Ex-Googler Alex Feinberg sat down with TechRepublic's Dan Patterson to discuss the ongoing Facebook privacy concerns. Read the transcript of their conversation below.
Dan Patterson: If you were inside Facebook, you're a decision-maker at Facebook. You're a public company, and you have obligations to the public. You have many obligations to the public. One is to your shareholders, and the other is to your users. How do you make the decision? If you run Facebook, how do you decide between privacy and your shareholders, your valuation?
Alex Feinberg: Well, fortunately for Facebook, Mark Zuckerberg has almost all or at least a majority of the voting shares. I think this is very often a red herring that I hear from Silicon Valley companies saying, "Oh, you know, we're beholden to Wall Street." It's like, really? Well, how come your voting structure is structured in such a way that your board cannot be replaced unless three co-founders decided that the board gets replaced? If you're Mark Zuckerberg and you're saying, "Well, we need to do this because Wall Street says so," it's like, "Well, no, you're Wall Street actually. You hold the majority of the voting power in your corporation." I think to the extent that they're cognizant to what Wall Street wants is really an excuse to make sure that they can grow their own authority, if they're not influenced by at least the share growth or the monetary growth of their stock. I think to the extent that they're concerned with shareholders is merely a reflection of the extent to which the founders of the company want to grow their own stake.
SEE: Social media policy (Tech Pro Research)
Now, that being said, I happen to think that privacy's actually going to blow over. I think with the news cycle as fast as it is, with outrage hype the way it is, I think a lot of Americans in a couple months will be on to the next thing. Maybe six months from now, it'll be back to privacy, but I don't think that most people have enough time or interest to think about the issue to such an extent where a mass movement towards privacy solutions for privacy solutions' sake is going to happen. A certain subsection of the population who is very, very interested in it and very scared by it will probably do a lot of research and become frightened, but I don't see that growing beyond a few percent of the population at least at this point unless something changes.
Patterson: Facebook has toyed with creating their own cryptocurrency.
Patterson: It's already a social network that spans 2.2 billion people. Does this put them close to behaving in a way that a government would behave?
Feinberg: Well, yeah. What's quite interesting over the last century is we grew up in civics class learning freedom of speech because the United States government guarantees it in the Constitution. You have freedom of assembly because the United States government guarantees it in the Constitution. You have right to bear arms, freedom from unlawful searches and seizures. This might have made sense 200 years ago when we had an agrarian economy and a lot of small merchants operating their businesses. Now, a lot of the control over our society has shifted from legislative control to corporate control.
One might think 200 years ago, 220 years ago, the most important person in the United States may have been the executive. It may have been a George Washington, whereas now you could say that the most important person in the United States is Jeff Bezos. You could make that claim. Maybe it's not true, but you could certainly make that claim that Jeff Bezos, compared to a Donald Trump, has quite similar authority and quite similar in power, but I'll tell you one thing. If you're working for a Jeff Bezos, you don't have freedom of speech. You don't have freedom of association. You don't have the right to protect yourself against unlawful searches and seizures. The same rights that have been granted to private citizens that made sense 200 years ago are not so much the case now, where we are so dependent on these large organizations to operate.
What do I think Facebook is going to do with this? I think it makes a lot of sense for them to airdrop tokens to their users, provided that it clears legal hurdles. I personally bought Facebook stock a couple months ago, because I believe that what they could do is say, "We have over a billion Facebook Messenger users. We are going to airdrop tokens to these users, and we will let them decide what the value is," because they don't want to be in a position where they're selling tokens the way Telegram is. Because even if they're raising one, two, 10 billion dollars, and the thing crashes in price, that's not worth the reputational hit to them.
But if they can offer their users something for free, say, "Hey, if you want these tokens, we'll give them to you. Just fill out this know your customer anti-money laundering information, because we need you to fill that out in order for us to give you these tokens," a solid portion of their users will fill it out. They will get the tokens. Depending on the laws surrounding what they could do with that KYC AML information, it's possible that they could actually form a better ad targeting data or ad targeting layer using the data that's necessary for them to obtain in order to airdrop tokens to their users.
Then what could happen is, if their token ended up floating to a price of, say, $10, and they were able to drop 100 tokens to every user, that's $1,000 of digital currency or cryptocurrency that each accepting user has. You can just multiply that by how many users might accept it. If you have even 10 million of their billion users accepting essentially $1,000 worth of cryptocurrency, then there's a $10 billion market capitalization of crypto tokens. They control the creation and distribution of these, which means they can just create tokens any time they want, release them into the market and then sell them to users, and then use that money to acquire another Oculus, acquire another WhatsApp, or attempt to acquire another Snapchat.
- Special report: A winning strategy for cybersecurity (free PDF) (TechRepublic)
- Securing Facebook: Keep your data safe with these privacy settings (ZDNet)
- Facebook data privacy scandal: A cheat sheet (TechRepublic)
- Facebook's new data policy: Answers to your privacy questions (CNET)
- What developers need to know about Facebook's huge data privacy changes (TechRepublic)
Dan Patterson has nothing to disclose. He does not hold investments in the technology companies he covers.
Dan is a Senior Writer for TechRepublic. He covers cybersecurity and the intersection of technology, politics and government.