Rhode Island Congressman David Cicilline said "Facebook cannot be trusted to regulate itself" in a Wednesday tweet citing an NYT report on the latest turmoils at the Menlo Park, California-based company. The Congressman who's expected to be the next Chairman of the House Judiciary Committee's antitrust panel called the expose "staggering," referring to it as proof that Facebook executives will always prioritize profits over the wellbeing of its users. The 57-year-old accused the company of trying to corrupt the United States democratic process through donations, concluding "it is long past time for us to take action." While he didn't share many details on his plan, Congressman Cicilline said the new House roster that's being sworn in two months from now should work on legislation that will push back against "the corrupting influence of corporate money in our democracy."
Background: The report cited by the legislator described the extent to which Facebook went in an effort to "delay, deny, and deflect" blame from a large-scale incident that saw a number of Russia-linked agents and groups spread misinformation in the run-up to the 2016 presidential election in the U.S. Insiders accused the company of hiring a PR firm that spread conspiracy theories about the debacle by planting stories on how people protesting against the social media giant are associated with George Soros, a multi-billionaire investor often painted as the boogeyman of the political right. The firm is also said to have lobbied with a Jewish civil rights group in order to propagate the notion that some of the criticism aimed at it over the Russian misinformation campaign it failed to stop, Cambridge Analytica scandal, and other privacy debacles is anti-semitic.
Facebook's business model is largely based on user trust, with the firm collecting vast amounts of information it then utilizes to deliver highly targeted ads paid by marketers. With that trust now eroding in the aftermath of dozens of recent scandals, the company is in full damage-control mode as it's trying to once again be seen as the force of social good. However, previous calls from Germany, India, Myanmar, and some other countries pointed to its online service as an effective tool for spreading misinformation, propaganda, and polarizing the public for a variety of reasons, including whitewashing crimes such as ethnic cleansing. While the company is now publicly admitting to those issues and saying it's fighting against them, it originally ignored those warnings and downplayed their severity.
The Cambridge Analytica scandal was particularly hurtful to Facebook's image and led to a series of government hearings in the United States and Europe. The European Parliament was particularly displeased with the development and grilled founder and CEO Mark Zuckerberg over the matter, with German representative Manfred Weber in May saying the discussion on whether Facebook needs to be broken apart must happen in the immediate future. Facebook remains adamant it's not a monopoly and believes it faces significant competition across numerous markets, from social media to messaging. This spring, Belgian representative Guy Verhofstadt asked Mr. Zuckerberg whether the technology juggernaut would be willing to completely open up its books and assist EU investigators in determining whether the company's business and activity are in violation of any antitrust laws on the Old Continent but the executive first didn't address the question and then essentially declined the request as part of a written follow-up to the hearing during which it was made.
While Republican governments in the U.S. traditionally aren't particularly tough on antitrust issues, the Trump administration has so far been sending mixed signals over the matter, particularly in the wireless space where it's still fighting to reverse AT&T's $85.6 billion purchase of Time Warner, a vertical merger that didn't directly eliminate any competition from the market. On the other hand, neither the FCC nor the DOJ have so far expressed significant opposition to T-Mobile's proposed acquisition of direct and closest rival Sprint. It's hence unclear how the current government may approach the question of whether Facebook is a monopoly and whether it would even be willing to work together with a Democratic House on regulating the firm, given recent political hostilities.
Regardless, Facebook has been attracting criticism from both sides of the political aisle in the country ever since the last presidential election; the left is accusing it of not doing enough to stifle Russian misinformation efforts that may have affected the outcome of the presidential race, whereas the right believes the company is biased against conservative worldviews and is unjustifiably censoring them. Both sides also agree that the Cambridge Analytica scandal and similar smaller debacles that followed at the very least constitute a significant breach of user trust. That particular episode still hasn't yielded significant consequences for Facebook and both Mr. Zuckerberg and COO Sheryl Sandberg dismissed the possibility of stepping down in response to the incident.
Impact: Congressman Cicilline's remarks signal Facebook has a rough period ahead of it as allegations of anti-competitive behavior and monopolistic tendencies that it's been facing in Europe for some time already have now made their way to its home country. Any form of legislation that would seek to regulate the vast social power yielded by Facebook would likely spell bad news for its stock and limit its revenue potential, though the exact manner in which the newly elected Democratic House may attempt to approach the effort remains unclear.
The fact that the Senate is still controlled by the GOP also lowers the possibility of new laws being drafted in the immediate future as the Republican party traditionally has a hands-off approach when it comes to business regulations and isn't likely to fully support the Democratic initiative. However, given the amount of criticism the political right — including the President himself — sent in Facebook's direction in recent times, a scenario wherein a bipartisan legislative effort places the company under additional regulatory scrutiny isn't out of the realm of possibility. While the two major political parties in the U.S. don't hold identical concerns about Facebook, they may still be willing to work together to tackle issues such as online misinformation, bias, and privacy violations.