signed into law by President Franklin D. Roosevelt before the Turing machine had even been conceived.
The unavoidable clumsiness of governance will not deter technological progress. Data will continue to inform marketing and will reduce advertising noise in all media channels. Intrusions will become socially normalized over time. For most people, #deleteFacebook was a means of venting frustration and not an action that was actually taken. However, the scandal has now sounded alarm bells around lawmakers’ technological competence, and that exposed vulnerability will be difficult to forget. If a company with well over $500B in market cap can’t handle what literally started out as a personality quiz, why would anyone expect that other, more ambitious tech companies will remain scandal-free, if left to their own devices (pun intended)?
A personality quiz is small fries once you look at what’s being cooked up in the kitchen. Amazon is selling a “Big Brother”-style facial recognition system to police departments. Unmanned store technologies have already figured out a way to automate the role of retail workers. Problematically, that is actually the most widely held job in the U.S. Mass unemployment is likely fast approaching.
The government can serve to guide these changes without going full technocracy or creating a revolving door problem. Lawmakers are well-positioned to filter out the negatives through nimble but appropriate rules. However, they need to have at least some prerequisite knowledge and must also be afforded the time and resources to delve into tech issues, beyond the optics of testimony. Although it is not reasonable to expect all representatives to achieve anything more than a broad understanding of technology, the legislature’s deficiencies could be counteracted by a few representatives in possession of knowledge that is narrow and deep. CTOs, pack your bags and make like Jimmy Stewart!
This change in leadership is long overdue. “Black Mirror” is popular inside and outside of the tech community because everyone knows that modern technologies have the potential to go radically wrong. However, these technological concerns don’t seem to be reflected when Americans cast their ballots. It’s time to send tech-savvy representatives to D.C.
