On November 5, the Internet giant Facebook acknowledged that after “Cambridge Analytics” took Facebook user data in 2018, the Facebook remedy failed to block more than 100 other third-party applications in a timely manner. To make matters worse, a newly leaked Facebook cache file revealed that from 2011 to 2015, Facebook CEO Zuckerberg used user data as a bargaining chip in business competition.
With the “split Facebook” being put on the agenda by Massachusetts senator, Massachusetts popular 2020 presidential candidate Elizabeth Warren, and Republican Missouri federal senator Josh Holley, Mark Zuckerberg Feel stress. Silicon Valley oligarchs, represented by Facebook, have begun to take regulation seriously.
“Little trouble” evolved into “big problem”
On October 23, the US House of Representatives Financial Services Committee questioned Zuckerberg for a six-hour question about the hidden dangers of the Facebook cryptocurrency plan Libra. Although the latter has repeatedly reiterated that the plan is beneficial to “defend the global leadership of the US dollar”, “defend competition from China”, and promises “strengthening user data protection” and “supporting Libra’s postponement until regulatory issues are fully resolved”, its testimony remains It was considered “nothing new” and “lack of sincerity” by lawmakers.
During the 2016 election, Facebook user data was used by Cambridge Analytica to send targeted advertising in support of Trump. After the incident came out, Facebook didn’t take it seriously at first, and Zuckerberg even missed the first congressional hearing because he “meeted with investors.” In April 2018, Zuckerberg attended the hearing for the first time and repeatedly apologized for the misuse of user data, but the answers to key questions such as “how to put an end to it” were almost “robots.”
In July this year, the US Federal Trade Commission issued a $ 5.6 billion ticket to Facebook to settle the “Cambridge Analysis” incident. But the punishment only temporarily ended the “privacy battle”, and Washington turned to antitrust as the focus of investigation.
Before the hearing on October 23, Zuckerberg went to Washington in late September to meet with members of Congress and meet with President Trump. During his visit to Washington, Zuckerberg was convinced that “the years of self-regulation are over” after meeting with a number of lawmakers, and stated his support for “protecting user privacy”, “combating fake news” and “maintaining election fairness”; On Libra, he promised to value regulators and public opinion. However, Zuckerberg was “unacceptable” in response to Warren and Holly’s proposal to sell Facebook’s WhatsApp and Instagram products.
Rejection: Facebook has paid the price for abuse of user privacy. In Zuckerberg’s words, “Facebook currently invests more in cybersecurity than Twitter’s total revenue.” More importantly, in order to get rid of the reliance on traditional advertising business, Facebook has decided to move from “divergent social” to “cohesive social + e-commerce” (similar to “renren.com + Weibo” to “WeChat + Alipay”) .
Instagram, which is popular among younger generations, is an important weapon that Facebook uses to ward off competition such as Douyin, and WhatsApp, an instant messaging software similar to WeChat, is an important carrier for Libra to land. If you split Instagram and WhatsApp, you can’t help but hinder the reform of Facebook.
As early as October, in an outgoing Facebook internal conference recording, Zuckerberg had stated that if Warren was elected president next year, Facebook would take up legal weapons to resist the antitrust split from the government. This internal speech revealed a certain desolation and sadness. Soon after, PayPal, who just received a payment license in the Chinese market, announced its withdrawal from the Facebook-led Libra alliance; Apple CEO Tim Cook also criticized Facebook for borrowing Libra.
There are various signs that the business community is not optimistic about Libra’s prospects, which is closely related to the expectations of Facebook or anti-monopoly split. For the foreseeable future, “supporting Libra’s postponement until the regulatory issue is fully resolved” will be Zuckerberg’s only option.
For Warren, breaking up the monopoly Facebook is a must-have for her pursuit of economic equality, and running for president only made her claim more public.
Warren: Endorsing the Middle Class
Since the announcement of election in 2020, Warren’s campaign policy, a former Harvard law professor, has focused on the economic and people’s livelihood areas, proposed taxing the rich, and launched the “Responsible Capitalism Act”, which requires “from wealthy executives and shareholders In the hands, trillions of dollars were redistributed to the middle class. ”
The Democratic Progressives, represented by Warren and Sanders, have advocated policies such as the “rich man’s tax”, “exemption of college student loans”, and “universal health insurance”, which have often caused public outcry, mainly because they deviated from mainstream Chicago since the Reagan era School of Economics. Milton Friedman, the school’s leader, once said, “Corporate social responsibility is to increase profits.”
However, unconstrained large companies may be as “corrupt” as Washington, and may not be good for Wall Street but for the economy and the average consumer. Warren once stated that the process of going to bankruptcy courts across the United States in the mid-1980s to review cases gave her a deeper understanding of ordinary American families, and she transformed herself from a “free market believer” to a “fair market fighter.” “. During Obama’s tenure, she set up a Consumer Financial Protection Agency, but was forced to leave the White House to shake the interests of Wall Street and run for the Senate.
Although the Obama stimulus package started a long-term economic recovery, Warren found that companies no longer use profits to reproduce but use them to buy back stocks: In 2017, large US companies distributed 93% of their income to shareholders, and This number was only about 50% in the 1980s. In June this year, the International Monetary Fund released a report that the current median household income in the United States has increased by only 2% compared to 1990, the incidence of poverty is the same as before the financial crisis, and the income gap has further widened.
In other words, during the Obama administration, it was the American economy, not the average American family, that emerged from the financial crisis. In fact, the popularity of Sanders and Warren, and Trump’s victory, are two sides of the same coin. Behind them are the middle class trying to pursue distribution justice in the post-financial crisis era with votes; the difference is that receiving tea The Republican basic model shaped by the party movement firmly believes that resistance to immigration and trade protection can increase employment and income, while progressive voters suspect that big companies and Wall Street have divided up the fruits. Therefore, splitting economic power, strengthening supervision and taxation, becoming progressive Of the three main policy options.
Compared to 4 years ago, in the 2020 election season, Silicon Valley attracted more firepower than Wall Street. Part of the reason is that Wall Street turned to a low profile after the financial crisis, and more directly, the expansion of Silicon Valley’s economic power.
Today, Facebook and its products account for 70% of the global social networking market, and Google and Facebook account for 60% of the US digital advertising market. In the 2018 Forbes list of the richest people in the United States, six of the top ten Silicon Valley people took six seats; As of June this year, there were 177 U.S. technology “unicorn” companies valued at more than $ 1 billion, compared with only 9 a decade ago.
Former Google chairman Eric Schmidt once said, “Google buys a company every day.” Facebook also acknowledged that the acquisition of WhatsApp and Instagram was to eliminate competition. The Silicon Valley giants use their first-mover advantage to join forces with capital to eliminate opponents by squeezing or acquiring in order to make themselves “big and stumped.”
The “Wall Streetization” of Silicon Valley made Warren choose the new battlefield in Silicon Valley. Comparatively speaking, issues such as hate speech, privacy protection, and election justice are commonplace. Only antitrust can hit the pain points of Silicon Valley oligarchs.
Ironically, Warren, who is “anti-Silicon Valley”, is quite popular among Silicon Valley people. Some executives are willing to spend $ 50,000 on VIP tickets for their speeches, but find that they have to buy a $ 100 ticket just like ordinary people and queue up for admission. Warren’s popularity is not difficult to understand: large enterprises worthy of separation are rare, but antitrust can bring opportunities to small enterprises; in the wave of the digital economy, executives and investors have made a lot of money, and Warren advocates populism , Naturally welcomed by ordinary employees.
Since October, a number of polls have shown that, under the influence of Trump ’s “phone door”, the Democratic Party ’s representative Biden ’s approval rating has been evened out or even surpassed by Warren; Warren topped the list with a total of $ 24.6 million. Although Sanders “recruited” again after undergoing heart bypass surgery, it is obviously difficult for him to continue to carry the banner of the Democratic Progressive Party. If Democrats eventually launch Warren, Facebook’s situation will be more delicate.
The business model of “monitoring users to push ads” has been repeatedly questioned, but Facebook has no intention of getting rid of its reliance on social advertising revenue models.
For Warren, breaking up the monopoly Facebook is a must-have for her pursuit of economic equality, and running for president only made her claim more public.
The Real Dilemma of Facebook: Industrial Connectivity
This round of Facebook disputes originated from its improper protection of user privacy in 2016, fermented by the debate between the two parties over “hate speech” and “conservatism”, and reached a peak in Congress’s antitrust appeal. The reason for this is probably its own development model.
Facebook’s “initial heart” is to meet people’s social needs, but its survival depends on advertising. However, the endless push has caused information fragmentation and time wastage, and its positive effects have been diminishing day by day. “Erase Facebook” has become a new trend. A 2015 OECD survey found that netizens in developed countries are more accustomed to searching or asking questions through the Internet to obtain useful information, while netizens in less-developed regions spend more time on social networks.
After antitrust was put on the agenda by Congress, Facebook once argued that the products it provided were free, and according to traditional economics, “as long as the product remains low, no monopoly is involved.” However, more and more scholars point out that the services provided by Google and Facebook seem to be free, but there are huge hidden costs, that is, consumers pay the price of “data” and “attention”, and the latter two are advertising Business foundation.
The digital economy can be roughly divided into four models: platform (search, social, sharing), solutions (payment, cloud services), content (media, games) and e-commerce. In the past ten years, the Internet “cross-border” trend has become more and more obvious. For example, Google, which focuses on search, has launched a number of its own products and established Google Cloud. Apple, which relied on hardware, started producing content. The problem with Facebook is that it only socializes.
Facebook ’s “Achilles’ heel” is not “poor privacy protection”, nor is it discriminatory against conservatism, untimely removal of hate speech, or rebellion by internal employees, but its slow response to market changes: ” The business model of “monitoring users to push ads” has been repeatedly questioned, but Facebook has no intention of getting rid of its reliance on social advertising revenue models. Last year, 98.5% of its full year revenue still came from advertising.
Comparatively speaking, although advertising is also Google ’s revenue leader, the layout of hardware products and cloud services has reduced the proportion of Google ’s advertising revenue from 96.8% in 2009 to 85.4% last year. This leaves plenty of room for transition for Google, which also faces antitrust investigations. Facebook, which relies entirely on advertising, can only struggle with coping with “privacy investigations.” It is struggling to maintain its precarious business model, and its late transformation may even be ruined by antitrust.
Facebook’s obsession with social advertising will likely leave itself on the “previous generation Internet.” At present, the traditional consumer Internet with its core characteristics of social, entertainment, shopping, and behavior is “saturated”; with the development of key technologies such as cloud computing, artificial intelligence, and the Internet of Things, the consumer Internet is transitioning to the industrial Internet—Google will not Human driving is regarded as a breakthrough point, and Amazon is vigorously developing cloud services. The poor performance of the shared office “unicorn” WeWork and the up-and-coming upstart Uber market reflect not so much the “investment errors” of Softbank’s pool of pools, but rather the wait and see of the traditional Internet in the capital market attitude.
Because industrial interconnection requires a large amount of basic data support and a super computer center covering an area of 10,000 acres, the Internet oligarch will replace the traditional scientific laboratory and become the main driving force for this round of Internet transformation and upgrading. Under this circumstance, Facebook, which has a huge amount of data, still does not stop at being an advertising company to realize shareholders’ interests. It lacks the urge to invest big data and big funds in reproduction. This “elegant egoism” will certainly eat back, making Facebook data a “data desert” in the end.
All in all, in the era of industrial interconnection, social networks will return to their tool attributes, and the Internet will return to service life and the real economy. Only a model that is deeply integrated with the real economy and can achieve profitability is an Internet product with excellent commercial and social value.
Distress and “legacy” of Silicon Valley oligarchs
On the issue of antitrust, the U.S. Department of Justice, the Federal Trade Commission, and the state attorney generals appear menacing, but due to overlapping investigations and inter-departmental competition for power, the investigations have not progressed smoothly for several months. Did not get the “real hammer” that Google or Facebook involved in the monopoly.
With Chicago school students still spread, investigators can hardly “think Warren’s thoughts” completely; even if law enforcement finally makes a split Facebook or Google ruling, the lawsuit promised by Zuckerberg will inevitably occur. The results are still unexpected.
Just as Facebook’s crisis is not a monopoly but its own model, the real challenge in Silicon Valley is probably not in Washington, but the Internet industry itself.
Taking Europe as the observation coordinate, in the era of the consumer Internet, Europe failed to form high-quality local companies due to low population, diverse languages, and high labor costs. This gave Silicon Valley a chance to attack the city. As the Internet transitions from consumer interconnection to industrial interconnection, the industry itself will take the lead in replacing traditional Internet companies.
The long-term outflow of the U.S. manufacturing industry and the decline in the number of industrial workers, while the overall scale, automation, and digitization of the EU’s manufacturing industry are leading the world. This has given the EU the imagination of “overtaking in the curve” in the era of industrial interconnection.
Taking the core of smart industrial manufacturing as an example, since the 1980s, the U.S. manufacturing industry has experienced a long-term outflow and the number of industrial workers has declined, while the EU ’s overall scale, automation, and digitization have led the world. The imagination of “curve overtaking” in the era of industrial interconnection.
Since 2010, the EU has suppressed and restricted Silicon Valley’s activities in Europe by means of privacy censorship, antitrust, and the levy of a “digital tax”. With the introduction of the EU’s General Data Protection Regulation (GDPR) and the new European Commission will work to defend “digital sovereignty”, the European market will become a “risk zone” for Silicon Valley.
In the long run, the alienation of Silicon Valley from the physical industry will not necessarily affect the industrial Internet landing in Europe and the United States, but it will certainly weaken the development potential of Silicon Valley’s Internet oligarchs. These oligarchs often use platform-type “cloud services” as the entry point to the industrial Internet, but this is still far from the fact that engineers go deep into factories and fields to help the real industry “digitalize.”
Taking China as its observation coordinate, the US non-profit organization “Data Innovation Center” released a development report in the field of artificial intelligence in August this year, arguing that the United States leads in four areas: research, development, hardware and talent, while China leads in data and applications. The report recommends that the White House increase the number of green cards issued to artificial intelligence talents, remove the ethnicity limit on the employment of technology companies, and avoid introducing excessively stringent regulatory measures.
For a long time, Silicon Valley has called for relaxation of the opportunity for Asian engineers to obtain work visas, but in the context of Congress’s struggle over immigration issues, the possibility is very small; the dispute between the two parties over freedom and conservativeness has been reached by Silicon Valley employees and American society. Divided-Google employees oppose the company’s cooperation with the Pentagon in the field of artificial intelligence, liberal-led cities insist on minimizing the use of face recognition technology, and even Amazon’s unmanned stores must set up artificial cash registers to ensure “political correctness” This undoubtedly limits the application scenarios of the Industrial Internet.
Since the 1990s, the rapid growth of the US digital economy has mainly benefited from the “light regulation” during the Clinton and Obama administrations. At present, in the rip-off between the progressive Democrats and the Trumpized Republicans, Congress and public opinion seem to be more willing to discuss the rights and wrongs of the “previous generation of the Internet.” This undoubtedly poses great constraints on the transformation and upgrading of Silicon Valley.
In addition to the anti-monopoly coming from the rain, Congress is brewing “privacy protection” legislation at the national level. This will hinder the development of artificial intelligence that relies on big data and machine learning. Without artificial intelligence, there is no way to talk about the Industrial Internet.
This is the pain of Zuckerberg, but it is also the “legacy” left by the Silicon Valley oligarchs after excessive “consumption of the world” in the era of the consumer Internet.