Facebook’s loudest critic says social media profits by manipulating consumers.
Investor Roger McNamee takes aim at social media company executives like Facebook CEO Mark Zuckerberg, seen here testifying before a House Energy and Commerce Committee hearing. | Reuters/Aaron P. Bernstein
Roger McNamee, a high-profile Silicon Valley investor, has become an urgent and sharp-tongued critic of the tech world’s largest and most influential companies.
Most notably, his ire is focused on Facebook, a company he helped launch with an early investment and then served as adviser to cofounder and CEO Mark Zuckerberg. McNamee paved the way for the hiring of COO Sheryl Sandberg and dissuaded Zuckerberg from selling the young company for $1 billion in 2006.
“I was so proud of Facebook. I thought Mark was different,” McNamee said during a conversation with veteran Wall Street Journal technology reporter Ann Grimes at Stanford Graduate School of Business in April, part of a series sponsored by the Corporations and Society Initiative led by professor Anat R. Admati. “I was blissfully a fan.”
But the bromance is over. McNamee now says the social network is “terrible for America. Bad actors exploit the design of Facebook and other platforms to hurt and even kill innocent people.”
Now retired, McNamee has written a broadside of a book, titled Zucked: Waking Up to the Facebook Catastrophe. He’s been promoting it via numerous media interviews and speaking engagements and has been rewarded with a place on the New York Times best-seller list.
His critique goes well beyond Zuckerberg and Facebook, and he is careful not to make it personal. “These are not bad people,” McNamee says. His criticism extends to the fundamental business model of Silicon Valley — it treats consumers as “fuel” — and more broadly to the economic environment of the United States.
“We have deregulated for 40 years,” he says. “We’ve gone from a version of capitalism where government sets rules and enforces them so it is fair for everyone.” But now there are very few rules and little enforcement of the ones that remain, so businesses are encouraged “to grab whatever they can grab,” he says.
The culture of our economy is so warped, McNamee argues, it’s almost unreasonable to expect executives like Zuckerberg to act more responsibly.
“If Rex Tillerson [when at Exxon] could conduct a separate foreign policy despite sanctions against Russia, if Wells Fargo can get away with defrauding [millions of] customers, and the whole banking industry in 2008 wasn’t punished, it’s really hard to expect Facebook to be held to a higher standard,” he says.
McNamee is particularly outraged by the ease with which a New Zealand terrorist used social media to broadcast his shooting attack on a mosque on March 15. As a result, he says, there may need to be a kill switch to shut down social media in an emergency. “New Zealand changes everything,” he says.
The Real Price of Data
Saying that consumers are treated as “fuel” for Silicon Valley is an apt metaphor. The collection and sale of personal data, including location, is at the heart of the business models of Facebook, Google, and many smaller companies that live on advertising. McNamee describes a rather Faustian bargain in which consumers trade their data for services.
“We’ve always said services are free, but that’s not true. It’s a barter of personal data for services. The price in data has been rising geometrically, or at least a steep slope,” he maintains.
Data collection, he says, is no longer just a passive technique; it’s become much more sophisticated and is a form of behavioral manipulation or modification. Consider Pokémon Go, a mobile game in which smartphone users hunt for digital creatures stashed around the city. The game seems harmless. But it’s more than that. “If we put a Pokémon in a Starbucks we can get you to go in and buy some coffee,” McNamee says. “That’s manipulation and it’s not what we signed up for.”
And Twitter and Facebook flame wars not only generate clicks but also reveal a lot about the combatants. That’s no accident, McNamee says. “If you want to find what people are about, you have to pierce the shell of civility around each one of us, and the best way to do that is to provoke us,” he says. “You want to get people in an unstable state to find out what they are really like. The problem with the business model is it depends upon hate speech, fear, outrage, disinformation, and conspiracy theories.”
McNamee says censorship of content is not the answer. In fact, the approach taken by the European Union’s General Data Protection Regulation isn’t working well because it judges content “after the fact,” he argues. “If you want to solve the problem, you have to take away the incentive,” which is to say, change the business model.
In Search of Solutions
McNamee isn’t altogether clear on how he would take away that incentive. At Stanford and other venues, he’s mentioned using antitrust tools and has spoken favorably about Sen. Elizabeth Warren’s proposal to break up massive tech companies. He mentioned that he is lobbying the Federal Communications Commission and the Federal Trade Commission about privacy issues, but didn’t say who he is working with or what, concretely, he would like them to do.
McNamee says that investors have a huge role to play in this, “and it’s time to get off the nonsense of just focusing on shareholder value.”
But he admits that he still holds shares of Facebook stock. “I didn’t want anyone to accuse me of speaking ill of a company whose stock I had just sold. My theory was I had made a lot of money in the stock and my action could cause the stock to go down. That was a personal value judgment.”
McNamee concedes that his position seems inconsistent, saying, “I’m not the perfect messenger. But this is not small stuff, this is people’s lives. We can’t lose sight of this.”
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