Why Sears should haunt Facebook

Listen to the podcast "The danger in turning Facebook into a utility" from the April 14, 2018 show

Mark Zuckerberg certainly got his moment in the spotlight this week, spending two days testifying before Congress. Some of the questions directed at the Facebook CEO -- and even more, the manner in which they were asked -- really highlighted just why I have previously argued that we need more technologists of many sorts in lawmaking.

My enormous worry is that a lack of knowledge at the government level will lead to deference to Facebook when it comes time to set the rules and regulations that are long overdue. Naturally, the incumbent power players will seek to set the rules in ways that benefit them.

That's not really evil -- it's just self-interest. But there needs to be a countervailing self-interest. I trust the power of self-interest set in opposition to self-interest. Had rules been set in the past, they might have entrenched Netscape Navigator, Yahoo, and MySpace as the powerful incumbents.

Rules need to be set so that they do not turn Google, Facebook, Amazon, and others into the online equivalents of public utilities. But the rules also shouldn't be set just for the benefit of encouraging disruption.

The rules and regulations imposed on social-media firms and other tech giants need to be set so that they will work equally well in futures where:

  • Facebook remains the dominant social-media tool
  • The "next Facebook" comes along and displaces the old one
  • There is no "next Facebook" -- and the old one withers away, just like MySpace

The nature of any commercial venture changes with time. Of all things, Sears is closing its last store in the city of Chicago, the place where the company began. It's a sobering reminder that competition can displace even the giants in an industry -- as long as the giants aren't protected by laws that discourage innovation.

Rules and regulations are best set with the input of lots of groups, carefully and thoughtfully evaluated by curious, competent, and humble elected officials. But every time a Senator asked Mark Zuckerberg, "Will you help us write these regulations?", I thought: "Of course they will!" Nothing could please the market hegemon more than writing rules to further entrench its own interests. Should Facebook offer constructive opinions regarding the shape of tech regulations? Sure. But let's not assume alignment between the interests of Zuckerberg and those of Jane Citizen.

Google, Facebook, and firms in a similar market position have a perverse incentive to favor regulations that turn them into the equivalent of public utilities. Sears, MySpace, and Netscape all probably would have favored more regulations during their respective times in the sun.

Brian Gongol

Brian Gongol

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