Social media business models under fire

As controversy continues over investigations into Russian online disinformation programs, the business models of tech companies, and social media companies in particular, have become the target of a growing chorus of criticism.

Last week, lawyers for Facebook, Google and Twitter testified on Capitol Hill about Russian purchases of political ads and manipulation of their platforms.

“The abuse of our platform to attempt state-sponsored manipulation of elections is a new challenge for us — and one that were are determined to meet,” Sean Edgett, Twitter’s acting general counsel, reportedly said.

Yet despite Twitter’s assertions, there are indications that fake accounts, including state-sponsored ones, have long been a problem on the platform. A report published a few days after the tech companies’ congressional testimony, for example, quotes Leslie Miley, former engineering manager of product safety and security at Twitter, as saying that although he identified a large amount of apparently fake and Russian and Ukrainian-linked accounts in early 2015, he had to report his findings to a “growth team” which was “more concerned with growth numbers than fake and compromised accounts.”

That report also notes that while Twitter claimed in its recent testimony that less than 5 percent of accounts on its platform are fake or spam accounts (also known as “sock puppet” accounts) “outside research has found the number to be closer to 15 percent.”

Although social media and finance are obviously different industries in myriad ways, David Dayen of The Intercept compared Twitter’s “fake accounts scandal” to one that hit Wells Fargo last year when it was revealed that they opened fake accounts in an apparent attempt to inflate their sales numbers and, consequently, their stock price and compensation for executives.

“It’s hard to reconcile the tens of billions of dollars of profit [major tech companies] make with the lack of attention they’ve had with something that could possibly affect our democracy,” Jason Kint, chief executive of the group Digital Content Next, a trade organization representing digital media companies, reportedly said in the wake of the tech giants’ recent testimony. “The questioning is deeply uncomfortable for them because it gets to the root of their business model, which few people really understand.”

Similarly, the New York Times notes that “(a)t the heart of the companies’ problems are business models that reward viral content — which can include misinformation — and an enormous advertising business that is automated and unable to easily spot ads purchased by foreign governments.”

Even the chairman of Alphabet (parent company of Google), Eric Schmidt, has joined in the recent criticism of social media companies. “How many Twitter accounts are real people versus non-real people? It’d be useful to know if the thing tweeting at and spamming you was a person or not,” he said in a recent interview. “And in Facebook’s case, they’re working hard on this, but how would you know that it was a computer that was spreading viral fake news?”

Of course, Schmidt’s public posturing on the matter should be taken with a grain of salt. Although Schmidt says Alphabet is diligently seeking solutions to problems related to manipulation of its own platform (Google), one would be forgiven for accusing him of cynicism for directing attention and criticism away from his own massively influential tech company and towards the two others that had to testify on the same day as his, but which happen to be primarily social media firms rather than search engines. Schmidt is a shrewd PR man for Google, but he’s certainly not above criticism, which I’ve personally offered him in the past for a wide range of his activities, from his political flip-flopping to his Bilderberg Group membership to his comments on artificial intelligence.

Yet Schmidt is not the only powerful tech executive stepping up to criticize his colleagues in the slightly-more-narrowly-defined social media sector.

Sean Parker, who became famous for co-founding the file sharing service Napster back in the day, and subsequently was founding president of Facebook, recently discussed his views on the way the company has changed social interaction — and how some of the negative consequences of those changes were understood from the start.

Facebook is “a social-validation feedback loop … exactly the kind of thing that a hacker like myself would come up with, because you’re exploiting a vulnerability in human psychology,” Parker said. “The inventors, creators,” of Facebook, according to Parker, “understood this consciously. And we did it anyway.”

Other impacts Facebook and similar social media platforms would eventually have, however, may not have been anticipated by their designers.

“When Facebook was getting going, I had these people who would come up to me and they would say, ‘I’m not on social media,'” Parker recalls. “And I would say, ‘OK. You know, you will be.’ And then they would say, ‘No, no, no. I value my real-life interactions. I value the moment. I value presence. I value intimacy.’ And I would say, … ‘We’ll get you eventually.'”

“I don’t know if I really understood the consequences of what I was saying, because [of] the unintended consequences of a network when it grows to a billion or 2 billion people and … it literally changes your relationship with society, with each other … It probably interferes with productivity in weird ways. God only knows what it’s doing to our children’s brains.”

Despite the problems plaguing social media — and spilling out of cyberspace and into the real world — it is not yet clear what solutions might work. As I’ve previously pointed out, plans such as using algorithms to automatically censor social media are not free of drawbacks, and while Russian operations have received the vast majority of mainstream media attention, it’s worth remembering that America also engages in its own online disinformation programs that pollute the information environment of the internet and spread chaos and confusion, just as the Russian campaign we’ve heard so much about was intended to do.

If you needed a friendly reminder that social media companies aren’t the only tech industry players invested in cutting-edge research with dystopian potential, meanwhile, a final comment from Parker, who now runs an organization called the Parker Institute for Cancer Immunotherapy, should reassure you.

“Because I’m a billionaire,” he reportedly said, “I’m going to have access to better health care so … I’m going to be like 160 and I’m going to be part of this, like, class of immortal overlords. [Laughter] Because, you know the [Warren Buffett] expression about compound interest. … [G]ive us billionaires an extra hundred years and you’ll know what … wealth disparity looks like.”