Listen to Berkeley Talks episode #120: "Roger McNamee on his quest to stop Facebook."Henry E. Brady: Roger McNamee spent a 34-year career investing in Silicon Valley, co-founding Integral Capital Partners, Silver Lake Partners and Elevation Partners. He was an early investor in Facebook and an adviser to Mark Zuckerberg from 2006 to 2009. Since 2016, Roger has worked to reform the tech industry. As author of the New York Times bestseller Zucked: Waking Up to the Facebook Catastrophe, Roger has a lot to say about how social media impacts our lives. So, I’m really looking forward to what promises to be a lively and provocative discussion today. And I also recommend to everybody go read the book, it’s fabulous. With that, Roger, take it away.
Roger McNamee: So, thank you very much, Dean Brady and hello to everyone. I want to just tell you how much I appreciate the opportunity to talk to you. So you have to imagine I arrived in Silicon Valley in 1982, and I was a brand new analyst at T. Rowe Price Associates, which was a mutual fund company, it was the biggest investor in emerging growth. So small tech companies were my thing. And from a public policy point of view, the tech industry was well-known in those days for being just universally a good thing. It was an industry where the culture was an amalgam of that from the space program, particularly the Apollo program. So if you think about the movie, Apollo 13, all those men with white shirts and ties and plastic pocket protectors, earnestly trying to make the world a better place, or to at least go to the moon. That was one piece of it.
And then the other piece of it was the hippie value system of Atari and Apple. And both of them were idealistic in the sense of using technology to essentially make the lives of the people who use that technology better. And that was the culture that lasted until about 2004. The industry underwent a dramatic change between 2000 and 2004. The internet bubble of the late nineties burst in March 2000 and essentially undid everything. And the venture capital community went into retreat, stock prices collapsed, many companies disappeared, San Francisco, which for the first time it’d become a hub of technology suddenly was a ghost town. And we were in this situation where the industry had to rethink its place in society, that it hyped up the internet in a way that was unsustainable and that had not worked out and the stock market had punched it.
During that four-year void, a series of things happened. From an industry point of view, the most important thing that happened was that one of the ground rules that had kept the industry on a good path was finally broken. From 1956 when digital technology really began as an industry to 2000, the one constant was that engineers and entrepreneurs never had as much processing power, memory, storage, or bandwidth to do the things they really wanted to do. So in order to have a business, you had to find a customer and satisfy some need that was so pressing the customer would buy it now, even if it was only a partial solution. So the industry was based on this notion of small steps forward all the time. And products were limited in their scope because everything was so expensive and hard to do. Between 2000 and 2004, for all four categories, processing power, memory, storage, and bandwidth, the limitations essentially evaporated, at least in the world of wired networks.
Suddenly, you could design a global system. You didn’t need to listen to customers. That changed a lot of things, but nobody picked up on it initially because the Market had collapsed. The second thing that that enabled was the creation of the predecessors to Amazon Web Services. So, service companies that instead of, where you could literally rent the capacity needed to build a web company, but you could rent it on a credit card. I cannot overstate how important this change was, because in the nineties, when you were doing the.coms, they’d have to spend $100 to $150 million on infrastructure just to launch a website.
So, the undertaking was not just expensive, it was expensive enough that it could only be done by seasoned people. Nobody would entrust $100 or $150 million in those days to a 20 year old. You’d get somebody who’d already done it. And that limitation went away when you could use a credit card. Suddenly a 20 year old entrepreneur could start a company with money borrowed from parents. And they didn’t need a venture capitalist, they could do with the support of an angel investor to grow the thing to subscale. So the cost of creating a startup collapsed by a factor of more than 10. And with that, the need to have experienced people.
So, the third thing that happened in that window was that the internet pivoted from a web, the worldwide web pivoted from a web of pages, which is web 1.0 to a web of people. Suddenly the focus went on to social. The first people to see the interconnectedness of these three things were the founders of PayPal now known as the PayPal Mafia. So this is Peter Thiel, it’s Reid Hoffman, Elon Musk, and the eight or nine others who were part of the founding team of PayPal. They sought, they initially created LinkedIn, they funded Facebook and they brought to this new world, this world where you could create global products without listing with anybody, where you could found companies started by 20 year olds that were all the employees that worked there came out of a dorm room where they’d all gone to college together, where you were going to focus on people and not on pages or businesses. They brought a culture with them that was not the intersection of the Apollo program and the hippie value systems.
They brought an extreme form of libertarianism. They basically said, each one of us is an independent economic unit responsible only for ourselves. So that’s the environment that created move fast and break things. This idea that you can do whatever you want because as a technology person, you’re special. And if somebody gets hurt, well, that’s their problem. And the early days of this, that move fast and break things was such a radical departure from the traditional Silicon Valley model. And the number of companies that embraced it was so small that it seemed like just something associated with a bunch of kids that they would grow out of. But by 2010, the early success of Facebook and LinkedIn, as well as Google, which adopted many of the same principles caused venture capitalists to decide that hyper libertarianism was a goal and that 20 somethings were the right people to hire as entrepreneurs, and that you could create companies that were based on this notion of disrupting huge industries by getting cheap Wall Street capital or cheap Silicon Valley capital and disintermediating traditional industries.
So, think about what happened with News for Google and Facebook, but restaurants with DoorDash and Uber Eats and all that. And so that is where the system that we have today came from. By 2010, this notion of disrupting the economy using cheap capital and data was really deeply ingrained, and where venture capitalists concluded that since the early people had certain sociopathic tendencies, that that was actually something that you would embrace. And so they started to select for that kind of people. So the value system changed. Between 2000 and 2010, people were quiet about move fast and break things, but after 2010, they just, nobody cared anymore.
And so, you’d start to have companies like Uber and Lyft, where, or Airbnb, where the starting assumption was the law for whatever industry they were in, did not apply to them. They would just ignore the law. And if they got caught, they would cheat. Or you get a situation like Spotify, where the premise was, they were going to create a company and they were going to use data to disadvantage one of the core constituencies in the economic system that they were involved in, in this case, musical artists. Or you get a thing like Robin Hood, which would go into a place like Wall Street trading and create a system where they would go to folks who didn’t know any better and offer a service, trading stocks or trading options and offer it for free because that generation had been trained that free was right without explaining that, well, actually that meant you weren’t the customer, the real customer was the hedge fund or the market makers who were buying the order flow in order to front run all of these retail investors.
And then you would remove friction, turn Wall Street trading into a game such that people could buy or sell their net worth or more than their net worth in a matter of seconds.
And this notion of predatory business models, or in the case of DoorDash and Uber Eats, parasitic business models, right? Because they’re inserting themselves between restaurants and customers are already buying from this restaurants. Or what Google and Facebook did with News, same thing. These parasitic models, just, they became all the rage. And so my battle is a very simple one, in 2011, having looked at Uber and Airbnb and Lyft and Spotify as a venture investment, I realized, "Oh my God, the culture of Silicon Valley has changed in a way I can’t support. I like the old way. I don’t like the new way.” So, I told my investors in 2012, "I’m done. I’m only doing this one Elevation fund then I’m going to retire. And so I want you guys to just get ready for that.” And the fund had three more years to run, but that was going to be it.
And so I retired at the end of 2015, convinced that I’d passed my sell by date and Wall Street was doing this thing that I didn’t agree with, but who was I to criticize it? It was not pretty, but it didn’t look like the end of the world. And then immediately after I retired, like a month later, I start to see things going on on Facebook, a company that I was incredibly close to between 2006 and 2009. I started seeing things going on there that are like really dangerous. First, in the early primaries in 2016, hate speech being distributed through Facebook groups with advertising support that were just spreading hate speech virally in Facebook groups, I’m going, "Whoa, what’s going on here? That’s real evil.” And then, a company got expelled by Facebook for using the ad tools to gather information about people who expressed an interest in Black Lives Matter, which is a terrible thing to do to any group, but then they sold it to police departments who went and harassed the people.
Now, Facebook did the right thing. They expelled the corporation, but not until the damage had been done. I mean, literally I want to say hundreds of thousands of people had their personal identification information turned over to police departments for money, but in June 2016, Brexit happened. And Brexit will realize, oh my God, you can use these ad tools to change potentially the outcome of an election. In that case, I didn’t know that it changed it, but what was super, super obvious was there was an eight-point swing between the final poll the night before the referendum and the actual outcome. And there was only one explanation, which was one side had used Facebook in particular to spread massive amounts of disinformation. And that was brand new. And how much of the eight-point swing could you attribute to that? Hard to say, but obviously very scary.
So, I start looking for allies. I can’t find it, but I do persuade somebody to let me write an op-ed, which I write in October 2016. Instead of publishing it, I send it to Sheryl Sandberg and Mark Zuckerberg, my two former mentees. And it says, "Guys, there’s something about your business model, your algorithms, and your culture, which is allowing bad actors to harm innocent people, both around civil rights and potentially around democracy. And you’re in a trust business, this is going to be disastrous if it turns out this is systemic.”
And of course, let me just put it this way. I spent three months begging them to do the right thing. So, I send this to them nine days before the election. And I spend the next three months trying to persuade them to work with authorities to figure out not only what happened, but what parts of the culture business model algorithms caused it and then make radical changes, whatever the cost, because I mean, no matter what, democracy and civil rights are more valuable than Facebook stock price, right? And I just assumed they would go along with it, but they didn’t.
That’s the point when I realized I had to become an activist. So, I did a lot of research to understand what was going on and the core thing for you to understand. There’s a professor at Harvard named Shoshana Zuboff, who wrote a book called The Age of Surveillance Capitalism. And Shoshana basically studied Google and Facebook, but started with Google because they invented it, from 2000 to the present. And analyzing this entirely new business construct. And the book is in many ways, the first time since Adam Smith’s Wealth Of Nations, that somebody has described an entire economic system in a book, that was the first time anybody had ever thought about it and Shoshana did this.
And her point was that Google and Facebook are extraction businesses like energy or natural resource companies, or like private equity firms, that what they do though, instead of chopping down trees or drilling for oil or sucking the value out of newspapers or retirement homes, what they do is they convert human experience, your life, my life, everybody’s life into data. And they claim ownership of that data. And they use it to construct a data voodoo doll, that is your entire life. So it’s not just what you do on their platforms, it’s everything you do in the real world where you touch a digital system and leave a footprint - your location, all your health stuff. So, medical tests and prescriptions, location off your phone, all your financial records, your genetic stuff, whatever you do on an app, anything you do on the web. And they construct this voodoo doll, that’s your entire life, but in digital form. And they use that to make predictions about your behavior.
Now, they can sell that in the form of advertising, that prediction, or they can apply it directly as they do now in some of their new businesses, as in Amazon’s work for law enforcement or Google’s work with the government on education or the military or healthcare or what Facebook’s trying to do with currency, cryptocurrency. So the notion here is those predictions are immensely valuable, but they then take that same data voodoo doll and construct recommendation engines, and they use the recommendation engines to manipulate behavior.
And so you say, "Well, what do you mean Roger?” Think for a moment about the thousands of people who are dying of COVID, who are convinced as they die, that COVID is a hoax and they’re dying of something else. Now, if you actually study who those people are, you discovered very quickly it’s not that they’re dumb and it’s not that they’re poorly educated, it’s that the information space that they live in is more or less hermetically sealed and is based primarily on things that are not true. Think about the insurrection, tens of thousands of people storm the Capitol. Every one of them convinced that the election was wrongfully decided, not withstanding literally hundreds of recounts and 61 lawsuits to the country. And yet those people were convinced, and incredibly, because there’s been no accountability for it, that they still believe it. And you ask yourself, well, what does that have to do with these guy? Well, the reason that COVID has been such a problem in the United States is that the president was spreading disinformation, but it was amplified really intensely by internet platforms, particularly Facebook, but also YouTube, Instagram, Twitter. And in Facebook’s case, the use of Facebook groups to organize anti-vax and other conspiracy theories, the way they trigger engagement, right? Is to amplify this stuff. Now, why did they do that? Their business is based on our attention. The data they get in public spaces, that’s the public you when you’re on your best behavior. The thing that Facebook in particular can get and YouTube to a lesser extent, Instagram can get it as well and I think Tik-Tok will be able to get it also, is they can find out what you’re like when you think nobody’s looking. So when you’re outraged or when you’re afraid, the real you comes out.
So, if they can trigger that, that is incredibly valuable because almost nobody has that data. So it turns out that what they want to do to keep you on their platform to learn more about you, is they want to trigger whatever emotions get you into that agitated state. For most people, there are three types of data that do their best, hate speech, disinformation, and conspiracy theories. Not because we like them, but because our flight or fight survival instinct kicks in. We have to look. It’s a matter of self preservation. And so for those people who are in these hermetically sealed worlds, so the COVID deniers, but especially the people who stormed the Capitol, let’s think about this. Every one of those people who stormed the Capitol believes in some part, if not all of the QAnon conspiracy.
How do people come to believe QAnon? Well, the answer is conspiracy theories have existed for all time, but they’ve gone mainstream in the last 10 years because Facebook in particular has leveraged conspiracy theories along with hate speech and disinformation to maximize engagement and maximize its profits. And again, they don’t do it consciously, it’s just that they construct algorithms that are designed to command attention and trigger emotions. And it happens that hate speech, disinformation, conspiracy theories will always get amplified disproportionately in that environment. So they’re doing that. Now, QAnon, which has been on the FBI’s list of dangerous extremist groups since early 2019, was percolating and everybody knew it was a problem in my world, but Facebook, they didn’t care. In fact, they viewed it effectively as a business opportunity. So when pushed hard last summer about how many people were in Facebook groups and Facebook pages devoted to QAnon, Facebook admitted the number was at least 3 million.
But here’s the other part of it. Separately, it was revealed by the Wall Street Journal that Facebook did an internal study in 2018 in response to a lot of government pressure to find out what role they played in polarization. And that study showed that 64% of the time that people join extremist group on F acebook. The thing that pushes them into that group was a Facebook recommendation, which means of those 3 million people, it’s actually 3 million plus who are members of QAnon pages and Facebook groups. Facebook actually radicalized approximately 2 million. So, common thread of all the people at the insurrection is they’re believers in QAnon, and Facebook radicalized ballpark two-thirds of them. Then when Trump gives out the signal after the election that, stop the steal the thing’s been wrongfully decided. Facebook groups pick that up, especially the QAnon groups. And QAnon, because of the way it’s designed has embraced and subsumed anti-vax groups.
So the same people are denying COVID are in the same thing. And they’re all being brought into the stop the steal thing. And people start to organize an event in Washington on the 6th of January in plain sight on Facebook. And people in my world are screaming about it. So January six happens, five people die, a hundred plus policemen are badly hurt, couple cops kill themselves after the fact. It’s not a pretty situation. And it’s the first time since 1861 that we faced that kind of a problem. Now, in 1861, there was a general in the United States by now, Winfield Scott. I’m going to read you a quote from Winfield Scott, he was the senior army general in 1861. He’d been a general. He’d been in the army since before the war of 1812. So he’d been in the army for 50 years and he’d been a general forever. He was from Virginia, which a matter of weeks after Lincoln was inaugurated seceded from the union.
But this is what he said when there was a threat to interfere with the electoral college vote count in 1861 that was going to certify President Lincoln’s presidency. He said, "Any man who attempted by force or unparliamentary disorder to obstruct or interfere with the lawful count of the electoral vote should be lashed to the muzzle of a 12 pounder gun and fired out of a window of the Capitol.” He then went on to say, "I would manure the Hills of Arlington with fragments of his body, were he a Senator or a chief magistrate of my native state. It is my duty to suppress insurrection.” My duty, that is a direct quote from a man who was a wig candidate for president and the senior general in the U.S. Army. Now, they don’t make them like that anymore. The problem that we face today from a public policy perspective is that public health in the United States, democracy in the United States, the right to self-determination in the United States, and the competition that makes our economy successful are all imperiled by internet platforms.
And to say that policymakers have failed to respond adequately to this is a gross understatement. Winfield Scott would have known what to do with all of the members of the Republican Party that were part of stop the steal, but we do not know what to do. There has been no accountability at all. There may never be any accountability. And the reason I accepted this invitation is because I think that’s a problem. I like the enlightenment values of self-determination and democracy. Mark Zuckerberg and the founders of Google they’re engineers. They’re not bad people, but they have a different value system. They believe that efficiency is the most important value. And so now that their companies operate at nation scale, there’s an inherent conflict between their value of efficiency and the enlightenment values of democracy and self-determination in which our countries are founded. That is not something that can be reconciled without public action. And that’s a policy issue.
Anyway, that’s what I have to say. I would like you to view what I just said here, not as an argument for you to believe something, but take it instead as a thought experiment, okay? Imagine that what I just said is all true. How would you behave if you knew it to be true? Because I’m laying out what I’ve learned, but I’m not certain about all of it. And we can talk about that now, but that’s our opportunity for today. Let’s just engage in those thought experiments. See if we can find a way to resolve this peacefully. Dean Brady, your floor.
Henry E. Brady: I want to just ask of, to get a framework for thinking about this as a public policy problem. And you do that very well in your book. And I want to make some analogies here. In your book, you point out that one issue with these organizations is it’s likely oil barons, John D. Rockefeller, who took over all the oil companies and had a monopoly. And therefore what they did is they stifled innovation and they essentially price gouged and did things like that. In the case of these organizations, it’s often that they get information for cheap prices and that’s how they’re price gouging. Even though they seem to be free, they’re not really ultimately free. So that’s the first thing. The second you point out is that in fact, they’re getting a natural resource like oil companies, or maybe the people who cut down trees got, but they’re getting it for free. And that’s people’s private data and they’re not paying for that at all and yet that’s an extraordinary resource to have a monopoly over.
And then the third thing you say is that furthermore, as they go along, they create toxic waste very often, they create oil spills. In this case, oil spills are situations where the platform is used for things like planning an insurrection, but there’s many other things that have happened to minority communities around the world in Sri Lanka or Mynmar- Roger McNamee: Mynmar.
And that these three problems, it’s a monopoly. It takes a resource and gets it basically for free and the people who should own it, us, individuals, don’t have control over it. And third, these organizations create toxic spills that they’re not asked to clean up. In the area of public policy, we actually have laws about monopolies, about who should own things and what ownership should look like, and about what should be done with toxic spills. And I’d like you to just talk a little bit about those three areas.
Roger McNamee: So, I literally wrote a piece for the Washington Post last week in which I observed that the U.S. has been faced with crises like this before, where industries that were indispensable to the country’s economic viability were essentially harming people at large scale. So the building trades in the late 19th century had an issue at the time of the fires. There were no building codes. And so essentially construction was inherently dangerous. Turn of the century, food and pharmaceuticals. There was no regulation of them. And so people were dying because the food chain wasn’t safe and pharmaceuticals included a lot of quack medicine. And then in the fifties, we had this issue that the chemicals industry and people who used chemicals would pour waste products wherever they wanted, toxic fumes in the atmosphere, mercury into freshwater, mine tailings on hillsides, leftover oil down sewers. And that had huge harm to public health and huge harm to the environment.
And we tried policy things to satisfy each of these, and they’re important parallels to all of them in this thing here. So the core issues, so my thinking has evolved since the book in large part because Shoshana Zuboff’s book came out and helped me take those three things and put them in the broader context. So the first point I would make to you here is that the threat that internet platforms currently pose in the United States exceeds anything that we’ve seen before, because there’s never been an industry that essentially had a business model of mainstreaming harmful ideas at global scale.
And so this notion that democracies are being undermined globally, not exclusively because of these guys, but where these guys are mainstreaming the ideas that are being used to do that and that they’re profiting from that, that’s a huge issue. And there’s never been a pandemic before where the most important communication systems that existed in the world were actively undermining the response to the pandemic. You’ve never had a situation before where the dominant communication systems systematically favored the most extreme voices in society or a small minority at the expense of everyone else, such that these extreme voices would have a disproportionate weight in the body politic. They probably punched 10 times their actual numbers, and then they get overflow. So it winds up dominating our politics.
Shoshana Zuboff’s view is that to Dean’s first point, these are extraction businesses and they are profiting from something they didn’t create and something over which, they’ve asserted ownership over something that they have no right to. But Shoshana also points out that it isn’t a question of property ownership here. That data is not just about you and someone else. My data can be used to harm a lot of people, including people I don’t even know. And because of that, she believes we should view personal data, that data voodoo doll, as a body part, like a kidney or liver. We don’t allow people to trade in their human body parts, nor should they be allowed to trade in data. That would be Shoshana’s position. I strongly agree with that in principle. Politically, that’s a heavy lift because it essentially wipes out the Marketing industry as we know it today.
At a bare minimum, I do think we need to recognize that there are certain classes of data that just should never be used. Health information should never be used commercially. I can give health information to a provider in exchange for a service, but that’s it. And then it gets vaporized, it doesn’t get sold, it doesn’t get traded, it doesn’t get used any other way. Same thing about location, same thing about web browser, right? We never allowed the publishing of people’s video rentals. Why do we allow the publishing people’s internet browsing? I mean, there’s actual laws against this stuff. We just don’t enforce them. So that’s one class of the problem. A second class of the problem is the question of liability. This is an industry that has a unique situation because a law that was passed initially to protect it from nuisance suits has been used to provide a blanket immunity against all legal actions stemming from content created by third parties.
And it’s been applied in ways that were clearly contrary to the initial intent. And this is no longer about protecting a little startup industry, it’s about protecting monopolies. And they have no liability, so there’s no incentive for them to anticipate or mitigate harm, either before they ship a product or afterwards. That has to change. So we have that public policy to address actual liability. We have to have public policy. So if that’s privacy, safety, and then lastly competition, where in the antitrust law is a very imperfect law to be applied here, but it has real usage because these companies are a product, they’re an infrastructure that supports the product, and they’re monitored in advertising based monetization engine. And then they are lots of categories horizontally using all those things. And so I think you have to bring kind of a tic-tac-toe model and break them up both vertically and horizontally. So Google might become 250 companies.
Now, do we have the ability to do that? I have no idea, but that’s clearly ought to happen. And all of this is coming at a time when, at the end of a 40 year experiment in deregulating our economy, where the country, which was member, it was founded as a revolution against monopoly because we believed in this democratic entrepreneurial capitalism. And then that worked for the agrarian age and then when the industrial revolution came in, the rules changed and we needed to pass all the antitrust laws in order to reinstate that competitive level playing field. And now the information age, which coincided with this period of massive deregulation and the removal of government from its role, is the gardener of the garden of capitalism has resulted in the economy coming highly monopolistic, highly authoritarian, and as a consequence not a check on our authoritarian government. And that’s a lot to do from our current situation given that people’s trust in large institutions, including government is of very low level.
Henry E. Brady: One of the listeners asks, "What does a fair balance of continued technological development?” So we want innovation, revenue generation in user data privacy look like to you. You’ve started to sketch some ideas for government regulation. And I can imagine people saying, "Well, these are natural monopolies because networks should be big. You don’t want to break up the networks. That’ll be bad.” And- Roger McNamee: Also, I thoroughly disagree with that.
Henry E. Brady: Okay, go ahead.
Roger McNamee: Let me frame the question in a different way. The problem with monopolization is that when a company has a new idea, the first instinct of these guys is to go to the people with capital and explain that the idea can’t possibly survive and not to fund it. That happens routinely. And there have been literally dozens of companies acquired for pennies on the dollar because these companies first discouraged capital from going into them and then bought them and either shut them down or went abusing the product. They’ve bought things that were really threatening, that looked really promising that were too late to shut down. And they have through a period of acclimatization trained the venture capital industry and entrepreneurs to steer away from their core Markets and into places that are, shall we say, noticeably more capital intensive and less interesting like cryptocurrency, or at least less economically valuable.
So if anybody says, what do I think innovation looks like-real simple, reverse the architecture. These guys are hyper centralized. Everything’s in a cloud. Everything is centralized. Everything’s controlled. What if every function you had instead of operating off of a cloud thing, operate it off of a server that was in your phone. Let’s start with email. I use a product called Signal. It would be incredibly straightforward to create a Signal style email product, immensely valuable. That way Microsoft and Facebook or Microsoft and Google can no longer scan emails, right? That would be a really interesting product. And you could do that with literally every single thing you do today. Now, would you say, would that be innovative? I’d say, "Well, gosh, if you’re completely protecting my privacy and I’m not giving up any data, that seems really innovative to me.” If I get all the things I like from today’s internet without giving up any data, that seems like a big step forward.
But what’s weird is if you put everything in here, you can probably do a whole bunch of things that don’t make any sense in the cloud environment. And there’s a whole class of problems, like the ones created by the SolarWinds Hack, which is the thing that has basically exposed to all of our government systems and our big corporate systems to the Russians and Chinese, basically making those systems transparent, incredibly vulnerable, all because they used highly efficient and therefore totally insecure technology. That same principle can be applied there. What I’m saying here is we’ve optimized everything for the last 40 years for shareholder value and efficiency. I don’t think those are the only things you can optimize for. I think you could optimize for everybody being employed, everybody being healthy, everybody being happier. You could have security, you could have control, privacy. I mean, there’s a gazillion things you could optimize for, all of which would create great businesses and all of which would result in different levels of innovation.
And again, it’s like we were kind of in a Stockholm syndrome, 40 years in this one environment, but 20 years under the power of Google, and we’ve forgotten that it could be different. But of course- Henry E. Brady: And in fact, in your book, you talk about how AT&T was thought of as a natural monopoly and that breaking it up would be a bad idea. And in fact, when it was broken up, a lot of innovation occurred. So there is an argument you made that- Roger McNamee: Well, let me actually run that history. In 1956, first AT&T consent decree forces them to divest the computer business. So it creates the separate computer industry in the United States, uniquely in the world, IBM, all that, but it also takes the transistor and puts it in the public domain, which literally created Silicon Valley. Then the IBM case in the sixties creates a separate software industry, which leads to the personal computer industry. Carterfone was a FTC case that uncoupled telephony hardware from the network, so suddenly at a hardware business, then the second AT&T case, the one that broke them up, creates the internet, accelerate cellular telephones, and the Microsoft case creates Google and the second generation internet. Now, the mistake in all those cases was that the case didn’t go nearly far enough. And every one of those companies came back. So what it was was they bought time with those cases. That’s why we have to go after the fundamental root issues, we can’t… Antitrust, the way I would describe is antitrust is a way to buy yourself time, but doesn’t actually solve any problems.
Henry E. Brady: So, by the way, one of the reasons you can- Roger McNamee: By the way, we need, Henry, we need time, okay? So I’m all in on antitrust that just, we can’t view that as the only way to [inaudible 00:44:02].
Henry E. Brady: So, by the way, one of the reasons you could put more in the phone now is because technology keeps getting more and more powerful until you can put more storage in that phone and you could even 10 or 20 years ago. So that would be a way to actually get rid of the cloud or at least reduce the role of the cloud. Another audience member says, "Is there a way for Facebook to return to its early days when it was a pleasant place for people to freely connect with others? Or is there no going back?” And I think that gets at some of the ideas you have in your book about that maybe it might be possible to do that.
Roger McNamee: Of course it’s possible. In fact, when I went to Mark on October 30th, 2016, I’m just saying, "Dude, be the hero in your own story.” Right? That’s the message I’ve had for the last five years. And Mark has total control and they didn’t start off with a harmful business model. The business model which does the harm began in 2013. And I talked to them from 2007 or 2008 to 2013, to be able to figure out how to apply surveillance capitalism to their kind of business. And Mark has total control. Of course they could do it. I mean, the problem we have here is, as you just saw in Australia, Mark’s basic position is, I’m twice the size of China and no country can tell me what to do.
Now, the good news here is that the Texas antitrust case, which is 10 states, if it gets federalized, could be made into a felony section one case, which means it would carry with it prison sentences for the key executives and it’s a really easily provable case if what is alleged is price fixing, but there’s actually a ton of evidence of it. And that would change the negotiating push, that would make it create the incentives for Mark and others to be more cooperative. There’s also a chance to do the same thing with securities law, because they’ve been grossly overstating ad views, ad duration and user counts, which means they’ve also been overstating their revenues. And in that case, again, the jail sentences with that get to be really big, that’s Enron territory.
And so they have broken the law. Or let’s put it this way, I would allege they have broken the law. I can’t personally prove it, but there are cases about that that are in process. And from my point of view, I don’t want to see them in jail. What I want to see them do is fix the problem, but at the end of the day, they’ve had a lot of opportunities and they have resisted them.
Henry E. Brady: Let’s talk a little bit about the relationship between these companies and the news media. The initial relationship was that in fact, they crowded out a lot of the sources of revenue for the news media, both the want ads and advertising. And now the question is, is how can we revitalize the media? One idea would be for the tech companies to pay more for the content provided by the media. Well, one of our audience members asks if the tech companies pay the media for content, or if the source of money for the media come from the tech companies, doesn’t it neutralize the media’s incentive to be critical of the hands that feed them? Roger McNamee: Sure looks that way to me.
Henry E. Brady: So, how do we do it? Roger McNamee: My hypothesis is we need to rethink the role of media. I think that the role of media in our society is to be a countervailing force to power. And we used, when I was a kid and when the Dean was a kid, there were five countervailing forces in our society. You had big business, big religion, you had labor, you had the press and why am I forgetting the fifth one? Well, it’ll occur to me in a second. Oh, big government, sorry. So five big forces, right? And it was hard to get more than three of them together at any point in time. But since 1980, we systematically wiped out the power of unions and we’ve wiped out the power of the press, and the Republican Party has gotten a big part of the religion market together with their part of government and basically all of big business.
So there’s no countervailing forces to power today. I believe that news isn’t about what you report as a story, it’s about the certainty for public people, that everything you say is being tracked and is accessible at any time. So think David Fahrenthold’s Pulitzer Prize winning reporting about Trump’s charitable giving, right? None of that was taking place in real time. He just went back and looked at datasets. So the thing I’ve proposed to Wikipedia and to Apple is that we create a system that essentially the old news media, the thing we can’t get back was based on having a monopoly of local advertising. That’s gone. There’s no way to get that back. There’s no way to have the kind of news organizations that exist today in every market in United States.
For most markets, you have to rethink the whole thing. And the key thing is to take the cost down. And it’s less about what you print and distribute than about gathering all public documents and all public records and making it available in a single secure thing that looks like Wikipedia. And you can do a lot of that with volunteers. They just literally go to the meeting of the board of the school board or the city hall with an iPhone they record it, they also get the transcript, they get the minutes, they get all the public docs and that’s then submitted. You have the equivalent of Wikipedians who guarantee quality control in the way in, right? We keep tabs and the people bring the stuff in. So you can track who does a good job and bad job. Then the other side of the thing has journalists or anybody who wants to look and it’s got all these signals built into it so you can see where change occurs or where meetings are not happening, right? Because it’s about the harsh sunlight on bad power.
And so that’s one end. And at the other end, my proposal was to have Apple create, recraft Apple News to focus on local first. So instead of the thing being national and trying to extract rents from everybody for a product that demonstrably sucks, what we really want to do is empower individual journalists, as well as news organizations to create content in this case, actual local reporting on your community. So that looking at your zip code, you would get the stuff about your local community that was there. And you wouldn’t need a whole newspaper company to do it because Apple would take care of the distribution. Now, would it be a business? No, you’d probably need a lot of philanthropy because you’d need to have 3007 ombudspeople because that’s how many counties that are in the United States. And that’s almost certainly got to be supported philanthropically.
But the critical thing is you’re reducing the cost of the reporting probably by a factor of at least three, and you’re taking distribution from being prohibitively expensive to something everybody can afford and say, well, it’s just Apple. And then go, yeah. 48% unit share in North America, but way more than 60% of all the people who consume news in print. So it’s a good start, not a complete solution, but that’s an idea. So that’s one way of thinking about the problem. I think what’s going on in Australia is not about paying for news. I think it’s an attempt by Australia to implement an anti-trust thing. And Rupert Murdoch’s power in Australia was done to the benefit of news organizations, but it’s really about Australia saying, "These guys are too powerful. We have to bring them down a peg.” And this is the one tool a country our size has, and I agree with them on that.
Henry E. Brady: Well, and in fact, I mean, that does lead to the question of where is the power going to come from to try to harness these institutions in better ways? And it’s hard to believe it isn’t going to be government. And yet we start worrying if the government gets too involved in the knowledge production industry, because we look at authoritarian governments where in fact, when governments do that, they try to feed their people information [crosstalk 00:51:59] and misleading. And so we’re on the horns of a dilemma.
Roger McNamee: Yeah. But to be clear, the tool that they’re using are these tools, right? I mean, these tools are the authoritarian’s absolutely best friend. And I would argue that the presence of these tools at the scale dominating our information space makes it an absolute certainty we will be an authoritarian country within 10 years if we don’t make gradual true change. I mean, it almost happened January 6th. And we’re literally a millimeter away from that. And so I believe, I don’t want government regulating these guys, I want government ending this business model. We do not allow Ponzi schemes. We do not allow the sale of body parts. Okay. I don’t want to allow surveillance capitalism. And I don’t know what the path is for getting there, but I want to get there as quick as possible.
I want the way that these guys control people to be taken away from them and taken away from everybody. I don’t sit there and say, "If you’re a little guy, you can do this.” No, nobody can do this. No, make a smartphone-based email system, do something different, but if we’re not willing to do this, what we’re really saying is we’re perfectly happy living in a world that they absolutely control.
And remember, their goal is efficiency. So they will over time encroach on your ability to make your own choices, and they’re for sure going to control the [inaudible 00:53:28].
Henry E. Brady: So, I think as I understand it, your model is that we would have a lot more breakups of these institutions, a lot more smaller ones that would provide more centers of power and therefore countervailing power, one hopes. And more places, maybe in local areas, for example, where there would be enough power to overcome some of the bad actions that are undertaken by- Roger McNamee: You’re actually missing the two most important things. I am prohibiting the business model that they use, that’s first. And then secondly, I’m making all people who work in tech companies accountable for the work that they create, personally accountable for the harm. I’m changing incentives completely, right? That’s my goal. The critical thing about anti-trust is it buys you time to get the other things to work, but it does not solve the problems, it never has and it won’t here, okay? But that’s not an argument against it. It’s a tool… This is just like Australia grabbed the one thing it had. We got to use whatever we can use. And listen, our situation today is a million times better than it was five weeks ago. Well actually, let’s call it eight weeks ago.
The insurrection made all this personal to every member of Congress. And in Congress, there was already bipartisan interest in antitrust and bipartisan interest in safety, amending 230. The whole thing has much more momentum now. And so, and the Biden administration, I mean, January 6th had a huge impact on them. And they haven’t yet done anything that makes me really unhappy. I mean, in fact, they’ve done a million things that I think are amazingly good. And so I’m modestly hopeful, but not yet optimistic, but I think folks like you guys, I mean, this can be your whole career. I mean, you’re in graduate school at exactly the right moment. You’ve got a chance to change everything.
Henry E. Brady: I think that’s right. It’s a really exciting area for research and to try to understand what’s going on. Let me just talk a little bit about the QAnon kinds of conspiracies. Could you say a little more about exactly how you think those might be stifled by the approach you’re taking and who should be accountable for the voracity and hate speech among news outlets or so-called news outlets online? Should this be at the state or federal level and exactly how can we somehow stop that particular aspect of what we’ve got out there? Because a lot of that’s just about connectivity. It’s not their personal data. It’s about connectivity.
Roger McNamee: I think that, no, actually, so let’s be clear on a couple of things, but let me come to the core points here. I think we have two huge problems with conspiracy theories today. The first is that genuine conspiracies are uniformly successful today. I mean, if you look at the insurrection, the people who instigated the insurrection will almost certainly get away with it. Boeing had a plane catch fire the other day, it’s third one of that type in two, whatever two or three years. It previously had the 737 Max. Both of those are the result of conscious management choices, no accountability. 2008, Wall Street destroyed the U.S. economy. No accountability. 2000, whatever it was, four to 2008, the CIA did torture in Iraq. No accountability. So genuine conspiracies are out there. So it’s really understandable why people would find conspiracy theories believable in this environment because the real thing is everywhere. We have no accountability in our society and it’s killing us.
The second problem here is that I don’t think there’s any way to kill conspiracy theories. What you want to do is get rid of the algorithmic amplification of them for profit, which is why you have to go after the root cause of surveillance capitalism. You have to get less data so it’s harder to target people, and then you have to take away the ability to amplify hate speech, disinformation, conspiracy theories for profits. Again, don’t think about this in terms of, like we’re going to create an FDA or we’re going to create a Securities and Exchange Commission. I mean, these guys are way too smart for that, things changed too rapidly, it’s just too easy to get regulatory capture.
Now what they’re doing is obviously wrong. There’s no way to regulate it and make it safe, you have to get rid of it. And conspiracy theories aren’t going to go away. What you want to do is keep them in the pockets of society. And that’s the thing we’re failing at. And the reason we’re failing at it is because we are uniquely bad at having accountability. We just normalize every single thing that goes on, no matter how awful it is. And it’s like, I mean, half a million Americans are dead, greater than the sum of every war other than the Civil War. So greater than the sum of every war in the last 150 years in a year. And we think this is completely normal. We’re not exactly a price from anybody for this. I mean, what the hell is wrong with us? I mean, seriously, we have lost the ability to govern ourselves.
Henry E. Brady: Well, that sounds like a challenge for public policy schools to say the least. I want to thank you, Roger McNamee, for really an extraordinary tour through your thinking on these topics. I really recommend Roger’s book, Zucked. Easy title to remember, Zucked and it’s really revelatory excursion. Thank you.