Facebook Readies for Washington

Earlier this week, Bloomberg Technology host Emily Chang asked me where I think Facebook will be in a year. My answer: Pretty much where it is now. It will be unchanged or even emboldened, thanks in part to its new strategy of buying protection in Washington. Like many other industries — for example, tobacco and oil — Facebook has figured out that it can help write regulations that will allow it to exist blissfully and put its competitors at a disadvantage.

To tame Washington, you must have the right people. So, the company has begun hiring individuals that will help achieve this goal. These are seemingly innocuous moves in what is a long game. It named Jennifer Newstead as its general counsel. John Pinette, who (among other jobs) previously advised Microsoft co-founder Bill Gates, is the new vice president of global communications. These are just the latest in a growing number of appointees with roots in DC and other political hotbeds. Facebook even lured Kevin Bankston — its biggest critic on issues of privacy — to leave his DC think tank and come work for the company, thus proving that everyone and everything has a price.

First things first, Facebook has to deal with the FTC, which has been probing Facebook since March 2018 to determine if it violated a 2011 agreement with the government to better protect the private data of its users. Nearly a year after announcing an investigation, the FTC is negotiating with Facebook over a fine that could be in the $3 to $5 billion range. In reality, that is chump change. A few billion is a small price to pay today if it helps pave the way for a future full of Internet regulations written in the company’s favor. Facebook is the clear and present danger to the Silicon Valley way, and yet our elders don’t seem to care.

Neither advertisers nor Wall Street — the two constituents that matter more to the company than the people — don’t seem to care about the regulations and the stream of outrage news. Macquarie Research analyst Ben Schachter put it best when, in a note to his clients he pointed out that, if you “take away all the headlines, the controversies, the regulations, and what you are left with” is a company with lots of users on its platforms that “advertisers will pay to reach.” Despite the negative concerns, users “continue to find value in FB platforms, as demonstrated by the fact that FB has 2.7b MAUs and 2.1b DAUs.”

Perhaps if the people that they work for (ostensibly, at least) were less complacent, our government officials might wake up to how Facebook is using them.

This first appeared on my April 28, 2019, weekly newsletter. If you like to get this delivered to your inbox, just sign-up here, and I will take care of the rest.

Photo by Andy Feliciotti on Unsplash

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