Facebook’s Testimony in Congress: 5 Big Questions

The reviews are in from Facebook’s two-day testimony in Congress—and they are mixed.

Investors seemed comforted by Mark Zuckerberg’s preparation and poise. Tech and marketing professionals were disappointed by lawmakers’ lines of questioning, which seemed to reveal a general lack of understanding of how social media advertising works. Critics of Facebook said the platform’s response to the Cambridge Analytica scandal was insufficient, and that leadership has been “tone deaf” when it comes to the general public’s growing concerns.

These conversations didn’t end with the testimony and they certainly won’t end anytime soon (we’ll be continuing the conversation at SMWNYC next week). In fact, Mark Zuckerberg’s trip to Washington seemed to yield more questions than answers. Here are just a few of them.

Do lawmakers even understand how Facebook works?

As members of Senate and the House engaged Mark Zuckerberg in questioning, many tech and marketing professionals were quick to point out their collectively limited knowledge around how Facebook works. Some lawmakers asked about Facebook’s methods of “selling” user data, to which Zuckerberg had to explain (and re-explain) how Facebook makes money by NOT selling data to advertisers, and instead using that data to target advertising. The general lack of understanding raised a flag among some people who wondered how Congress can be tasked with making important decisions about tech absent this level of understanding.

We asked Suraj Patel, a candidate for Congress in New York’s 12th district and SMWNYC 2018 speaker, to weigh in. Here’s what he told us: “I wish leaders in both politics and tech would admit that online platforms will not be healthy again until there is real competition, and consumers will not be protected until lawmakers have the courage to vigorously enforce antitrust, anti-monopoly laws. But we shouldn’t expect people who don’t use technology well to regulate technology well. We need to elect a new generation who can legislate and regulate from a position of knowledge and strength.”

Will Facebook materially change its business model now?

Not necessarily. Sheryl Sandberg alluded to the possibility of a paid, ad-free model, and Mark Zuckerberg’s testimony seemed to echo that when he said that there will always be a free version of the service. That said, in a statement to Congress, he affirmed that the best version of Facebook is ad-supported, because it is free and allows the company to realize its mission of connecting people to more people around the world. It’s also worth noting that Facebook generated some $40 billion in ad revenue in 2017, so it’s hard to imagine a world in which that model goes away.

What, if anything, will Facebook change moving forward?

Following backlash from the Cambridge Analytica scandal, Facebook announced a series of changes designed to make their method of collecting data more transparent, including making it easier for users to bulk-download their lifetime data. A similar feature is coming to Instagram soon. Despite these efforts, lawmakers pushed Zuckerberg on the cloudy nature of the user privacy policy and called for greater transparency when it comes to how Facebook explains these features to users in “plain English.” One of the most quotable moments of the testimony was when Sen. John Kennedy told Zuckerberg, “Your user agreement sucks.”

We asked Mark Barker, Principal of Craft & Commerce, to weigh on Facebook’s approach to communicating privacy features. Baker joins our SMWNYC speaker lineup to share how brands can bring people together amid an increasingly divisive cultural a climate.

“Privacy on these platforms is intentionally opaque, even to industry insiders,” Barker said. “If Zuckerberg and company truly want to demonstrate a commitment to users, they would make issues of data and privacy for more user-friendly. They would bake clarity, simplicity, and transparency into the platform such that literacy comes naturally and intuitively through use. In lieu of that—on the agency side—we’re now feeling an imperative to do the work that Facebook isn’t, and are weaving trust and transparency into our social ad messaging.”

Why did Facebook’s stock go up?

Facebook’s stock increased by 5 percent following Zuckerberg’s testimony. For a company at the center of a major scandal, with its “dirty laundry” now aired to the nation’s lawmakers, this seemed surprising to some onlookers. Per experts, the lack of new revelations assuaged investor fears. Moreover, the CEO was calm, collected, and deflected questions around regulations by saying that Facebook should be guided by “the right regulations,” but not necessarily new ones.

Is it time to regulate Facebook?

The calls for regulation for companies like Facebook and other tech titans are not new. Jonathan Taplin, a former Social Media Week speaker and best-selling author, and others like him have been calling for regulation for years. The recent revelations about Cambridge Analytica, in which a potential 87 million Americans had their data compromised, are shedding new light on the debate. The answer to this question depends on whether you define Facebook as a monopoly. In the hearing, Zuckerberg argued that Facebook operates within a competitive industry, but lawmakers were quick to point to the platform’s unrivaled scale when it comes to disseminating (and they argue, restricting) the flow of information to the general public. James Cooper, Head of Creative at Betaworks, echoed this sentiment, stating that, “Regulation is the only way to save Facebook and protect innovation.”

A more near-term concern for Facebook is the threat of the FTC. As part of an earlier agreement with the FTC, inked in 2011, Facebook could face steep penalties for “deceiving” its users by assuring them their information was private when it, in fact, is not. If the FTC determines the Cambridge Analytica scandal represented a breach of this contract, then Facebook could be on the hook for $40,000 per incident. Multiply that by 87 million, and the potential penalty would be in the trillions. The ongoing FTC investigation will be something to watch in the coming months.

With these complex topics top of mind, we look forward to continuing the conversation with you all at Social Media Week New York April 24-27. Limited passes remain.