Why America’s social media firms aren’t ‘parasites’ – AEI – American Enterprise Institute: Freedom, Opportunity, Enterprise

24th May 2019 Off By binary
Why America’s social media firms aren’t ‘parasites’ – AEI – American Enterprise Institute: Freedom, Opportunity, Enterprise
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It’s hard to be a big tech company these days without somebody rooting for your demise. But some cases are a bit more understandable than others. Like this one: “Bannon says killing Huawei more important than trade deal with China.” I mean, I get it. Former Trump White House adviser and nationalist Steve Bannon wants America to launch and win a Tech Cold War against China. Taking an ax to what might be its most important tech company, a key player in the global 5G rollout, might be a big step forward in such a plan.

But it’s not Americans wanting to shut down just Chinese tech companies. Sometimes it’s Americans going after American firms. “Maybe we’d be better off if Facebook disappeared,” writes Sen. Josh Hawley, a Missouri Republican, in an op-ed for USA Today. And his problem isn’t just with the social media giant run by Mark Zuckerberg. According to Hawley, Twitter and Instagram, though oddly not YouTube, are also “best understood as a parasite on productive investment, on meaningful relationships, on a healthy society,” He claims they’ve created an “addiction economy” based on extracting and selling data gleaned from uniformed users. The first sentence of the piece: “Social media consumers are getting wise to the joke that when the product is free, they’re the ones being sold.”

An illustration photo shows the Facebook page displayed on a mobile phone internet browser held in front of a computer screen at a cyber-cafe in downtown Nairobi, Kenya April 18, 2019. REUTERS/Stringer

To be sure, Hawley is not using “disappear” in what’s been called the “post-Argentina transitive use of an intransitive verb,” as in “disappearing” a political opponent. Although, some of the more intensive anti-tech critics might want to disappear these companies. But even calls for heavy regulation or anti-trust action banning business models or breaking up big firms requires serious argument and evidence, as well as proof of harm from elected officials. This also means grappling with research contrary to your thesis and understanding trade-offs. Does Facebook have value? As I wrote recently:

Lots of people seem to like Facebook as we know it, even with occasionally disturbing videos, privacy leaks, and foreign election meddling. So what is the value of Facebook as it currently is? That’s exactly the subject of the new Stanford University study “The Welfare Effects of Social Media.” In the run-up to the 2018 midterm elections, researchers used Facebook display ads to recruit nearly 3,000 users who indicated a willingness to deactivate their Facebook accounts for a period of four weeks ending just after the midterms. Then about half were asked to actually do it with their inactivity verified.

So what happens to you after four weeks without Facebook? According to the study, participants reported they were happier and desired Facebook less. And while they were less informed, they also seemed somewhat less politically polarized. Even so, people still wanted their Facebook. With the costs comes benefits. The researchers concluded their “results leave little doubt that Facebook produces large benefits for its users” with a majority of the people in the study valuing a month of access at $100 or more. That valuation implies “annual consumer surplus gains in the hundreds of billions of dollars in the US alone. The 60 minutes our participants spend on Facebook each day is itself suggestive of the substantial value it provides.”

Another study found that Facebook users would need to be paid, on average, more than $1,000 to deactivate their account for one year. Indeed, the evidence that Facebook provides value may be stronger than the evidence that it or other social media platforms are “addictive” in any sort of clinical sense. Oh, and by the way, the “users are the product” framing is problematic at best.

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