11/8/17

Thoughts on this? The debate has been fueled by the recent Senate discussion about Russian manipulation of the US election results.

From Financial Times:
Why we need to regulate tech platforms

Big tech companies should be required to keep audit logs of the data they feed into their algorithms. "A recurring pattern has developed [...] in which some entity complains about a major internet company's practices, the company claims that its critics don't understand how its algorithms sort and rank content, and befuddled onlookers are left to sift through rival stories in the press."

Complexity (or the illusion of it) is too often used to avoid legitimate public interest questions, such as how propagandists get their messages across, or how users are tracked and valued. Companies should help us understand all this.

Would government regulation of the industry be beneficial for our society? Or would it just make it more difficult for upstarts to break into the industry?

Comments (14)

11/7/17

Big fan of Prof Scott Galloway. In his blog last week he proposed 12 questions for the Big Tech companies related to this issue and the consequent congressional hearings.

It's an interesting perspective, albeit intentionally caustic. Regardless of where people stand on the issue, I think Big Tech "platforms" need to be able to provide convincing answers to questions 6 and 11/12:

6.) "When you claim it's impossible to ensure no weaponization of your platform, don't you mean "unprofitable"? It could be stopped, but at substantial detriment to your free cash flow."

11). "Can you assure us that this will never happen again, as the CEOs of every major newspaper, TV, and digital media company have?"

12.) "If you can't make the same promise as every other media CEO, shouldn't your firm warrant additional oversight or regulation?"

I'm largely torn on the issue. There doesn't seem to be a viable mechanism for enforcing bias-free regulation of media content. News media has a fundamentally different business model in which they are purveying a known perspective. The idea of a platform is that it's not curating or catering to any specific view point but just a medium for self-directed access to media content. This feels like a legitimate grey area, but not grounds for absolute absolvement of any standard or repercussions--especially if they are going to hawk targeted and pointed advertisements/propaganda.

Financial Modeling
11/7/17
Schreckstoff:

6.) "When you claim it's impossible to ensure no weaponization of your platform, don't you mean "unprofitable"? It could be stopped, but at substantial detriment to your free cash flow."

Why do you think it would be unprofitable? Assume Facebook disclosed its algorithms: would it lose significant money? Are they source of any competitive advantage in your opinion?

11/8/17

Just to clarify, those are his words not mine. I don't think he's implying that the business itself would become unprofitable, just that any regulatory apparatus, whether it relies on automated software or an editorial board ect., would become a source of cost. Additionally, setting a regulatory standard for advertisements and content would result in having to turn away would-be revenue-- not necessarily a practice that would make the business unprofitable, but certainly an unprofitable practice.

Ultimately, I think you are seeing the honey-moon phase between big tech and capital hill starting to sour. They have had the good fortune of evading the regulatory reach of Washington for a long time and I don't see that good fortune lasting much longer. Innovators are left alone, monopolies are not. It's hard to argue that big tech is not at least as much the latter as the former, at least in certain areas i.e. mobile advertising, search, ect.

Best Response
11/9/17

Couple of reasons why it would be unprofitable:

1.) Fake news/Propaganda sites/blogs/pages boost posts. Blocking them would mean lost ad dollars, plain and simple.
2.) To screen and fact check content would require manpower and resources, as it does for "normal" media companies such as the New York Times. -- It's as simple as content screening adds cost

Unfortunately, this is the reality, there really is some "regulatory arbitrage" going on here. Tech media platforms distance themselves from the Fourth Estate, and unlike their "legacy" counterparts aren't covered by the same type of regulation.

Scott Galloway isn't the only person who has pointed this out, there have been many others, even Zuck himself has noted that the way to deal with this is to disrupt Fake News/Propoganda economics over the internet. The question is whether there is political/corporate will to do so.

On the flip side (i.e. why it's not a clear and shut case that tech media platforms need to be regulated harder) is that you open up another can of worms if you start regulating them. New regulation may open up another "NYT vs. Sullivan" (https://en.wikipedia.org/wiki/New_York_Times_Co._v...)type of discussion, where politicians and other public figures may then try and use things like libel laws to prevent critical coverage of themselves, their actions and those of their cronies.

"Be the Disruptor, not the Disrupted" - Clayton Christensen

11/7/17

If it's a monopoly, then yes, it should have to operate with some element of content neutrality. If it's not a monopoly, then no, it shouldn't be regulated at all. An example of an effective monopoly is youtube, which has nearly 80% market share in online multimedia; it should no more be allowed to content discriminate than the local phone company can. On the other hand, an organization like Patreon is not a monopoly and, therefore, should be allowed to content discriminate, even when it directly discriminates against people that I like (and it has).

11/8/17
Dances with Dachshunds:

If it's a monopoly, then yes, it should have to operate with some element of content neutrality. If it's not a monopoly, then no, it shouldn't be regulated at all. An example of an effective monopoly is youtube, which has nearly 80% market share in online multimedia; it should no more be allowed to content discriminate than the local phone company can. On the other hand, an organization like Patreon is not a monopoly and, therefore, should be allowed to content discriminate, even when it directly discriminates against people that I like (and it has).

I honestly do not see how Youtube can be considered a monopoly. There are plenty of alternatives to Youtube (vid.me, https://www.bitchute.com,DailyMotion, Vimeo, and more). The reason Youtube has so much market share is simply because they have a superior product (though, It seems that their goal for the past 12 months has been to commit suicide). It could be that I am misunderstanding your reasoning, but by this logic, any company with a significantly superior product, compared to its competitors, could be considered a monopoly; this is a ver

I'm well up-to-date on the YT censoring situation (I know you and I follow some of the same political commentators), and although I find it tremendously frustrating, I think it is a very bad idea to start calling for government regulation.

Firstly, as I said, I cannot see how YT could possibly be considered a monopoly, and pushing the government to interfere and classify YT as a monopoly will CERTAINLY set a precedent that will do unbelievably more harm than good over the long-term. The only place where the government is equipped to handle these types of problems without doing significantly more damage than good is in people's imaginations. I know Tucker Carlson was also advocating for a regulatory approach, but after watching him regularly since he was given his own show, it's obvious that he has little understanding of economics (whether it be Austrian or otherwise), and instead has come to his opinion based on the emotions that were brought on by YT's censorship.

Secondly, someone like Dennis Prager has absolutely no case against Youtube based on censorship. As someone who keeps up-to-date with a couple of progressive commentators (for the sake of keeping up-to-date with opposing views and the reasoning behind those views), I can guarantee you that the YT censorship, which started with the so-called 'adpocalypse', was and is certainly not only targeting one side of the political spectrum. It might (probably does) have a disproportionate affect on right-wing commentators, but It is/was an active problem for many progressive commentators too, many of which literally had their ad revenue cut by 90%+. I was shocked at how oblivious and arrogant Prager's claims were when he was discussing the situation and his lawsuit: It's not like it's a secret that YT's censorship has been destroying content-creators on all sides of the political spectrum. But, after witnessing Prager's antics for years, I have a very low opinion of him and his intellect, so I really shouldn't be too surprised.

And since Youtube is a private entity and, in my opinion, obviously not a monopoly, they are free to censor whoever they want for any reason they wish.

EDIT: And as a Tech guy, I can say unequivocally that forcing any tech company to make its algorithms public WILL destroy that company. In the abstract world of bits, the algorithms are LITERALLY EVERYTHING. It's difficult for a non-tech person to appreciate what I'm saying here, but it is simply unfathomably insane to suggest that a company make its algorithms public. This is tantamount to forcing a Pharmaceutical company to make its new drug and its chemistry publicly available for anyone to view and reproduce; It's insane.

And as an addendum, the fact of the matter is that, in the present day and going forward, we simply DO NOT understand and CANNOT reproduce the algorithms that we use, since we didn't precisely write the algorithms -- the machines themselves did (machine learning/ "AI")!

11/8/17

Your definition of monopoly simply doesn't meet common regulatory muster. By your definition, the only thing that constitutes a monopoly is 100% market share with competition being impossible. Not even the a local electric utility, by your definition, is considered a monopoly because people can hang solar panels on their roofs if they are cut off.

The reality is, 80% market share of any non-internet business would be considered a company with monopolistic power by the FTC, unless there was a legitimately competitive market that was in the process of springing up (I got my YouTube screen name in October 2006, and YouTube has basically dominated the market for more than a decade, especially after being acquired by a near-literal search engine monopoly in Google).

https://www.ftc.gov/tips-advice/competition-guidan...
Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power -- that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power. Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area. Some courts have required much higher percentages. In addition, that leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power.

In other words, there is no singular definition of monopoly in American law, but a reasonable person could rationally conclude that 80% market share is monopolistic. On the other hand, a reasonable person could conclude that 80% market share isn't a durable monopoly given certain market forces, but I would passionately disagree with that assessment regarding YouTube, especially now that it is paired with a search engine monopoly.

11/8/17
Dances with Dachshunds:

Your definition of monopoly simply doesn't meet common regulatory muster. By your definition, the only thing that constitutes a monopoly is 100% market share with competition being impossible. Not even the a local electric utility, by your definition, is considered a monopoly because people can hang solar panels on their roofs if they are cut off.

The reality is, 80% market share of any non-internet business would be considered a company with monopolistic power by the FTC, unless there was a legitimately competitive market that was in the process of springing up (I got my YouTube screen name in October 2006, and YouTube has basically dominated the market for more than a decade, especially after being acquired by a near-literal search engine monopoly in Google).

https://www.ftc.gov/tips-advice/competition-guidan...
Courts do not require a literal monopoly before applying rules for single firm conduct; that term is used as shorthand for a firm with significant and durable market power -- that is, the long term ability to raise price or exclude competitors. That is how that term is used here: a "monopolist" is a firm with significant and durable market power. Courts look at the firm's market share, but typically do not find monopoly power if the firm (or a group of firms acting in concert) has less than 50 percent of the sales of a particular product or service within a certain geographic area. Some courts have required much higher percentages. In addition, that leading position must be sustainable over time: if competitive forces or the entry of new firms could discipline the conduct of the leading firm, courts are unlikely to find that the firm has lasting market power.

In other words, there is no singular definition of monopoly in American law, but a reasonable person could rationally conclude that 80% market share is monopolistic. On the other hand, a reasonable person could conclude that 80% market share isn't a durable monopoly given certain market forces, but I would passionately disagree with that assessment regarding YouTube, especially now that it is paired with a search engine monopoly.

But there's no comparison between a utilities company and a website that you can simply use an alternative to by typing in a different URL. My argument is that the ease of switching to a plentiful number of similar and viable alternatives should make it obvious that this is not a monopoly.

11/8/17
lwmg:

But there's no comparison between a utilities company and a website that you can simply use an alternative to by typing in a different URL. My argument is that the ease of switching to a plentiful number of similar and viable alternatives should make it obvious that this is not a monopoly.

Again, the existence of competition does not mean there is not a monopoly as defined by U.S. law. If YouTube can effectively cut a person off from access to 80% of internet multimedia users than they are the definition of a monopoly.

A company with 99% market share could still have a thousand competitors competing for that 1%--existence of competition in itself is not evidence of a competitive market.

11/8/17

Unpopular opinion time:

In the name of freedom of speech, I believe that Twitter (and maybe YouTube) should considered public commons and nationalized, so that the First Amendment can fully apply.

"Work ethic, work ethic" - Vince Vaughn
11/8/17

even more unpopular opinion time: if any social media platform influences your opinion on elections, you're no longer allowed to vote.

"The four most dangerous words in investing are: 'this time it's different.'" - Sir John Templeton

"The investor's chief problem - and even his worst enemy - is likely to be himself." - Benjamin Graham

11/8/17

During those congressional hearings there was a tweet referred to as a "Russian advertisement" (lol) by a 4chan troll that was a fake ad (decently made though) that told people they could skip the line and vote for Hillary by phone, with a number to text their vote to.

Apparently people actually tried to vote this way. I am being completely serious and can probably find the video clip if anyone is interested.

11/9/17
Alessiod:

Thoughts on this?

We should absolutely regulate the tech platforms currently available and the ones emerging with new technologies/developments.

I've worked at one of the big tech companies currently undergoing scrutiny in the US at the moment, and to be frank, the amount of data I had at my fingertips if I just read up on various coding and software platforms... wow. I am sure someone out there working for one of the big or small tech companies exploit the data readily available in systems, without any protection depending on seniority/the department and area you work in.

I actually interviewed for Palantir technologies, mostly to learn about their stuff and it is always interesting to meet new people, and it was truly interesting to see how much intel they can gather based on some random algorithms and human intervention. There is a youtube video where someone from Palantir walks through a case study on Iran's geopolitical influence. Check it out. Many firms serve as contractors when working with this data. They can easily replicate data and findings in these projects without letting the employer know. We have seen instances of this, and I believe leaks will keep on appearing, at least until we have a modernized regulatory framework which takes into account the delta in technology since the laws were last updated due to technological/industrial advancements.

11/11/17

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