Why is Mark Zuckerberg testifying in Congress?

——It is likely to get uncomfortable for Facebook’s boss

From The Economist

WITH great corporate power comes great responsibility. Many politicians and onlookers feel that Mark Zuckerberg, the boss of Facebook, has been irresponsible in his oversight of the world’s largest social-networking company. Facebook has spent the past 18 months defending itself against pointed criticism, including allegations that it has done too little to stop the spread of fake news and extremist propaganda, and that it unwittingly enabled Russian meddling in America’s election and Britain’s “Brexit” vote in 2016. The latest scandal, involving the sharing of Facebook data with third parties by Cambridge Analytica, a political consultancy, has sparked an acute corporate crisis, as well as a political reckoning. In America Congressional committees often summon experts to answer questions about topics of national concern. In the past year Mr Zuckerberg has sent his general counsel to answer politicians’ questions, but this time he is going himself. He has released his prepared remarks in advance in which he admits to making a “big mistake” by not taking “a broad enough view” of Facebook’s responsibility. On April 10th and 11th, he will field questions directly from disgruntled senators and congressmen. So what will be the likely focus of the questioning ?

Mr Zuckerberg’s current problems began on March 17th, after articles in the New York Times and the Observer, a British newspaper, asserted that Cambridge Analytica had obtained detailed data about some 50m Facebook users and shared this trove of information and analysis with third parties, including Donald Trump’s presidential campaign. (Facebook has since admitted that Cambridge Analytica got data on nearly 90m users.) The data were obtained by Aleksandr Kogan, a researcher at Cambridge University, who had enticed some 270,000 people to take part in a survey in exchange for a small fee. When those users installed the survey app, they shared details about themselves and their friends. Surprisingly, before 2015 Facebook’s rules allowed the mining of social connections without each user’s consent. Facebook has promised to put more safeguards in place to protect users’ privacy, but that has not quelled the backlash. A campaign to encourage people to stop using the social network, #deleteFacebook, has taken off. The company saw its share price plunge 17% at its trough, though it has recovered slightly. Many wonder whether this scandal could permanently damage Facebook’s reputation and commercial prospects.

The Cambridge Analytica scandal is so important because it draws attention to how Facebook, as one of the world’s most influential and valuable firms, has built up a profitable empire by collecting consumers’ data and observing their online behaviour. Conventional wisdom says that consumers are happy to trade their information in return for free services. But the Cambridge Analytica fiasco suggests Americans may become more privacy-conscious than was presumed. Facebook’s business is built on selling access to advertisers based on minute details about what is known and inferred about users, such as their location and preferences. This can be useful if it helps consumers see more relevant ads, but it can also be used for manipulation and more nefarious purposes, as the Cambridge Analytica issue shows. It is still not known how much President Trump’s campaign used the data obtained by Cambridge Analytica for political advertising purposes, but it is possible that these data informed the messages that users saw. The dataset could also have come into Russian hands.

Mr Zuckerberg will have to supply answers to politicians about a range of uncomfortable subjects, including why Facebook did not do more to clamp down on Cambridge Analytica and outside firms abusing the social network’s platform. Politicians will then decide what steps to take next. To understand whether the scandal will have a lasting impact on the firm’s future, there are three questions to consider. First, how likely is it that there will be regulation that will limit Facebook’s ability to operate as it has to date? Some think that Congress may embrace restrictive data regulation similar to what Europe will enact next month, but it is unclear whether Republicans will be on board, and even if they are, how much this could circumscribe the firm’s usual way of doing things. Second, will advertisers stop spending on Facebook? So far there is little indication that they will do less business with the social network as a result of the scandal, and new advertisers are starting to spend more online, blunting the impact of any defectors. Third, will this controversy dampen users’ willingness to spend time on Facebook’s core social network or its sister app, Instagram? This is the company’s gravest long-term risk, but no one outside Facebook is quite sure how this has affected the time people are willing to spend on the platform. Perhaps one of Mr Zuckerberg’s inquisitors will ask him.