Here, the fiction they have invented about Europe is instructive. Many American businesspeople and some politicians rail against “statist” old Europe, painting it as a sclerotic place that illustrates why regulation is the enemy of growth. I’ve heard from a number of European policy makers how tired they are of CEOs from Silicon Valley “coming over here and telling us we aren’t innovators, we didn’t create the biggest tech companies, and our concerns [about privacy and monopoly] are just sour grapes.”42
But a fascinating study by academics Germán Gutiérrez and Thomas Philippon showed that EU markets are, in fact, more competitive by many measures than those in the United States, and points to a huge rise in U.S. political lobbying as the key reason that the European Union has significantly lower levels of corporate concentration, excess profits, and regulatory barriers to entry since the 1990s.43 The study found that this jump in dollars spent on U.S. political lobbying is the key reason that levels of concentration between the two regions have diverged since the 1990s.
“European institutions are more independent than their American counterparts, and they enforce pro-competition policies more strongly than any individual country ever did,” Gutiérrez and Philippon wrote. If you look at competitiveness in terms of GDP numbers and the size of the biggest companies, Europe lags behind the United States. But as most economists today would agree, GDP alone is an inadequate metric for well-being, and more corporate concentration is a sign of poor economic health rather than vibrancy. This serves as a sharp counterpoint to the argument often used in Silicon Valley that Europeans do not have an Internet giant because they simply are not innovative. It’s true that Europe doesn’t have the equivalent of the FAANGs. But by some measures, it’s all the better for it.
None of this is to say that Europe doesn’t have its own problems with regulatory capture and unhealthy ties between government and the private sector. The dysfunctional German banking system, for example, is a perfect illustration of how cozy ties can create conflicts of interest that ultimately backfire—recall the highly leveraged German state-owned banks that blew up in 2008, and the ongoing Deutsche Bank bailout saga today.
But in the United States, the sheer amount of political power exerted by just a handful of big companies is breathtaking. Consider, for example, Google’s 2019 announcement of plans to roll out faster Web content for Cuba,44 which would seem to counter President Trump’s promises to get tough on the regime of Nicolás Maduro in Venezuela. The Cubans, you see, are understood to provide Caracas with intelligence services. How was it that Google in particular got first dibs to wire Cuba? Because former chairman Eric Schmidt and three other executives at Google—which had tremendous pull with the Obama administration as we’ve already learned—flew into the country in the midst of an embargo in 2014. Six months later, U.S. policy toward Cuba changed. Now Google may send YouTube videos to the island under Trump.
It’s not a huge deal commercially for Google—and some would argue it’s better than Latin oligarchs doing it. But it encourages the conclusion that the United States is more like Latin America than many of us would like to think: a place where money and personal connections matter more than anything else. No wonder millennials see markets as being politically constructed in ways that their parents did not. While they are too young to remember the failures of communism, they see the hypocrisies of capitalism all around them.45
It’s useful to remember the last time a big industry captured the regulatory system in ways that undermined both economic security and public trust: the years before and after the 2008 financial crisis. One reason that the Dodd-Frank financial reforms and regulations took years to write and arguably didn’t end up really addressing the core issues of making our markets safer is that there were too many vested interests in the room. Banks themselves were involved in 90 percent of the consultation meetings about the most contentious bits of regulation, and between the lobbyists, the seven financial regulatory bodies, and the various political factions, the resulting legislation had more holes than Swiss cheese. This is one reason it’s been relatively easily for the Trump administration to roll back some of Dodd-Frank—there were plenty of people on both the right and the left who didn’t like it to begin with because it had been made so complicated, and in some cases so ineffectual, by industry lobbyists themselves.
We are seeing the same pattern today with Silicon Valley. One can only hope it doesn’t add kerosene to the fire of populism that was lit by the 2016 elections.
CHAPTER 12
2016: The Year It All Changed
If Facebook were a country, it would be the biggest one on the planet. Over 2 billion people, more than a third of people living today, log in every month. It knows more about us than pretty much anyone else, barring our closest friends and family, who are, of course, right there, every day, on the platform with us. When you think about that, it was only a matter of time before nefarious actors found a way to exploit that data to corrupt the democratic process.
Politicians have for years been using detailed data metrics and market feedback to try to influence election results. But it wasn’t until 2016 that the general public really understood the vast possibility held by such techniques when amplified by the kind of surveillance capitalism practiced by the largest platform technology firms. In the run-up to the presidential election, political groups spent a total of $1.4 billion in online advertising and marketing, up four times from the last election cycle.1 Facebook and Google were, of course, both huge beneficiaries. But they were also involved in yet another way: They “embedded” employees (a term that PR representatives have since tried to eliminate from media reports, but which perfectly captures the depth and breadth of their involvement) with the Trump campaign, essentially providing free staff to help politicos figure out how best to use the platform to get their message across to potential voters.
While the ultimate results of that were unprecedented, the practice itself was not; media organizations have often worked closely with political campaigns. As reams of research and reporting over the past few years have shown, the Big Tech companies—not just Facebook and Google but others like Twitter and Microsoft and Apple as well—have taken political communications to an entirely new level. Since 2012, these companies have been intimately involved in campaign strategy on both sides of the aisle. Google and Facebook staff both collaborated with the 2012 Obama and Romney campaigns to orchestrate digital advertising purchases. In 2014, Twitter released a 136-page manual on how to use the platform to influence voters in elections. Also in 2014, a strategy memo sent to Hillary Clinton’s campaign chairman and other senior leadership outlined how the Clinton campaign might work with tech firms. “Working relationships with Google, Facebook, Apple and other technology companies were important to us in 2012 and should be even more important to you in 2016, given their still-ascendant positions in the culture. These partnerships can bring a range of benefits to a campaign, from access to talent and prospective donors to early knowledge of beta products and invitations to participate in pilot programs.”2
But 2016 was the year that Big Tech really blew up the old style of political campaigning. At the 2016 Democratic National Convention in Philadelphia as well as at the 2016 Conservative Political Action Conference (CPAC) in Maryland, Big Tech firms had a huge presence. In Philly, Google took over an entire industrial space where politicians and staff could mingle with tech workers. The company also worked with Republicans like Rand Paul, whose digital director Vincent Harris flew out to Google headquarters for “ideation” sessions on campaign content and advertising. Facebook had prime real estate, too, at both conventions, and also worked “to teach conservative-leaning candidates [at CPAC] how to use its platform to reach new voters.”3
The relationship was rich for both sides. As academics Daniel Kreiss and Shannon McGregor laid out, “Firms are motivated to work in the political space for marketing, advertising re
venue, and relationship building in the service of lobbying efforts….Facebook, Twitter and Google go beyond promoting their services and facilitating digital advertising buys, actively shaping campaign communications.” The academics concluded that “these firms serve as quasi-digital consultants,” shaping “strategy, content and execution.”
And from the point of view of the campaigns, why not? Big Tech firms could serve as “free labor,” which is how Nu Wexler, associate communications director at Twitter in 2017, put it in an internal communication. Wexler, who was interviewed by Kreiss and McGregor, noted that the Trump campaign in particular compensated for its small staff by using the expertise of tech firms as advisers on strategy and communications. “The Trump model was that they…rented some cheap office space out by the airport, a strip mall, and they said it’s going to be Trump Digital. They had the companies, the advertising companies, social media companies, come down there [to San Antonio, the campaign headquarters] and work out of that strip mall. And we did it, Facebook did it, Google did it.” Much of the help, according to Wexler, was around building “ads that get results.”4
Results are one thing. But the dirty politics of the Trump campaign, coupled with the vast trove of data that could be harvested from Facebook and a variety of other websites and apps, led to something much darker.5 According to a report published in Bloomberg Businessweek that came out a full two weeks before the election, Trump knew he needed a miracle to win, and his campaign team, led by the infamous Steve Bannon; Trump’s son-in-law, Jared Kushner; and other social media–savvy staffers, found that “miracle” in Facebook, Twitter, and YouTube.6
Kushner, who had friends in the tech world, reached out to “some Silicon Valley people who are kind of covert Trump fans and experts in digital marketing.” These techies showed the campaign how it could target particular groups of swing voters, either to bring them out or to suppress them, by sending out targeted online messages in advance of the elections. The Businessweek story quoted a senior official in the campaign who admitted “we have three major voter suppression operations under way. They are aimed at three groups Clinton needs to win overwhelmingly: idealistic white liberals, young women, and African Americans.”
The campaign succeeded in throwing out a raft of propaganda designed to discourage people from turning out for Clinton. It distributed anti-Hillary videos, used Facebook to raise nearly $300,000 in campaign donations, and paid Facebook for help in online messaging that highlighted Clinton’s support for NAFTA, and played to the “Bernie-Bro”–type misogyny that appealed to some Rust Belt white males who knew they’d been sold out by the Republican Party, but also felt betrayed by the corporatist wing of the Democratic Party, and thus were open to hateful messages about Clinton. If they had a germ of truth in them (while Clinton did shift her trade stance during the campaign, her husband’s administration had orchestrated NAFTA), then so much the better.
Some of the propaganda came from the Trump bunker itself. Some was fanned by overseas actors, including Russian agents who wanted to help the reality-TV-star-turned-candidate win the election. Whether or not Trump was actually in hock to Putin (the long-awaited report from special counsel Robert Mueller fell short of declaring collusion, but had plenty of examples of suspicious pre-election communication between Russia and the Trump team, leaving both sides to believe exactly what they had before the Mueller report was in),7 it was clear that he’d be far easier to manipulate than Clinton, who was hawkish on foreign policy and particularly on Russia.
As Mueller’s investigations have shown, the Internet Research Agency, a Russian firm working for the Kremlin, managed to draw hundreds of users from Facebook and other social media platforms to ads that were designed to damage Clinton. The group’s content reached a stunning 150 million Internet users. As Theresa Hong, the Trump campaign’s digital director, put it plainly, “Without Facebook, we wouldn’t have won.”8
It was right around that time that Roger McNamee, the Facebook investor and former mentor to Zuckerberg, began noticing strange things online. “I first became seriously concerned about Facebook in February 2016 in the run-up to the first U.S. presidential primary,” he told me in 2017, which is around the time he began work on Zucked, his book about the topic. As a political junkie, McNamee “was spending a few hours a day reading the news and also spending a fair amount of time on Facebook,” he writes. “I noticed a surge on Facebook of disturbing images, shared by friends, that originated on Facebook Groups ostensibly associated with the Bernie Sanders campaign. The images were deeply misogynistic depictions of Hillary Clinton. It was impossible for me to imagine that Bernie’s campaign would allow them. More disturbing, the images were spreading virally. Lots of my friends were sharing them. And there were new images every day.”9
McNamee was becoming increasingly concerned about the effect of social media on election outcomes. He had been shocked, as were most people, by the outcome of Brexit, which defied all public polls in advance of the referendum result. While the British government had initially denied any involvement by nefarious actors using platform tech to influence the referendum, a damning report released by the British Parliament in February 2019 found just the opposite.10 The report indicated that there was indeed a possibility that the Brexit vote had been influenced by Russian actors, and that at the very least there were big questions about the ongoing role of disinformation in elections, questions that might require a reworking of electoral law, which the committee in charge of the investigation found was “not fit for the purpose” of dealing with companies like Facebook, which “intentionally and knowingly violated both data privacy and anti-competition laws.”
As MP Damian Collins put it, “Democracy is at risk from the malicious and relentless targeting of citizens with disinformation and personalized ‘dark adverts’ from unidentifiable sources, delivered through the major social media platforms we use every day. Much of this is directed from agencies working in foreign countries, including Russia….The big tech companies are failing in the duty of care they owe to their users to act against harmful content, and to respect their data privacy rights.”
Collins added, “We believe that in its evidence to the Committee Facebook has often deliberately sought to frustrate our work, by giving incomplete, disingenuous and at times misleading answers to our questions….Even if Mark Zuckerberg doesn’t believe he is accountable to the UK Parliament, he is to the billions of Facebook users across the world. Evidence uncovered by my Committee shows he still has questions to answer yet he’s continued to duck them, refusing to respond to our invitations directly or sending representatives who don’t have the right information. Mark Zuckerberg continually fails to show the levels of leadership and personal responsibility that should be expected from someone who sits at the top of one of the world’s biggest companies.”
* * *
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THE SAME CAN certainly be said for Facebook’s response to the 2016 U.S. election results. But to anyone who cared to pay attention, the evidence was hiding in plain sight. The more reporting that was done on the role of Facebook and Google and other platforms in the election, the clearer it became that online propaganda had played a role in fanning the flames of issues like immigration, which had been exploited by the pro-Brexit camp during the voting period as well as by the Trump campaign in 2016.
“For the first time,” says McNamee, “I realized that Facebook’s algorithms might favour incendiary messages over neutral ones.”11 What’s more, it was becoming clear that those algorithms might be leading to a more dangerous and polarized world, not to mention a less democratic one.
He decided to do something about it. In October 2016, several days before the presidential election, McNamee reached out to Mark Zuckerberg and Sheryl Sandberg. These were people that he counted as friends, and he had every reason to believe they would listen to his concerns. He was, after all, the one who had advised Mark Zuckerberg
to turn down Yahoo’s $1 billion offer to buy the company early on (a smart move given its current value); he’d also been the one to suggest that Zuck hire Google ad whiz Sheryl Sandberg to be COO of the company.
It turned out that McNamee had been overly optimistic about his relationship with Zuck and Sandberg. Despite his history with the two executives, and his insider status as a longtime Silicon Valley investor, they stonewalled him the same way they had pretty much everyone else over the previous two years.12
He wrote later in a Financial Times piece, “They politely informed me that what I had seen were isolated events that the company had addressed. After the 2016 US presidential election, I spent three months begging Facebook to recognise the threat to its brand if the problems I observed proved to be the result of flaws in the architecture or business model. I argued that failing to take responsibility might jeopardise the trust on which the business depended.”13 Still no dice.
As McNamee put it to me in interviews in 2017, Sandberg and Zuck had taken a “clean room” attitude toward the emerging scandal. They were going to zip up and protect themselves and the company at all costs, no matter what the ramifications might be. Their model dictated that whatever content resulted in the most clicks, and thus the most revenue, for the platform would win the day, even if that content was designed to manipulate voters or fan the flames of racism and hate. It speaks to how much Facebook—as well as the other major platform firms—has to lose. In 2012, Facebook had a billion users. By 2016 it had double that. Its revenue over that time had more than quadrupled, from $5 billion to $27.6 billion. By the end of 2018 it was $55.8 billion.14
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