Much attention has been focused on the role of social media such as Facebook and Twitter as enablers of Russian interference in the 2016 presidential election in the US and the Brexit referendum in the UK. I argue here, as JFK might have, that of those to whom much is given, much is required.
From a business model perspective Facebook[1] has a brilliant monetization engine. Thousands of international advertisers can pay to reach millions of consumers largely without the intervention of human employees at Facebook. This has allowed the company to grow rapidly at high margins (nearly 50% annual growth at 50% margins). The darker side of this hyper growth and scale is that it is impractical for Facebook to police the identity and content of its advertisers without either adding huge numbers of additional staff or developing new automated systems. Despite being a Facebook shareholder of long duration and an admirer of its senior team, I believe it is time to insist that they do more –either voluntarily or by law.
Many commentators label Facebook as a media company and argue that it should be required to identify political advertisements in the manner familiar to old media: “This ad is paid for by the few friends of Tom Glocer, etc.” I believe a higher standard should apply – one applicable to banks around the world. In the last century, banks were free to take deposits and trade with wealthy clients without asking difficult questions about the source or nature of their assets. Switzerland, in particular, came under the wraith of US prosecutors for its “discretion” in accepting client deposits. Since the 1970 adoption of the Bank Secrecy Act in the US and similar laws elsewhere, banks have been obligated to “know their customers” and police money-laundering to the point that “KYC” and “AML” are now familiar business acronyms.
Banks also complained that the new KYC regulations would impose unfair costs on them and hurt their revenues. They were not wrong and some institutions were never able to adjust to the new more transparent operating model (e.g., BCCI, BSI). Nonetheless the global banking system while not immune from abuse is a less welcome deposit and payment system for drug lords, dictators and terrorists — especially after the 2001 passage of the Patriot Act in the US.
Given this success I propose we impose similar KYC obligations on social media platforms with greater than 100,000 users. Will this move initially restrict business and hurt margins? Of, course. However, the threat posed to democracies around the world by weaponized social media are greater than the dangers that were present in international banking before the adoption of AML laws. Moreover, it won’t be long before Silicon Valley cranks up the same innovation it has shown in developing the underling social media platforms to automating KYC checks on the source of its advertising. I am not suggesting that Facebook can never accept an ad from the Russian FSB (or the US CIA for that matter), only that the true source of the funding needs to be prominently disclosed. Front men and cutouts such as “Friends of Charlottesville” are not enough. The stakes are high and so the burden placed on those who would profit from such powerful platforms must be commensurate with the challenge.
[1] For ease of reference I will refer to Facebook as proxy for all other social media.
