Whistleblower Frances Haugen’s decision to file multiple complaints against Facebook with the Securities and Exchange Commission, appear on “60 Minutes” and testify in the Senate may serve as an inflection point in the battle between Facebook and an increasingly alarmed public. In pressing the executive branch, Congress and the public to take back control of Facebook, Haugen poses an existential threat to Facebook’s business model based on monetizing mental illness, polarization, aggression and disinformation.
She in essence indicted the entire business model of the tech behemoth. It makes its money from “engagement-based ranking” — that is, maximizing clicks from material that generates strong reactions. Sadly, negative emotions such as anger and bias guarantee more engagement. Thus, Facebook’s algorithms prioritize content that in many instances instills anger, fear and anxiety. The Post reports that, among other things, “Facebook’s algorithms [are] causing teens to be exposed to more anorexia content, encouraging rifts within families, and fueling ethnic violence in Ethiopia, she told lawmakers.”
Haugen’s SEC complaints provide a damning portrait of the tech giant. CBS reports:
Among the allegations in the SEC filings are claims that Facebook and Instagram were aware in 2019 that the platforms were being used to “promote human trafficking and domestic servitude.” The filings also allege Facebook “failed to deploy internally-recommended or lasting counter-measures” to combat misinformation and violent extremism related to the 2020 election and January 6 insurrection.
She also makes the case that Facebook has deceived us as to what it does. For example, she alleges chief executive Mark Zuckerberg and other senior executive made misleading statements and omissions in explaining to investors — and to Congress — the extent of its role in fanning disinformation about the 2020 election. Haugen also alleges that Facebook knows its products make hate speech and misinformation worse, and that its own methods of addressing it are insufficient. The copious documents and detailed explanations to back up Hauser’s claims are bracing.
The SEC will now be compelled to investigate, demand further documents and testimony, and, if warranted, bring a lawsuit. While the SEC does not have the power to bring any criminal charges to the extent it finds evidence of actual crimes (e.g., fraud, perjury), it can refer those matters to federal prosecutors. Nevertheless, as the SEC’s website explains, “The SEC can charge individuals and entities for violating the federal securities laws and seek remedies such as monetary penalties, disgorgement of ill-gotten gains, injunctions, and restrictions on an individual’s ability to work in the securities industry or to serve as an officer or director of a public company.” This is serious stuff.
Put differently, even if Congress does nothing, Facebook and its executives face potentially years of investigation and litigation — with considerable financial risk. Any notion that Zuckerberg intends to leave these issues to underlings and disappear from the scene is as arrogant as it is unrealistic.
But make no mistake: Congress is fully engaged. In a rare show of bipartisanship, senators from both parties on the subcommittee reacted angrily to evidence of Facebook’s deceit and showed strong interest in probing Facebook, especially its effect on children. When ranking member Sen. Marsha Blackburn (R-Tenn.) and Chairman Sen. Richard Blumenthal (D-Conn.) are on the same page, the target of their ire should be concerned. When both Sens. Amy Klobuchar (D-Minn.) and Ted Cruz (R-Tex.) want to subpoena more internal documents, Facebook is going to find it difficult to hold investigators at bay.
By going public and focusing on children, health (mental and physical) and political violence, Haugen maximizes the chances that most every American will become angry about some aspect of Facebook’s conduct. Facebook may try to convince us that Haugen didn’t really know what was going on at the company, but ordinary people are inclined to believe someone who was a high-level executive and comes bearing documents. Attempts to smear her will only worsen the company’s image. Her testimony may also encourage others to come forward with incriminating information.
While some lawmakers want to break up tech giants, Haugen wants the SEC and Congress to open it up to scrutiny. After we know what Facebook is doing, she argues, we then can regulate it appropriately by requiring transparency or taking away its legal refuge in Section 230 of the Communications Decency Act. Haugen also floated creating a “dedicated oversight body” in the federal government to oversee the industry.
There are other proposals out there. Stanford Law professor Nathaniel Persily recommends in an op-ed for The Post that Congress pass “a law granting scholars from outside the social media companies access to the information held by them — while protecting user privacy” through the Platform Transparency and Accountability Act.
Under his proposal, a government agency would regulate researchers but not have access to the data itself. Facebook would no longer have power to decide who has access. He argues, “The current situation — platforms controlling all their data and deciding what information the public deserves to know — is unsustainable. So, too, would it be a mistake for Congress to regulate the Internet based on folk theories or misguided conventional wisdom regarding the harms caused by these new technologies. We need good information.”
Now that the public is engaged, the SEC and Congress must move forward to investigate Facebook, open it to investigation, determine if it has lied to the public and/or Congress, and devise a regulatory system that limits harm from its business model. It is one thing to guarantee Facebook legal protection when it is acting as a bulletin board for cat photos and birthday wishes; it is quite another to give Facebook a legal shield to manipulate, radicalize, polarize and mislead users through moneymaking algorithms. That aspect of Facebook’s free ride must end.