How Social Media Companies Profit From Data Heightens Concerns
SCOTT SIMON, HOST:
It's been more than a week since Mark Zuckerberg testified on Capitol Hill after a scandal called Facebook's privacy policies into question. Will Congress now call for more regulation of Internet media platforms? Om Malik is a seasoned tech writer and a partner at a capital firm that invests in startups who says whether or not regulations result, Facebook should be held accountable.
OM MALIK: You know, it's very unclear where we are being marketed and sold to. And I think that's one thing which we need to understand more clearly. So I would start with what I like to call terms of trust. How should we trust them and what they won't do with our information? I think that's the baseline for any conversation which is going to start about regulation and privacy.
SIMON: But isn't it their policies, or, if I may put it this way, lack of policies, that made them so rich?
MALIK: Well, I think, you know, being rich and being right are two different things, right? That's the question.
SIMON: Yeah. Well, and what about the argument that they are, whatever their endless demerits, connecting billions of people who weren't connected before? And they're able to do that at no cost because they sell advertising.
MALIK: I think I have no problem with their business model or what they are doing. I think by talking about advertising, we take away the bigger issue, which is that these guys have not been able to, you know, secure either our privacy or our data. Similarly, them trying to target and not understand that their platform can be misused, you can't be, like, so good and yet, you know, not do your duty as a platform owner to be protective of people's data and information.
SIMON: There are a lot of people, I gather, who are concerned in the industry that any time you begin to try and map out regulations, it has the effect of discouraging inventiveness, initiative, much less profits. What do you say to that?
MALIK: Which is exactly why Facebook is wanting regulation because once the whole industry is regulated, nobody new can come in and have that much data as they have amassed.
SIMON: So let me try and understand you. You believe that the effect of regulations now, which Facebook might endorse or at least sign off on and accept, could have the effect of installing them as a semipermanent monopoly.
MALIK: Yeah, pretty much. That's what is going to happen. For now, the biggest problem is that they keep your data for forever, and there is no oversight on how that data is shared with third parties or other people or even within the company. So I think regulations should be around how that data can be used.
I think that kind of, you know, baseline trust should not just be a Facebook problem. Every startup should be thinking about it. Every big company, whether it's a bank or it's an insurance company or it's, like, you know - our expectation's that there will be no security breaches and our privacy would be protected by these corporate entities. It should be codified in terms of service. And I think if they don't, they should be penalized for it.
SIMON: Om Malik is a partner at True Ventures. Thanks very much for being with us.
MALIK: Thank you, Scott.
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