The Decentralists

Hot Topix: Trump Opens Pandora’s Box

October 01, 2020 Mike Cholod, Henry Karpus & Chris Trottier
The Decentralists
Hot Topix: Trump Opens Pandora’s Box
Show Notes Transcript

When we said that Donald Trump was opening Pandora’s box by attempting to ban TikTok—we were right. This is having far-reaching ramifications. The EU’s privacy regulators are now holding Facebook to account over user data—this has Mark Zuckerberg threatening to leave Europe.

With the weaponization of social media, we are seeing more platforms being siloed according to geopolitical spheres of influence. If Facebook leaves Europe something else could take its place—and whatever that is, it might not be better. 

How much damage is Trump doing to the Internet?
Why is Mark Zuckerberg playing a game of chicken with the EU?
Is regulation the answer to lack of innovation?

Pandora’s Box is open—who knows what the future holds.

Henry: Hey everyone. It's Henry Mike and Chris of the Decentralist and it's hot topic time once again. This one is rather interesting. I read just a day or two ago in the guardian that Facebook is threatening to leave the EU to leave Europe. Mike, Chris? Chris, why don't you start, because I know that you were the one who sent me this article?

Chris:  Yeah. Henry. So, the Irish data protection commissioner has enforced a ban on data sharing with the US. The fear of course, is that everything that is posted to Facebook is shared with US intelligence agencies and the European court of justice found that Facebook's safeguards were insufficient to protect the games to intelligence snooping by the US.

Henry: Wow. Do you think that happens? It must, huh? 

Mike: Geez, ask Edward Snowden.

Chris: So as a result of Europe saying, Hey, you know, these safeguards are inefficient and insufficient. Facebook saying, Hey, we might leave the EU. We might pull out of this 500 million population strong zone and just pack up and leave.

Henry: They can't be serious.

Mike: Of course, they aren't serious. But it's an interesting twist on the weaponization of our data. Right? Think about it, I mean, up to this point, we've talked about this before and it's sad that we have to talk about it again, frankly but this is the social media company threatening to leave, right? Not the country threatening the social media company with a [cross-talking 01:50].

Henry: Yeah, weaponization boy. That's big.

Mike: Totally. And I mean, you know, you think about it, it was bad enough. Okay. It's bad enough that we have you know, the influencers or even just regular people. Hey, like us with Twitter, build a network, build influence, build a community on a platform to have at the geopolitical level, the plug pulled out, right? TikTok is banned, all these influencers are basically going nuts, right? Because their community and their livelihoods are gone. And yet here, we've got Mark Zuckerberg who already, you know, is basically the King maker for any political election on this planet. He's now positioning himself as the, like, as if he wasn't already the King maker for influence, for advertisers. I mean, he's, if he pulls out of the EU because the EU says that the U S data privacy laws are not sufficient to protect the data. He is literally taking, you know, kind of given the finger to all of his advertisers, to all of the community that those advertisers have built in Europe, to everybody in Europe who uses Facebook to communicate with their friends and family and, you know, schedule their hockey team practices and things like this. He he's literally now saying, well, now I can have what I want, I'm going to make sure none of you get what you want.

Henry: Schoolyard time.

Chris: Mike, this is a game of chicken that Facebook has been playing with the EU for 10 years. This court case that Facebook has been fighting with Ireland has been going on for about that long and Facebook hasn't changed their stance Ireland hasn't changed their stance, that EU hasn't changed their stance. Nobody wants to give.

Mike: Right.

Chris: So how does this get resolved?

Mike: Well, I mean, you know, I think the reason why you've got a decade long game of chicken is because basically this is, you know, there's also been this undercurrent, you know, how Apple had that tax suit, you know, where Ireland basically said, you don't have to pay corporate tax in the EU said, yes, you do and all this kind of stuff?

Henry: Right.

Mike: This is potentially just, you know, it's setting the foundation. Okay. If the EU basically says, you need to obey our privacy laws, right? Because this is the way that the governments in their regulatory shortfall, this is how they deal with things like the recent attempts to tax social media companies for the, you know, for the services they provide and the revenue they generate in countries. So, what you do is if you can't get, you know, the French tried to kind of put a tax on Facebook's revenue in France and Donald Trump, the next day basically threatened to put a hundred percent tax on wine and cheese. Right? And this is because the French are saying its French citizens data that it's French citizens, that you're making money off of. It's French citizens data. We're going to put a wall around France, like they have a right to do and say, you got to store your data here. And the moment that you do that, Facebook knows they walk into a trap where now they're going to have to, when you can clearly point to a pool of data that belongs to EU citizens with a stored within the EU on EU servers, not in the US on Facebook servers, but on, in the EU, on EU Facebook servers, they can now meter that and charge them a tax.

Henry: Right.

Mike: It's all about the money. It has never been about anything else. I guarantee you, if Zuckerberg didn't make a dime off of political wrangling and influence and all of this, he wouldn't be involved in this political quagmire that he's in right now over you know, advertising on Facebook.

Chris: So, Nick Clegg who is Facebook's head of affairs and communications. He's kind of banging the drum about the worst-case scenario. He's saying that if the EU's privacy protections go through any startup based in Europe will no longer be able to use a us based cloud provider.

Mike: Right.

Chris:  Mike, do you think that this is just saber rattling or does he have a point?

Mike: You know, why anybody, like, I think the fact that the cloud, okay. These cloud providers that I think it's bluster, I, frankly, I think it's bullshit. Okay. I used to do business and, you know, most of us have been involved in business in the cloud. Okay. I used to sell a solution that was cloud based, and that's one of the big things that the cloud providers always tote when they're in there selling their, you know, Salesforce or their office 365 subscriptions or their Azure and AWS implementations. They always make a point of saying that if you choose, you can have your data reside in one of their data centers in your country and or continent. Okay. So, there is an AWS cloud, probably more than one in Europe, and there's a big Google one in Europe, and there's a big, you know, all of them have this.

Henry: Oh yeah. They're all there.

Mike: Of course. And so, any US cloud service provider right. Clearly can have their data stored in an EU based version of Azure, right. If they want to. So basically, that's what Nick Clegg is saying is completely the opposite of what the marketing material for the cloud provider says.

Henry: Exactly.

Mike: Right? This is why I think it's just bullshit, frankly. It's an attempt to protect a sizable chunk of revenue. And more importantly, if you think about it, it's also an attempt to preserve Facebook's and Mark Zuckerberg's control over the social media landscape. Right? Because he's, I think it's a test, you know, he's been faced recently, right back in June and July, and even, you know, it's still going on with these bans. People are saying, I'm leaving Facebook because I don't agree with what they're doing, you know with politics and political advertising and misinformation and stuff. And so, they're leaving, and this is him kind of slapping them back and saying, you guys, okay, I've taken it for long enough. I'm not going to take it anymore. I'm going to threaten to pull out of a huge market. And he's betting just like he said, when people started, the advertisers started leaving, he said, they'll be back. This is his way to put a gun to their head and bring them back to the table.

Henry: Well, remember Chris said, it's a big game of chicken.

Mike: But, you know, realistically the idea is, is that what we're into is a situation where Donald Trump opened Pandora's box starting with Huawei.

Henry: And what do you mean by that exactly.

Mike: Well, you know, this was the Trump administration went after a technology company that was running an independent business, selling to people all over the world and basically threatened everybody with sanctions if they didn't stop using their equipment.

Henry: Right. For the 5G and everything.

Mike: For the 5G. Okay?

Henry: Yep.

Chris: And then that kind of started a cascade effect where you know, you've got India banning TikTok over border Wars and I think now it's up to 120 different Chinese apps. Right? You've got the TikTok talked ban in the United States. You know, there's now there's Facebook moving out of the EU. I mean...

Henry: Weaponization.

Mike: ... this is weaponization and so it's almost like, you know, this Pandora's box was a box of, of our data was this, like the surveillance capital business model was stuffed into that box. You know what I mean? And now they've opened it up and basically "A" proven to all of us, the true value of data. Right?

Henry: Absolutely.

Mike: Right. I mean, if Donald Trump can wane in and start banning like social media apps because you know, in order to gain headlines to deflect attention, well, that shows you how valuable these social media apps are.

Chris: So, Mike, I just want to say that we can't forget Mark Zuckerberg's hand in all of this, because Mark Zuckerberg as reported by the wall street journal, reportedly warned president Trump about the rise of Chinese tech firms and specifically pointed out TikTok as a threat.

Henry: Competitor.

Chris:  Yeah. Can't help but feel that Zuckerberg may have had a little bit of self interest in that morning.

Mike: Gee, do you think? But I mean, this just can't happen. I mean, you can't have one human being, having lunch with one other human being and then basically 2 billion people's, you know, networks lie in the balance. Right?

Henry: Exactly.

Mike: I mean, not everybody can, how do you, you know, Chris, thankfully you backed up you know, manually, I might add our Twitter followers, you know, somehow with some foreshadowing a week before we got banned. Right. But how does somebody like a Kim Kardashian with, you know, 6 million followers do that on Facebook before she gets banned or before it gets pulled out of the EU?

Chris:  She has to hire a lot of personal assistance.

Mike: Man, Fiverr is going to make a lot of people rich. You know, I mean, this is a big problem. It's another facet in this weaponization, this Pandora's box. It is something that, you know, we've already, you know, people are already feeling a lack of control. They're feeling a lack of control over, you know, their political leanings. They're feeling a lack of control over, you know, what, if this pandemic is real or not, they're feeling a lack of...

Henry: Economy.

Mike: Economy, racism, whatever you want to say. Okay. All of these things are basically things where everybody feels powerless, right? And so, what they do is they tend to look to their governments to help them through regulation. Right? And this is what this is, this is a, like Chris said, a 10-year game of regulatory chicken where the social media companies are now saying, enough is enough. We can play that game too. And so now you've got geopolitical weaponization, you've got you know, fiscal weaponization. You've got data weaponization. I mean, it's coming from all angles. I don't know how people are going to cope.

Henry: Okay. So, Mike, Chris, we know what's going on, the world has never seen this before. I want to hear from both of you individually, how do you think it's going to play out? How do you think it's going to end? And I have a feeling that a lot of it will sort of have sway or be impacted by the upcoming election. Who wants to go first?

Mike: Chris, take it.

Chris: Absolutely. So, Henry, what Facebook reminds me of is a Harley Davidson in the 1980s. And I know that sounds like a farfetched comparison, but bear with me for a moment. If you recall, in the 1980s Harley Davidson was facing a threat from Honda over their motorcycles. Okay. Honda...

Henry: The Japanese.

Chris: Exactly. Honda had a better bike. They had a cheaper bike. They had a better engineered bike, right? They had a bike that consumers overall wanted more than a Harley Davidson. So, Harley Davidson went to Ronald Reagan and they said, Hey, these Japanese motorcycle manufacturers, they're a threat. We need to do something about them. So, Ronald Reagan signed into law basically that these Honda bikes were going to be tariffed okay. So, Honda was forced to charge more for their bikes than they would basically, because Harley Davidson saw them as a threat and they basically didn't want compete with them over product. So, they competed with them through regulatory measures.

Henry: Yeah, exactly.

Chris: So, between 1980, till now, nothing changed at Harley Davidson. They didn't change their product. They didn't change their marketing. They didn't change who they marketed to. And as a result, right now, Harley Davidson is reaping. What they've sown.

Henry: Is true.

Chris: Okay. So, the average age of the Harley Davidson rider is getting older and older. It was 30 somethings were buying Harley Davidson, the 1980s. Nowadays it's 60 somethings, right? Who are buying Harley Davidson’s? The Harley Davidson buyer hasn't changed and if things keep going on the way they are with Harley Davidson, basically the Harley Davidson buyer is just going to die out and a Harley Davidson's going to age out of the business. Meanwhile, Honda is still selling bikes and Honda's buyers keep getting younger and younger.

Henry: Okay. So, relate that to Facebook then?

Chris: Absolutely. So, nothing much has changed with Facebook. Facebook's audience is getting older and older. Facebook's functionality hasn't changed much.

Mike: Bingo.

Chris: Here's the other problem. If Facebook is, you know, it's deciding, Hey, we can't out innovate them, we're going to out regulate them.

Henry: Well done.

Chris: You know, in 30 years, Mark, my words, perhaps even sooner, Facebook is going to regulate itself out of existence.

Henry: Wow. Okay. What do you think Mike?

Mike: Well, you know, I think you're right, Henry. I think the election is going to have some effect but I kind of I'm concerned that it won't have much effect. Okay. I think that you know, there is a certain level of interest amongst all people who are in power or who are looking to get into power, to have an economic lever to get into power. Okay? It's harder to go out as a politician and, you know, kind of put a platform and a message, an honest platform, and a message in front of an electorate and have, and change their minds. Right. And mobilize voters and things than it is to just spend a hundred million dollars on micro targeted ads on a social platform.

Henry: Well, very good point.

Mike: Okay. And to Chris's point, you know, one of the things with Facebook and this may not actually be a coincidence, right? I mean, Donald Trump won 2016 with a lot of the demographic that is current Facebook users. Right? Older social media users were on Facebook, like that's Chris's point. Right. And so, Donald Trump is, has really done, not a lot of interest in stopping Facebook, especially he doesn't care about TikTok. Let's remember, Hey, we're weaponizing, TikTok is a social platform targeted at 14-year-old.

Henry: Right. Who don't vote?

Mike: To Chris's point about Harley Davidson and Honda, right? Donald Trump is what, 72 or 70 something like this. You know, he's maybe if he goes with, by the constitution, which is always going to be a dice roll he's got one more term if he wins. So, none of these average age TickTok users is going to be voting.

Henry: He's 74, by the way.

Mike: 74, so he's going to be 78. If he gets another term, God forbid, okay, he's not going to get another term after that and you know, none of these TikTok users are going to be able to sway fundamentally the election and the electoral college vote because they can't vote.

Henry: Right.

Mike: Right. But they will next time.

Henry: Right.

Mike: And so, he's just going to squash them now. And it's not a coincidence that, you know, Zuckerberg has lunch in the white house with Donald Trump a couple of times. Has Dorsey been there? I guarantee he hasn't. Have the guys from Reddit been there? Nope. He's sure, certainly isn't lunching with Tim Cook or the guys from Google. Right. So, it's clearly, it's a platform that he's familiar with that he knows he can use and that it can gain, give him some kind of political gain. And so, I think the danger to me is that it's the same feeling on the other side. Okay. If you're Joe Biden and his campaign, you may have a different message that you put through social media. Right. But you still are using social media as a way to influence people's opinions and that's way easier than paying door knockers to walk down streets like they used to.

Henry: Oh yeah and then door knockers can't even go out now because of COVID.

Mike: Because of COVID. Right. So, I personally think there's a vested interest in the leavers of power to continue this debate over regulation. Right. I mean, Facebook voluntarily stands up at the end of the, you know, when Chris mentioned the, the Nick Clegg, he put a press release out, right. Which is what spawned this whole we're leaving the EU thing.

Henry: Yeah.

Mike: And what he said in there is Facebook invites regulators to create a regulatory environment that everybody can follow. Right. They actually want that because they're whispering in the ear of the guy that will create that regulation.

Henry: Yes.

Mike: Right. So, this is what I mean, you know, going back to this idea of a Pandora's box. Now that this is out in the open, you know, if Trump loses and I'm Joe Biden, are they whispering in my ear? Probably. And so, you know, and I think the thing to remember, you know, with this TikTok and Huawei, and all this other stuff is the one thing that's common in this thing and there's been some articles. I just recently, you know, I read the economist, right. And there's a big set of articles in it about the new cold war. There's a new front in the cold war between the US and China. It's no longer the US and Russia, like it used to be when we were kids, Henry. You know, and the you know, you can easily say no, no TikTok, no Huawei, no WeChat all this stuff because it's Chinese because it's them. It's us and them, that's the way they used to talk about the Soviet Union in the United States.

Henry: Exactly.

Mike: Right. And so, I think that there is, you know, what needs to happen is, is people need to start stepping into this, right? People need to start expressing concern that their personal data is being used against them. People need to start telling their politicians, it's unacceptable for them to transmit their message over social media. They need to start telling people. And I'm going to say fairly, both Facebook and the Irish you know, information security commissioner that it's unacceptable to just have this reality where one day you're going to wake up and your face and Facebook is gone, right. That can't be allowed to happen but the solution isn't regulation, the solution is a groundswell of public opinion, expressing concern over the weaponization of their data, and then doing something on an individual level to prevent it. It's the same argument. If you're sitting there in the United States and you don't want Donald Trump to be president, then you have one obligation and that's to get out and vote for somebody else. And so, as long as we're in this world where individual internet users are sitting at home, waiting for the government to make a decision, to protect them, we're in for a really, really, really long and depressing ride.

Henry: Absolutely. You know what we need, these users at home all over the world, they need a new democratic social media platform and really Mike, let's do it.

Mike: Absolutely. We're starting with the Fed Averse. Okay? But we're going to make it better. We're going to take it one step further and give people not just control over their own Twitter and Facebook and other alternatives. We're going to give them control at their individual level and now empower everybody to decide how this world works and take our data away. So, it can't be turned into a weapon.

Henry: Retain your own data.

Mike: Absolutely.

Henry: Gentlemen, that was really, really interesting. We are obviously going to be expecting some crazy times in the next few months and beyond. Thank you so much for your insights. Made me really think. Mike, thank you. Chris. Thank you so much.

Mike: Thank you, Henry.

Chris: Okay. Take care of Henry.