Hubris, Fantasies, and No Accountability
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Hubris, Fantasies, and No Accountability: Social Media/Crypto Today. This week, let’s examine what is happening across online platforms and point out some unfortunate commonalities.
Major social media companies and a cryptocurrency exchange are in varying degrees of chaos, some of which is immediately harmful:
Twitter is staggering under the impact of Elon Musk’s acquisition of the company. He has driven away thousands of employees, including Twitter’s Chief Information Security Officer, Chief Privacy Officer, and Chief Compliance Officer. Recall that Twitter previously settled charges brought by the FTC that it deceived consumers and put their privacy at risk by failing to safeguard their personal information. It remains under a consent decree that places primacy on privacy and security. Whether Twitter has breached consumer protection laws or its consent decree under Musk's ownership is an open question, but it seems likely. You can read more about Twitter’s security and privacy issues by clicking on the following link, which contains this memorable quote:
“Elon puts rockets into space, he’s not afraid of the FTC.”
https://www.theverge.com/2022/11/10/23451198/twitter-ftc-elon-musk-lawyer-changes-fine-warning
Meta (Facebook) is facing a revenue shortfall after spending billions on its “metaverse” project during the pandemic. CEO Mark Zuckerberg has offered this explanation for Meta’s struggles:
“At the start of COVID, the world rapidly moved online and the surge of e-commerce led to outsized revenue growth. Many people predicted this would be a permanent acceleration that would continue even after the pandemic ended. I did too, so I made the decision to significantly increase our investments. Unfortunately, this did not play out the way I expected. Not only has online commerce returned to prior trends, but the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected. I got this wrong, and I take responsibility for that.”
You can read more by clicking on the following link:
TikTok has again been deemed by the FBI to pose a threat to national security. The concern is not just about the facts of its ownership by an unfriendly foreign government or its enormous data collection. The concern is that TikTok promulgates disinformation, and its use of its recommendation algorithm results in psychological manipulation throughout American society. You can read more about it by clicking on the following link:
https://www.npr.org/2022/11/17/1137155540/fbi-tiktok-national-security-concerns-china
Crypto-exchange FTX and its trading affiliate Alameda have abruptly collapsed under the weight of gross negligence, blatant conflicts of interest, sub-adult frat-house behavior, and outright fraud. John Ray, who took over as CEO of FTX, had scathing remarks in his first-day declaration to the bankruptcy court, stating:
“Never in my career have I seen such a complete failure of corporate controls and such a complete absence of trustworthy financial information as occurred here. From compromised systems integrity and faulty regulatory oversight abroad, to the concentration of control in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals, this situation is unprecedented.”
You can read more about the bankruptcy declaration by clicking on the following link:
https://pacer-documents.s3.amazonaws.com/33/188450/042020648197.pdf
We would also suggest reading this shocking interview with FTX’s former CEO, who describes his ethics as mostly a "front," and:
"[A] dumb game we woke westerners play where we say all the right shibboleths and so everyone likes us."
What do these have in common? Three things:
Hubris, to start with. Three (3) of these businesses are owned by individuals of fabulous present, recent, or perhaps-soon-to-be-recent wealth and power, and an autocratic superpower owns the fourth. None of their power has been curtailed sufficiently – or at all – by forces that restrain their designs, whims, or caprices. In our view, none of them operates with sufficient concern for the millions, even billions, of other stakeholders in their enterprises.
Fantasies, for another. Draw a line from the Medicis of early capitalism, to the tulip promoters of the first stock companies, to the “blue sky” salesmen of the ‘20s, to inside-trading “junk bond kings” like Ivan Boesky and Michael Milliken in the ‘80s, to Ponzi-stock market “seers” like Bernie Madoff in the ‘00s and “magic-product” hustlers like Elizabeth Holmes in the ‘10s – we yearn for quick, generational wealth and daring, brilliant, fascinating iconoclasts who’ll deliver it. We want so badly for it to be true, and so we see in these people (and in their private and public regulators) what we want to see and what we hope they actually are.
No accountability, in consequence:
· Meta (Facebook) is a public company, but Mr. Zuckerberg owns a controlling interest in the voting shares.
· FTX and Alameda were owned by Sam Bankman-Fried (“SBF”) with no meaningful oversight, even by the business media, who seem to be falling short even now on their reporting of the sheer scale of the fraud.
· Elon Musk is ungoverned and perhaps ungovernable, be it by his boards, staff, the public, the FTC, or the SEC.
· And, of course, the foreign government that owns TikTok answers to no one.
What’s even worse? Americans seem inured to the harm that is being caused.
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Hosch & Morris, PLLC is a boutique law firm dedicated to data privacy and protection, cybersecurity, the Internet and technology. Open the Future℠.