From Axios: Blow-Back For FaceBook > In-Your-Face

Here it is: 2 Direct Hits Today 06 December 2018
Source: axios.com  

1 big thing: Facebook's New War

Mark Zuckerberg reportedly told Facebook officials that the company is at war. He's right, Axios' Felix Salmon writes:

• Facebook is facing a new kind of existential threat, not from competitors, but rather from an adversary who can neither be acquired nor competed against: governments, particularly in Europe.

The decision by Damian Collins, a British lawmaker, to publish highly sensitive, unredacted internal Facebook emails is aggressive, uncompromising, and further intensifies the European battleground — an arena where Facebook has little to no political support.

• Facebook has faced such threats domestically, and has responded by hiring attack dogs in D.C. It also has on its side Facebook-friendly senators like New York's Chuck Schumer. Europe has few equivalents.
• The emails published by Collins could not be published in the U.S., where they are under a court-ordered seal. But Collins is not subject to U.S. jurisdiction, and happily sent the U.K.'s Serjeant-at-Arms to demand the material. The gambit was legally dubious, but it worked.
• The lesson, for Zuckerberg: Foreign adversaries do not play by U.S. rules.

Facebook was already facing a formidable threat in the form of Margrethe Vestager, the EU's competition commissioner.

• After all, Facebook already comprises half of a duopoly controlling 75% of the digital advertising market, and it's growing fast.
• Calls to break it up are being taken increasingly seriously.

Internally, Facebook considers itself to be a business, acting as businesses do. Mark Zuckerberg's defense, in large part, boils down to "Running a development platform is expensive," in a world where Facebook needs to make money.

• But the company is grappling with a growing trust deficit with its users — the people who elect politicians like Damian Collins. Facebook's sheer size and influence over global communication has made governments want to check its power.
• In the U.S., such behavior can be defended as healthy, red-in-tooth-and-claw capitalist competition.
• To European eyes, however, it looks anti-competitive.

There's a fundamental difference in how regulators view monopolies (and duopolies) on either side of Atlantic.

• U.S. antitrust law evaluates monopolies in terms of potential direct harm to consumers, such as rising prices as a result of a firm's dominance. Simply being a monopoly is not illegal.
• In Europe, regulators act to preserve competition, whether or not there is evidence of direct consumer harm.

The bottom line: Zuckerberg has made an enemy of European lawmakers, who have a fearsome arsenal.

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2. What we learned from the Facebook docs

The Facebook documents released by a British lawmaker yesterday portray the company as a ruthless corporate giant that will do whatever it takes to squeeze out competitors and increase user engagement with its products, Axios' Sara Fischer reports.

• Why it matters: Some analysts began downgrading Facebook stock in the wake of yesterday's drama.
• Facebook says the provider of the documents "cherrypicked" the evidence as part of a lawsuit years ago.

Be smart: While the documents give important context into how Facebook executives operate and make decisions, it's unclear whether they expose any illegal practices.

What we learned from the docs:

1. Naïveté about data leaking: An email shows a former Facebook VP of product management saying he was generally skeptical there was as much strategic risk in data leaks between developers (like what happened with Cambridge Analytica).
2. Whitelists: The documents show that Facebook gave some companies like Netflix and Lyft access to data that Facebook stopped giving broad access to beginning in 2014-2015 after it changed its data policies.
3. Value of friends’ data: Facebook executives discussed requiring developers to buy ads in order to access users’ personal information as an opportunity to monetize their developer relationships.
4. Call and text history on Android: Facebook executives emailed about the PR and legal risks of accessing a record of Android call and message history. Emails make it seem like the company wanted to collect the data as discretely as possible to avoid such risks.
5. Targeting competitor apps: An email exchange shows Mark Zuckerberg approving a decision to shut down Vine's access to friends via Facebook for the purposes of undermining its success as a video competitor.

From Mark Zuckerberg's Facebook page:

• "I understand there is a lot of scrutiny on how we run our systems. That's healthy given the vast number of people who use our services around the world, and it is right that we are constantly asked to explain what we do."
• "But it's also important that the coverage of what we do — including the explanation of these internal documents — doesn't misrepresent our actions or motives."