An essay on social networks and regulation, published by Project Syndicate.

A Facelift for Facebook

One can agree with the explanation of the problem – centralized control of an increasingly valuable asset: information data. I’m not sure a real solution has been proposed yet. When I explain how platforms exploit the collection of users’ personal data for great material gain, I usually get a shoulder shrug. People still fail to appreciate that their data is as valuable as their labor, if not more so. They would not give away their labor for free, so why give away one’s valuable data for a free user page and some simple tools?

At a macro level, a social network like FB makes almost no sense, except as a data mining tool. FB thrives on little more than gossip networks and if one looks at the function of social gossip across time and cultures one realizes a global gossip network makes no sense from a human pov. All the negative effects and few of the positive. As Hill points out, Online Social Networks make sense for small assemblies of friends, families, and interest groups. This is the goal for OSNs of the future. FB “Groups” might resemble the type of content-focused social network that is valuable to users, but, of course, on FB these are exploited exclusively for FB or the administrator of the group. The users get free participation, but little of the value created. A small club of influencers is not the future of OSNs.

A digital license could impose some necessary public goods features, but for regulating audience size, the potential for abuse and centralized control probably outweighs the benefits. Better for the market to solve this problem with competition, but that will probably require some government policy that reduces or eliminates the existing natural monopolies due to network effects. (“Search” needs to be a public regulated utility, while Amazon needs to spin-off its vertical integration. I’m still of the opinion that large social networks like FB will be competed away.)

I would imagine the future would look like many social networks that are decentralized but coordinated in some way so that one doesn’t get siloed. And personal data must be under the control of users with the value of the social network created shared among them. For that one probably needs some kind of a decentralized blockchain solution. Most large, complex systems only become manageable through coordinated decentralization of control. Think representative democracy and Federalism.