Congress vs Facebook: Great soap opera TV, but don't expect big results

Remember when the US DoJ almost broke up Microsoft? No?

Facebook CEO Mark Zuckerberg

The images from Mark Zuckerberg's recent appearances before two US Congressional hearings (here and here) tell a story about the drama of such occasions.

The first shows a nervous-looking Zuckerberg surrounded by US lawmakers and the second a seated and still Zuckerberg surrounded on all sides by photographers. The easy interpretation is of a powerful man at bay, hemmed in, called to answer to the people's representatives.

And then there was that confession, when Richard J Durbin, Democratic senator for Illinois, grilled Facebook's founder and CEO over the right to privacy:

Durbin: Mr Zuckerberg, would you be comfortable sharing with us the name of the hotel you stayed in last night?

Zuckerberg: No.

Durbin: If you messaged anybody this week, would you share with us the names of the people you've messaged?

Zuckerberg: Senator, no. I would probably not choose to do that publicly, here.

It's an almost iconic moment that provides a sense of theatre that the actual hearings struggled to match.

This is a pity because Congressional hearings have provided plenty of drama over the years.

Back in the 1950s, many Americans were transfixed by the televised proceedings of a Senate investigation into organised crime led by Senator Estes Kefauver of Tennessee that included testimony from a number of gangsters and the ex-girlfriend of notorious mobster Bugsy Siegel.

It gave them a glimpse into a huge shadow world of criminality. But despite the excitement, the inquiry failed to deliver much in the way of legislation.

McCarthyism

McCarthyism swept the US during the 1950s. A collective cultural, societal and political paranoia that "reds" – Communists – were under the beds had penetrated deep into American life.

A series of hearings by Senator Joseph McCarthy paraded people before the camera to account for their actions and beliefs.

The constant TV coverage of 1954's hearing into the US Army by McCarthy's Senate Permanent Subcommittee on Investigations exposed the senator as a bullying, hectoring and vindictive interrogator and led to the famous retort from the Army's chief counsel Joseph Welch: "You've done enough. Have you no sense of decency sir, at long last? Have you left no sense of decency?"

In a later exchange, Democratic Senator Stuart Symington of Missouri rebuked McCarthy when he said: "Senator, the American people have had a look at you now for six weeks; you're not fooling anyone, either." He was proved right as the hearing signalled the beginning of the end for McCarthy.

Facebookgate

The most famous hearing was the Select Committee on Presidential Campaign Activities, established in 1973 to investigate the Watergate scandal – the break-in at the Democratic Party's headquarters – which led to the conviction of several of Richard Nixon's aides and the start of the impeachment process of a sitting US president.

So getting hauled before a televised Congressional hearing can shape the course of events.

How does Zuckerberg's debut before Congress stack up? Is it one for the history books? Will we be telling our grandchildren about that appearance as some kind of Ozymandian event?

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Wherever politicians are gathered before witnesses, an audience and the TV cameras, there is bound to be posturing and performance, but that doesn't mean they can't get to the heart of the matter.

It's tempting to dismiss, as some have, the significance of Zuckerberg's appearance.

Some senators and representatives demonstrated lamentable ignorance and a lack of basic understanding about how Facebook operates. There were also obvious and significantly important differences of opinion between those reluctant to regulate and those who no longer wanted to let Facebook and others continue to self-regulate. That can potentially cripple what happens next.

There were, however, some sharp questions and well-made points.

Republican senator for South Carolina, Lindsey Graham, raised the issue of competition – or lack of it – using the example of the car industry. "Car companies face a lot of competition," he told Zuckerberg. "If they make a defective car, it gets out in the world, people stop buying that car; they buy another one. Is there an alternative to Facebook in the private sector?"

The sessions also identified the weaknesses of past attempts to try to monitor and manage the behaviour of errant companies. The hearings took place just over six years after a settlement between the US Federal Trade Commission and Facebook was supposed to ensure the company lived up to its promises about user privacy.

In the wake of the recent revelations, the FTC is – perhaps unsurprisingly – understood to have launched another investigation into Facebook.

No wonder then that Connecticut's Democratic senator Richard Blumenthal told Zuckerberg: "We've seen the apology tours before. You have refused to acknowledge even an ethical obligation to have reported this violation of the FTC consent decree... my reservation about your testimony today is that I don't see how you can change your business model unless there are specific rules of the road."

Maggie Hassan, Democratic Senator for New Hampshire, weighed in: "Why should we think that Facebook, on its own, will ever truly be able to make the changes that we need it to make to protect Americans' well-being and privacy?

"You're sitting here at the head of a bazillion-dollar company, and we've heard you apologise numerous times and promise to change, but here we are again, right? So I really firmly believe in free enterprise, but when private companies are unwilling or unable to do what's necessary, public officials have, historically, in every industry, stepped up to protect our constituents and consumers."

Alas, the belief that government investigation or official regulation will deliver concrete results has not always been borne out in reality.

It's the Department of Justice that enforces US laws through investigation and prosecution – it operates as a department and via agencies including the FBI. The department has gone up against its fair share of US tech firms.

IBM got off...

The DoJ in January 1969 took on IBM for monopolising interstate trade and commerce in general purpose digital computers. The case eventually ran into the sand in January 1982 when it was withdrawn on the grounds that it was "without merit" after 13 years and 30 million pages of documents.

There was a more tangible result in the antitrust case against AT&T. The DoJ accused the phone giant of using monopoly profits from its Western Electric subsidiary to subsidise its network.

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The first antitrust suit was first filed in 1949 and settled in 1956 and then another antitrust suit was filed in 1974. The only wonder is that it didn't fizzle out like the IBM case.

The final judgment from 1956 was modified in 1982 to allow AT&T to sell computers but agreeing to split the Bell Operating Companies, which provided local telephone services in the US and Canada, into seven so-called Baby Bells. It should be noted that much of the substance of the consent decree had been initially proposed by AT&T.

It's also worth highlighting that the settlement took place despite initial opposition from almost 200 members of Congress who, back in 1976, had co-sponsored a bill that would have created a legal monopoly in favour of AT&T. It was only after persuasive arguments by economists against the prospect of an AT&T monopoly, advanced in a year of congressional hearings, that the bill, known as the Bell bill, was abandoned.

On the flip side, congressional hearings in the House Subcommittee on Communications, aimed at trying to introduce reform legislation that would de-regulate the industry and open up AT&T to competition failed to garner enough support from Congress (see Managing Change in the Postal and Delivery Industries, edited by Michael A Crew and Paul R Kleindorfer, page 328).

... so did Microsoft

Then the DoJ took on Microsoft. The department had already settled an investigation into the software giant in 1994 when Microsoft agreed not to tie its applications into the sale of Windows. But following a four-hour appearance in a congressional hearing with the Senate Judiciary Committee in March 1998 by then Microsoft chief executive Bill Gates, the DoJ brought a new suit against Microsoft. It was joined by the attorney generals of 20 US states. They all claimed the company had illegally stifled competition to protect and extend its software monopoly. The DoJ also claimed Microsoft had violated the earlier consent decree.

While the initial ruling by Judge Thomas Penfield Jackson advocated the dramatic solution of breaking up Microsoft, this was abandoned in favour of a much more lenient settlement on appeal.

The lesson seems to be that getting the politicians and the prosecutors of the US state involved can produce results, but that you shouldn't set your expectations of big – or even fast – change too high.




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