The Social Dynamics of Facebook’s Rise (and Fall?)

The FTC case against the giant company has real teeth, and lots of damning details on how Mark Zuckerberg has behaved like a monopolist unable to beat his competitors.

Last week, I finished reading Sheera Frenkel and Cecilia Kang’s new book An Ugly Truth: Inside Facebook’s Battle for Domination. By coincidence, the day I put the book down was the same day that the Federal Trade Commission filed its amended complaint against the company in the US District Court for the District of Columbia, responding to Judge James Boasberg’s June 28 ruling rejecting its initial filing. So I read that too, along with the original FTC action against from Facebook from last year. If you ask me, the FTC complaint is far more eye-opening and damning.

Yes, Frenkel and Kang offer some shocking new revelations about Facebook to the pile that are already in the public record. They report, for example, that after the company entered into a 2012 consent decree with the FTC to upgrade its privacy practices, “thousands of Facebook’s engineers [were still] freely accessing users’ private data.” By design, company founder and CEO Mark Zuckerberg had built a system that was open and accessible to all its engineers, seeking to foster a fast-innovating internal culture. It was one thing, in the company’s early days, for employees to have this kind of password-level access, an abuse that Kate Losse, one of the first women to work at Facebook, describing in glaring detail in her excellent 2012 book, The Boy Kings.

But years later, there were still no safeguards in place to prevent Facebook employees from accessing users’ private content, Frenkel and Kang write. They note, “Men who looked up the Facebook profiles of women they were interested in made up the vast majority of engineers who abused their privileges.” The person who brought this problem to Zuckerberg’s attention, Alex Stamos, was a security professional hired from outside the company’s ranks and thus not beholden to the same bureaucratic imperatives that kept other top executives from speaking truth to the Boy King. Stamos had found that more than 16,000 Facebook employees had routine access to user accounts and wanted to drastically curtail that power. “People were not paying attention,” he told Frenkel and Kang.

Frenkel and Kang also do a solid job of retelling the main arc of Facebook’s rise into its current dominant but troubled state. All the familiar high points are here: Zuck’s collision with Harvard authorities after he started TheFacebook by vacuuming up undergraduates’ info without their permission (“they ‘trust me’…dumb fucks” he texted later to one friend); the site’s rapid expansion; the success of “News Feed” (Zuck’s one true innovation, which turned your friends’ individual updates into a MTV-like stream of fresh information); his alliance with Sheryl Sandberg, the Google ad exec who he recruited as his #2 and who brought surveillance capitalism to the company; early collisions with federal regulators; and then the saga from 2016 forward of the company’s pallid and confused responses first to Russian misinformation campaigns and the Cambridge Analytica scandal, and then COVID disinformation, QAnon and hate speech in general.

The authors do a particularly good job of exposing Facebook’s opportunistic and unprincipled response to political misinformation and hate speech. They dredge up Zuckerberg’s embarrassing 2018 interview with Kara Swisher, where he insisted that his oft-stated devotion to free speech not only included allowing the nutcase Alex Jones to claim that the Sandy Hook massacre was faked, it extended to allowing Holocaust deniers to post their mistaken beliefs on the site. “At the end of the day, I don’t believe that our platform should take that down because I think there are things that different people get wrong. I don’t think that they’re intentionally getting it wrong,” he told Swisher, who was incredulous. Two years later, as the 2020 election came to its climax, Facebook announced that it was banning QAnon and Holocaust denial. With a straight face, Zuck told his employees that this didn’t represent “a shift in our underlying philosophy or strong support of free expression.” Instead, “what it reflects is, in our view, an increased risk of violence and unrest.” I stand corrected: by the time you finish reading An Ugly Truth you might instead decide that Facebook’s one true principle is opportunism.

All that said, one more book about Facebook isn’t about to get the company dismantled or put under tight government regulation. The FTC’s lawsuit just might. And as a longtime connoisseur of the little driblets of truth that sometimes come leaking out of the powerful company into the sieves of reporters, I found myself reading the FTC’s revised and expanded complaint against Facebook with a great deal of respect for what a government agency can uncover during an enforcement process.

Two things stand out in the FTC complaint. First, how it demonstrates the extent of Facebook’s anticompetitive practices, which go well beyond its buying of rivals Instagram and WhatsApp. And second, how it situates these practices inside a larger context, which is Facebook’s realization, after several expensive failures, that it didn’t have the business talent to maintain its dominance as tech usage shifted from the desktop to mobile. That failure is what led Zuck to decide as early as 2008 that “it was better to buy than to compete,” and also what made him use its platform power to starve would-be rivals of user attention whenever possible.

In 2009, the FTC reminds us, only 21% of mobile phone users in the US had a smartphone. Three years later, that proportion had more than doubled to 55%. Facebook’s core service, known internally as Facebook Blue, didn’t function well on smartphones, and the company’s first attempt at rewriting its code for mobile use was an abject mess. Zuckerberg was worried that new apps that were native to the mobile environment, and in particular those that were well-suited to the way smartphones doubled as text- and photo-sharing tools, could challenge Facebook’s position. Instagram, which took off like a rocket in 2010, was a major threat.

Zuck told his engineers to build a competing service, but by September 2011 he was frustrated by their lack of progress. He wrote, “In the time it has taken us to get ou[r] act together on this[,] Instagram has become a large and viable competitor to us on mobile photos, which will increasingly be the future of photos.” He added, per the FTC complaint, “If Instagram continues to kick ass on mobile or if Google buys them, then over the next few years they could easily add pieces of their service that copy what we’re doing now, and if they have a growing number of people’s photos then that’s a real issue for us. They’re growing extremely quickly right now. It seems like they double every couple of months or so, and their base is already -5-10m users. …But at the current rate, literally every couple of months that we waste translates to a double in their growth and a harder position for us to work our way out of.”

Soon, he was thinking like a natural monopolist. In a February 2012 internal email advocating the acquisition of Instagram, he wrote, “One thing that may make [neutralizing a potential competitor] more reasonable here is that there are network effects around social products and a finite number of different social mechanics to invent. Once someone wins at a specific mechanic, it’s difficult for others to supplant them without doing something different. It’s possible someone beats Instagram by building something that is better to the point that they get network migration, but this is harder as long as Instagram keeps running as a product.” He added, “[O]ne way of looking at this is that what we’re really buying is time. Even if some new competitors spring[] up, buying Instagram, Path, Foursquare, etc now will give us a year or more to integrate their dynamics before anyone can get close to their scale again. Within that time, if we incorporate the social mechanics they were using, those new products won’t get much traction since we’ll already have their mechanics deployed at scale.”

That concern about “social mechanics” and the need to dominate any emerging new trend that emerged as humans learned to use tech, it could be argued, was Zuckerberg’s true genius. At a time when many of us were celebrating the potential of connection technologies to enable powerful forms of human association and collaboration, he understood that as an early mover who had conquered the social mechanic of personal social networking, his only hope for survival as the de facto phone book for the Internet was in defeating or absorbing any newcomer offering a new social tool. And Instagram, as a mobile native, might have an advantage Facebook couldn’t beat. In February 2012, he wrote of that competitor, “I think it’s quite possible that our initial thesis was wrong and that theirs is right -- that what people want is more to take the best photos than to put them on FB. If so, [Facebook] Snap might be a good first step but we’d be very behind in both functionality and brand on how one of the core use cases of Facebook will evolve in the mobile world, which is really scary and why we might want to consider paying a lot of money for this.” Two months later, Facebook bought Instagram for $1 billion. Soon, Zuck scaled back his team’s own efforts to make their own photo-sharing app.

The FTC complaint shows that Facebook viewed the rise of mobile messaging as its next big competition, with WhatAapp, which grew to 450 million users by early 2014, as its greatest challenge. The company created Facebook Messenger to compete, but Zuck knew that it was inferior, writing in April 2012, “Right now, aside from Facebook integration, WhatsApp is legitimately a better product for mobile messaging than even our standalone Messenger app.  It’s more reliable and faster for sending messages. You get better signal and feedback via read receipts and last seen times. You can even reach most people easily via the contacts integration.” He added, “[I]’m the most worried about messaging. WhatsApp is already ahead of us in messaging in the same way Instagram was ‘ahead’ of us in photos.” He added: “I’d pay $1b for them if we could get them.” Two years later, he paid $19 billion.

Zuckerberg with fellow tech moguls at a 2011 with President Obama (labels per Dave Winer https://www.flickr.com/photos/scriptingnews/5456395768/)

The FTC argues that with its acquisition of Instagram and WhatsApp, Facebook choked off their independent development and deprived users of the benefits of competition, which might have included strong privacy protections, lower ad loads and a more diverse advertising marketplace, plus the general benefit of being “untethered from Facebook’s control.” The FTC complaint also shows that Facebook also made many acquisitions of nascent competitors simply to shut them down, citing its 2012 purchase of Glancee, a geolocation friend-finding app; its 2016 purchase of EyeGroove, an app that enabled users to create and share videos with augmented reality effects; and its 2017 purchase of “tbh,” a youth-oriented polling app that had grown to 2.5 million users within 9 weeks of launch. Likewise, in a major part of its complaint, the FTC shows how Facebook has conditioned access to its platform to keep developers of potentially competing products from gaining traction. This move, where a tech company uses the power it has over its own application programming interfaces to compel others to use an inferior product, is what Microsoft did in the 1990s when it bundled Internet Explorer with every copy of Windows and made it difficult for PC makers to give buyers other choices—leading to the Justice Department’s successful anti-trust prosecution.

If I have any quibble with the FTC complaint, it is this: it fails to discuss how Facebook’s walled garden approach has damaged the open web and harmed civil society. Most of the content on Facebook is Facebook-only. You can’t link to a comment on a page or a group. Nor can you “see” inside Facebook to tell if what it is showing you is comprehensive or filtered. Not only does this hinder research into its effects, it also gives the site unprecedented power over the social landscape. Imagine if Google chose to hide some undeterminable portion of Google Maps from public view; that’s what Facebook does to our social lives. While the vast majority of us rely on Facebook because, like the old phone book, it connects us to family and friends, it does so on highly irregular terms, ones that have even allowed it to charge us for the ability to make sure one of our own posts on our own page reaches all the people who we have friended.

Unfortunately, the mainstream media rarely challenges Facebook on these terms. Instead, it lets Zuck ramble on about how wondrous it is that Facebook has conquered the social mechanics of the “digital town square.” Here, for example, is the Boy King talking to George Stephanopolous in 2019: “So for the last 10 or 15 years we've mostly been focused on building what I'd say is the digital equivalent of the town square, right? So that's what Facebook and Instagram, broadly are. It's a place where you can go and interact with a lot of your friends and the people that you're interested in all at once. …It's if you think about the platforms that we've built out around Facebook and Instagram -- there are so many different things that you can do. It's not just about sharing photos. You can find communities for the interests that you have. You can set up a page for your small business to find customers and create jobs and grow. You can run fundraisers for causes you care about. Pretty much anything that you would want to do with a number of people at once, you can do in that digital equivalent of the town square.” Indeed, you can do all those things, but only if you pay the square-keeper with your data and often with your cash.

In her recent New York Times story on the FTC’s revised complaint, Cecilia Kang focused mainly on one point, that it had made efforts to more tightly define “personal social networking” so as to clarify that Facebook’s main current competition was SnapChat, excluding other platforms like LinkedIn or Nextdoor because they are specialized, not general, networks, and excluding sharing sites like TikTok, Twitter and YouTube because they are public-facing content platforms, not social network sites. Naturally, Facebook pushed back, saying that it “fight[s] to win people’s time and attention every day.”

Of course, Facebook would love to keep our attention focused on how many other tech products are out there, rather than have us attend to how dominant it has become and the methods it uses to unfairly lock its market down. It turns out that those social mechanics, which are natural to unfettered capitalism, aren’t as in vogue under the current Democratic administration as they were a decade ago. Today’s FTC, under the leadership of Lina Khan and with the help of reformers like Tim Wu at the White House, might just be the one force that is ready to keep the focus where it belongs, on the rise of an online behemoth that has at least temporarily locked down the social side of 21st century life.

Odds and Ends

-As part of the ongoing resistance to the dictatorship of Alexander Lukashenko, Belarus’ Cyber Partisans have released “lists of alleged police informants, personal information about top government officials and spies, video footage gathered from police drones and detention centers and secret recordings of phone calls from a government wiretapping system,” Ryan Gallagher reports for Bloomberg News.

-Oregon Secretary of State Shemia Fagan on the media needs of civic organizations to Zack Montellaro of Politico: “If we’re only putting out accurate information and press releases picked up by credible news organizations, we’re missing all the people that are sharing Facebook memes about Sharpiegate. We can’t combat memes and TikTok videos about voter fraud with PDFs on government websites that nobody’s going to read.”

-The Ada Lovelace Institute, AI Now and the Open Government Partnership are out today with a major new report on global algorithmic accountability for the public sector.

-Code for America is partnering with the Internal Revenue Service to build a new online system called GetCTC to make it easier for taxpayers to claim child benefits more easily, John Hewitt Jones reports for FedScoop.

-Code for America employees are also in the process of forming a union, Zoe Schiffer reports for The Verge, and they are waiting for voluntary recognition from management.

-Bloomberg’s Sophie Alexander, Szu Yu Chen and Shera Avi-Yonah have tracked down the specifics on 375 grants by Mackenzie Scott totaling $4.3 billion.

-Adding to the “to be read” pile: Jer Thorp’s new book Living in Data: A Citizen's Guide to a Better Information Future. (h/t Nancy Scola)