November 29, 2011

If you dare call yourself Salman Rushdie on its social network, Facebook will "deactivat[e] [your] account, demand[] proof of identity and turn [you] into Ahmed Rushdie, which is how [you are] identified on [your] passport" (*). As usual when it finds itself the butt of bad buzz, it backed down after a vigorous campaign waged on Twitter.

According to Somini Sengupta, Twitter's chief executive, Dick Costolo, seized the day and declared "other services may be declaring you have to use your real name because they think they can monetize that better. We are more interested in serving our users first." Still his own jury is out. Time will tell how long his shareholders are willing to wait.

Fame is double-edged. If instead of being lionized for your books, you are a cute common cat, crouching under the couch and the radar, Facebook will be glad to add you to its roster, which doubles as its fodder. Pity the other Lance Downeys (1) who wonder why they get ads for fragrant litter.

It is easy to make fun of Facebook. Yet who will deny that "forcing users to appear under their real names improves security and brings more civility to online discourse"? Not I, who have castigated the current flight from responsibility, railed against the tide of bad data and put Identity as the center of my motto.

Richard Waters analyses this dilemma between the "freedom [...] to act anonymously" and the need for "greater accountability" so as to foster trust (**). Echoing Dick Costolo, he identifies the risk that "internet companies are putting their own interests ahead of those of their users". He reminds us this extends beyond consumers to the very clients whose marketing budget underwrite their development. Google is no less dominant today than Microsoft ten years ago and Facebook is keen to claim the crown. What merchant wants to depend too much on a dominant player?

According to capitalism, it is only natural for a company to pursue its own interest. Why then does Richard Waters' readers pick up the sweet smell of conflict of interest which wafts from Facebook? Surely nobody is naive enough to believe the marketing blandishments sweated by Mark Zuckerberg. Ransom of the latter's success, the conflict is more deeply rooted.

All students of economics learn about the wonderful benefits of scale, which drives down costs and accumulates experience. Take interoperability for instance, whose importance to our Information Age is so high. A well run company delivers it by design within its dominion. The wider its reach, the easier it is to reap the promised fruits. Convenience fuels dominance. If everyone speaks English, why learn any other foreign language?

Yet scale is double-edged too. Beyond a certain threshold, scale eliminates competition and perverts the very nature of capitalism, based on decentralization. Past the threshold, the organization must either be broken up or run in the public interest, hence the conflict faced by Facebook.

The well founded fear scale may be used to abuse is behind the recent action of the Federal Communication Commission which "has taken steps toward blocking the proposed $39 billion merger of the mobile phone companies AT&T and T-Mobile USA". Such a deal would, as Edward Wyatt reports, "harm consumers, kill jobs and result in an overly concentrated wireless phone industry" (***).

When it comes down to the diseconomies of scale, logic demands that internal growth be treated the same as external acquisitions.

But it would be misleading to reduce scale to a single measurement and Facebook to the number of its users. Read again Richard Waters for whom the attempts of Facebook and Google to "make themselves the hubs around which activity on the web revolves" bring two dangers.

To privacy piracy, the obvious one, "Viktor Mayer-Schönberger, professor of internet governance and regulation at Oxford university [...] adds, people in the physical world choose to identify themselves in different ways depending on the context". Often indeed identity is but the statement one "is identical to someone already known". I have as many identities as I have roles in society, not a few without my rare but cumbersome last name.

Ironically the last remark offers a clue to the transgression of Google and Facebook. Sheer size is not so much the issue as to their will to take on too many roles in the name of monetization. Greed is not always good.

This is the spirit in which "the highest court in the European Union said on Thursday that Internet service providers could not be required to monitor their customers' online activity to filter out the illegal file sharing of music and other copyrighted material". True, Eric Pfanner registers "the music industry shrugged off" this decision as "the blocking of Web sites that enable piracy and the cutoff of persistent file-sharers' Internet connections" remain on the books (****). But in such cases at least, even if they act as auxiliaries, the ISP's are spared actively playing the role of the police.

On the contrary, Facebook and Google see no evil in being at the same time the largest personal data aggregators of the planet and the voluntary enforcer of personal identities. Shades of the Stasi seem to escape them. Spying never happens in their dream world.

"Users will turn to alternative services if they sense their privacy is being compromised". Richard Waters' faith in competition is touching. But he should reflect that competition is the first victim of unbounded scale. Pronaocracies do not favor isolated individuals.

Anti-trust legislation came about because scale weighs too much in the balance. Who will forbid data aggregators to "trust" (2) the other roles?

Philippe Coueignoux

• (*) ....... Naming Names: Rushdie Wins Facebook Fight, by Somini Sengupta (New York Times) - Nov 15, 2011
• (**) ..... From pixels to persona, by Richard Waters (Financial Times) - Nov 22, 2011
• (***) ... Head of F.C.C. Takes Step To Prevent AT&T Merger, by Edward Wyatt (New York Times) - Nov 23, 2011
• (****) . European Court Overturns Rule on Illegal File Sharing, by Eric Pfanner (New York Times) - Nov 25, 2011
• (1) say mew to Lance Downey, as retrieved on 11/25/11 from Facebook, courtesy of the blogger at Abine Inc.
• (2) in the French meaning of the term, i.e. to "grab abusively"