The US, Democracy and Platforms: The Road Ahead
The Rookie VC #16
Hi everyone ! Welcome to another issue of The Rookie VC.
This week, I had written a long essay on the history of Startup Mafias and tried to analyze their past and future implications, but unfortunately Alex Dewez beat me to it before I was done (oopsie 😅). To be fair, I most certainly couldn’t have done a better job - Go check it out !
Instead, with the little time I had left to turn around and find another topic to talk about, I decided to try something different and focus on something else.
I’ve long loved the US as a country, lived for some time there, and was fascinated by the culture and the particular energy of its people, from the end of Northern Pennsylvania to the vibrant New York City.
As I was watching the debate last week, I tried to boil down my thoughts about ongoing events and wondered : why do little people step forward and actually try and go beyond immediate commentary and analysis to think about what lies in front of not only the American people, but all of us.
Very modestly and out of intellectual curiosity, I’ve tried to fixate and organize my thoughts around what could be better done. It’s also a way to try and change my way of interacting with political news: instead of focusing on the short term tactics and movement, it seemed healthy to try and look past.
A subjective recap of the stakes in uncle sam country
First off, I wanted to do a quick brush-up on what I subjectively think are the main stakes here:
Last minute addition (!) : POTUS and FLOTUS have tested positive to COVID and we are not sure just yet when the Donald will be out of Walter Reed military hospital. Trump lost his advantage of being able to move freely and host rallies across the countries, part of which was justified by the fact that nor he or any of his relatives had caught COVID. This is the infamous October Surprise that pundits were expecting, with different interpretations of the outcomes: some think it could help Trump’s campaign if he recovers quickly, because it would reinforce his narrative that COVID is no big deal, while others think it’s a death blow to his momentum. Some even suggested that he would be lying to shift the focus entirely on him for the next two weeks, effectively halting the campaign on his own terms.
The supreme court. The moment I knew I wanted to write this essay, I turned to Nicolas Colin’s feed for any overlooked topics or arguments that I didn’t think of. Nicolas has the following theory: Senate and House Republicans know the importance of the supreme court in passing laws that really move the needle. Many of them are dead set on placing a more conservative judge. Perhaps the most laser-focused is House republican majority leader Mitch McConnell, who described Trump being “strong as mule piss” in his will to get a conservative judge in. Hence, the passing of Ruth Bader Ginsberg and Trump’s choice to go along with the nomination of a new judge (motivated by the fact that he’s taking the November 3 results to the courts) could backfire on the Donald, once Republicans don’t need him anymore.
The Senate and Getting Rid of The Filibuster. Usually, the discussion is very much focused on the electoral college for presidential elections (rightfully so), but much less on the republican bias in how the Senator seats are spread. Indeed, every state gets two seats regardless of their overall population, which causes less populous states an outsized voice. Therefore the GOP Senate elected majority represents a minority of the US population, and still has a lot of power: they helped Trump not get kicked out after being impeached, they decide if the nomination of a new judge goes through, and most importantly and this is set in stone: they have the filibuster. Think of it as a soft version of the French motion de censure that the senators can use to block any law on the senate floor. On behalf of a small, non-majority fraction of the population. Effectively, this means that even if Democrats sweep both the White House and Congress, they still could be blocked pretty often and not pass anything significant under the tenure of the current congress. That is why many Democrats, including Sanders and Warren quite vocally during the primary campaign, were calling for the end of the filibuster.
The Strategy of Chaos. It’s now become self-evident that the sitting president is trying, House of Cards style, to steer some form of chaos in the last month before the run-up to November 3. Given the sharp 5-10% lead that Biden amassed in battleground states, Trump wants to create all necessary conditions for an extended recount and judiciary examination of election results that would prevent the transmission of power should he have lost the election. For many Americans and foreigners watching from behind the fence, it has slowly undermined the validity and purpose of the election and many of us are now looking at what’s beyond November 3. Yesterday, I was watching this phenomenal Le Média interview of Fabrizio Calvi, who explained the many links of the Trumps with various mafias, and Trump’s inspiration in the methods he used to rise to and conserve power. He paints an astonishing story of fierce survival instinct and a “whatever it takes” attitude at any turn of the Donald’s life.
An ever-polarized nation. My last take on the future of the US is that it is perhaps one of the most politically and culturally polarized developed countries in the world right now. A lot of European countries are not trailing too far behind, including France. Many films, articles and books point to the same problem: the attention economy and its intertwined effects on traditional and social media have brought us into an infinite polarizing vortex that would eventually lead us to civil warfare, temptations of separatism, etc. There are many ways to de-escalate this crisis of polarization, contrary to what one might think. By the way, Trump is looking at something much more efficient than polarization: by inventing outrage as an agenda, we’re forced to think about him each and everyday. This anchors the sentiment that the election is useless because votes couldn’t get rid of him. Mental exhaustion has effectively become a strategy and goes beyond party politics in Washington.
The attention economy: democracy’s sclerosis
Social media has deteriorated an existing problem of polarization and bipartisanship
The topic of the influence of social media in our society has regained significant traction ahead of the american election and amidst the very publicized release of The Social Dilemma, a very dystopian picture of the harm social platforms have done to America and society in general.
While The Social Dilemma is very well documented and packed with a feel-good sentiment of repentance, it fails the public at clearly laying out possible solutions for the problem we are faced with, which in my opinion is fairly irresponsible given what is at stake.
Social media and the hyper-personalization of feed algorithms have deteriorated an existing problem of polarization and bipartisanship in the US, for they reward and it amplify messaging that encourages a debate of posture rather than a debate of ideas: voters respond and engage much more to messaging with a high moral and emotive load than “classic” policy speech with a neutral tone.
Contrary to one might think, a study conducted by political scientists Cass Sustein and Thali Sharot found that continued exposure to the opposite side’s messaging with intense moral and emotive semantics worsened the ability for neutral judgment. This would mean that echo chambers are not the only component of the problem: it’s the messaging substance itself that hurts the debate but favors more radical stances.
The problem is that the naked autocratic tendency of Trump and his clan thrives on emotive and moral discourse over ideas. By framing outrage as a constant strategy for defocusing the debate on real issues, they have succeeded in rendering any serious debate inaudible. The first dictature in the US does currently not so much come from a constitutional crisis, rather from exploiting the dictature of the instant, forcing anyone that tunes into the outside world to see power and government as a day-to-day struggle, effectively relegating behind any policy debate in the foreseeable future.
The business model of traditional outlets and social media is a catalyst
As many of us know, the ad-based business models are fueled by tapping attention, and the data it generates for behavior prediction. It’s now a universal commodity that can be exchanged and priced very accurately, as it grows scarcer and scarcer. This paradigm has designated attention-mongering tactics as the only way to generate substantial money and build durable moats in the media landscape, and is now widely recognized as the only way to generate long-term shareholder value.
The choice Facebook and the other platforms are making is ideological, in that it equates shareholder value with constant surveillance of the user. Not because it tends to favor one side or the other or refuses to pick sides in the bipartisan debate. Whoever drains the most attention, engages audiences the most, has a durable playbook for catalyzing eyeballs and available brain time will never get shut down. It’s too aligned with long-term value brought to shareholders and the platform’s moat to happen. That is why I personally think there would be transformative solutions to be used inside these companies to sway products into a saner paradigm, but I do fear that none of this can happen without regulation or significant competitive pressure from the outside.
Think tanks can do their best job at advocating for this, but as I mentioned in my piece about digital mindfulness, it has to be a grassroots-led movement. Modestly and for the sake of the exercise, I will lay out some changes that could be implemented right now at the major social platforms, but I do not profoundly believe we will see any significant change anytime soon.
On the topic of social platforms, it is beginning to look like a tree with too much snow on it: either the branches can reel under the weight of their flaws, either someone grabs a chainsaw and starts cutting them.
The massive growth of social networks into content networks that connect people to ideas and emotions much more than they connect people together have caused the side effects to gradually outpace the positives.
The case for regulation
Platforms are business models that create marketplaces to match different parties with complementary interests, relying on what economists call ‘indirect network effects.’ Dating sites, eBay, Facebook, YouTube, and operating systems such as Android and iOS are all different types of platforms. Social media platforms connect consumers with digital content creators and typically monetize their interactions through advertising revenue.
Since platforms do not generally create their content, they contend that they are not responsible for what users produce and are thus exempt from the libel, defamation, and other laws and regulations that govern traditional media like newspapers and television. In other words, they are platforms for free speech and assume no responsibility for what their users communicate.
When platforms like Facebook are not held responsible for the accuracy of the content they present, there is no incentive for them not to show you the most outrageous or fake. Excessive social polarization is undesirable as it erodes the democratic institutions that protect free speech and other basic rights.
Without some basic consensus on the common objectives of social welfare, democracies weaken and become dysfunctional and/or corrupt. The objective of such regulation would not be to muzzle free speech, but instead find a new set of rules we can agree on. Just like chemical companies abide by environmental regulations, the social cost associated with social media platforms should be controlled to mitigate its worse effects.
How do we solve this ?
Because of direct network effects, social platforms tend to tip towards being monopolies by nature and breaking up any social media monopoly will not help anything but put the next contender in line in a dominant position in lieu of the one you tore apart.
Antitrust brute force does not raise the question of privacy protection, distinction of free speech and hate speech, election integrity, or fake news deflation. It’s an easy but very dumb answer to our problem here.
Let’s look at a handful of possible solutions that regulators can push forward :
Interoperability. I’ve discussed the benefits of interoperability for other parts of our digital infrastructure and mentioned how it would create massive benefits for merchants and consumers outside of Amazon, how it could automate lots of other administrative tasks that consist of pushing information. In this specific case, interoperability would consist in forcing the platforms to let people leave, kind of an “export all data to competitor x” button. It’s an enormous challenge, because it’s a completely different operation than making phone numbers portable. Plus, interfaces and interaction are very different from one social network to another ; you don’t imagine transferring your TikTok backup to a Facebook page or your Instagram following to a WhatsApp group. Some of the advocates of interoperability take AOL and the FCC ruling that made it interoperable with MSN and other messaging services, but the depth of the experience was nowhere nearly as deep and engaging as Facebook’s portfolio of apps. Another preemptive approach could be to create an independent system that would allow people to have kill switches for personal data transmission, harmonized across social platforms
Democratic safeguards. A lot of the blame on social platforms is that they will favor an unequal ground for elections: by spreading false information on mail-in ballots, on relaying theories discrediting the importance of turnout, etc. American legislators have targeted many regulations to try and safeguard elections and their coverage to standardize commitments for all social platforms to: make data about facts widely available, let users know about the danger of polarization, measure and correct algorithmic bias, let people know about the rules of the election. Instead of letting the Silicon Valley repentance movement talk in its own bubble or monger fear on Netflix, there should be a bipartisan National Commission on Democracy and Technology composed of members of congress but also of insiders and ethicists with real technical knowledge and who could build a realistic knowledge. And such things should exist in ALL democraties, otherwise the issues will remain compartmentalized.
Privacy protection. In the US, the problem is double-faced: federal regulation on data is not harmonized with adhoc state policies, and there is no taxation other than corporate tax on the data that fuels the advertising consumer surplus, therefore funding for legislation and oversight institutions is scarce. As I’ve previously mentioned in my essay on Tech Journalism, I think that the budgets should not be decided by the players themselves but by an independently run organization inside the government, and should not be helicopter money thrown at various media outlets. Facebook will never do anything that hurts their data moat and network effects, and will not invest significant money for privacy unless it’s financially incentivized to do so.
Misinformation regulation. Several steps have already been taken to slow misinformation on social media. But little work has been done to tackle and crowdsource the big job of labeling news, identifying and tagging sources, agreeing on the basis of facts, and limiting resharing on information labeled suspicious. Few to no companies and public institutions have focused on media literacy and critical thinking. Financial litteracy is a big topic of interest and has been extensively funded and publicized recently, but no one considers that media literacy is a market (that makes for another essay !)
Amending section 230. Section 230 of the Communication Decency Act of 1996 is what grants the right to Mark Zuckerberg to not intervene in the speech moderation on false or hateful claims on Facebook, and prevent Jack Dorsey from intervention and overreach on what discourse has its place or not on Twitter. It relieves all platforms from civil liability on speech that they help broadcast - It’s one of the cornerstones of an open internet, but this doesn’t mean it can be curtailed or amended to introduce exceptions that can help form a consensus about what is and what isn’t hateful speech or doubtful information
There are also a few out of the box views that are usage and product-based for social companies that take a double-dip in this crisis. The most famous of all is Twitter: for years, it has been struggling to monetize via ads and now has to face controversy when trying to stronghand POTUS into moderating false speech on the platform.
Over the summer, Packy McCormick published a very interesting essay on how Twitter should probably embrace what it is, a professional network whose job to be done is to put indie content in front of people, and would be better off creating a steady revenue by making creators subscribe to be empowered to do so.
Some of his points about what twitter should build are very interesting :
The verified status. Instead of being a status defined by your profession and a set of pretty fuzzy guidelines that are open to interpretation, Twitter should just verify the identity of people registering on it. He’s arguing that it is a table stake that would solve the bot, trolling and misinformation in hidden identities problems. I don’t agree that people should pay to verify, but the idea of a powerful search that lets you filter out unverified users profoundly resonates with the current context.
Build a premium product for creators. He and myself - as creators - are biased toward seeing Twitter this way, though I think our bias leads us towards the right direction. His ideas for a “Twitter+” product? A better bookmarking and note taking tool for content you see on your feed, a much better search experience, an overhaul of the DM system that would allow you to spin out conversations,
Twitter is not integrated with creator tools. Packy thinks there is two possible ways here: either Twitter eats up the food chain by building the tools internally, either it “paywalls” content discovery and captures some of the value it helps other platforms (say Spotify, Deezer, Substack, Gumroad, etc) generate - It’s all about getting in a picks and shovel play after having dominated the discovery end of the creator economy. Something that Facebook can’t really do with the media outlets or the groups it helps promote in any other way than showing them advertising
I was very happy to share some ideas with you guys on this topic I’m obsessed with, less than one month left in the run-up for the US elections.
Let me know with your thoughts on Twitter: @LarocheUlysse and see you next week for another issue !