On February 4 2019, Facebook celebrated its fifteenth anniversary. Its 2.3 billion user-workers created the best gift the digital giant can dream of: It achieved a record profit of US$22.1 billion in 2018, which means an increase by almost 39 percent from its surplus of US$15.9 billion in 2017 and the corporation’s best annual economic result thus far. On September 4 2018, Google celebrated the twentieth anniversary of its founding. But do we have reasons to celebrate?
In one of the latest Facebook affairs, the company was criticised for the use of algorithms that fetishize homology on its image sharing network Instagram. After 14-year-old Molly Russell had committed suicide, her father said that Instagram’s algorithms had presented materials about self-harm and the glorification of suicide and depression to his teenage-daughter.
Facebook has transformed itself from the time when Mark Zuckerberg and his friends created the platform in 2003 as the college and community network Facemash while studying at Harvard University until it became one of the world’s top-five software and Internet platform corporations. In 2018, Microsoft (#20), Alphabet/Google (#23), Amazon (#54), Facebook (#77) and Alibaba (#81) were all among the world’s hundred largest corporations. In 2017, these digital giants together achieved profits of US$62.1 billion and revenues of US$496.9 billion. Their sales constituted an economic power that is larger than the gross domestic product of population-rich countries such as Nigeria (GDP 2017: US$ 375.7 billion, population: 190.9 million) or South Africa (GDP 2017: US$348.9 billion, population: 56.7 million).
Venture capital was Facebook’s stepping stone to world fame. Facebook received venture capital investments from the likes of Peter Thiel, Accel Partners, Greylock Partners, Meritech, Microsoft, Li Ka-Shing, European Founders Fund, TriplePoint Capital, Digital Sky Technologies, Elevation Partners, or Goldman Sachs. Based on such investments, in May 2012 made its initial offering on the Nasdaq stock exchange. Venture capital boosts a company’s capital assets and in return expects profitability and a growing annual surplus. And this is also how Facebook’s problems began.
Driven to become profitable and accumulate capital, Facebook introduced targeted advertising as its economic model. In order for the digital corporation to yield ever more economic returns, its algorithms have to sell ever more advertisements and make sure that the users stay give attention to the platform as frequently and as long as possible. Facebook exchanges ad clicks and attention not just to content, but also to ads, into money invested by advertisers. Facebook’s algorithms push content and ads to the timeline of users in order to make them stay active on the platform. The algorithm is not human and therefore knows no morality. Moral judgements are part of human essence and can therefore not be simulated by or programmed into computers. For algorithms that are programmed to sell ads and create attention it does not matter whether the content whose visibility it enforces is about chocolate, cartoons, fascism, or self-harm. Anti-social social media’s substitution of human action by algorithms programmed to sell ads favour fake news, filter bubbles, post-truth politics, fascist and nationalist ideology. The moral and democratic deficits of anti-social social media are deeply embedded into their political economy.
Following the Cambridge Analytica scandal, Mark Zuckerberg in 2018 appeared in hearings before the US Congress and the European Parliament. One was bewildered by how he presented himself as the CEO of known unknowns, who argued that he knew that he did not knew how his company operated. His most frequent answer followed the style “I don’t know the answer to that exactly off the top my head either, but that’s something that we can follow up with you on”. He knows that he doesn’t know. Mark Zuckerberg presented himself to the parliamentary inquiries as Silicon Valley’s greatest Donald Rumsfeld-impersonator.
One of the most bizarre moments in these hearings was when Zuckerberg said that Facebook “doesn’t feel like” a monopoly to him. Google and Facebook are the world’s largest advertising agencies. In 2018, Google’s profits amounted to US$30.7 billion, an increase by 142.7 percent from 2017’s surplus of US$12.7 billion. Adding up Google’s 2018 revenue of US$136.8 billion and Facebook’s 2018 sales of US$55.8 billion, the total revenue of the two ad capitalists were US$192.6 billion. According to estimates global digital ad spending amounted to US$273.29 in 2018, which means that Facebook and Google together control 70.5 percent of the global digital advertising market. The two companies form an oligopoly. A monopoly is a monopoly even if it does not feel like one to those who own it. These owners certainly feel the effects of monopolies on their bank accounts. In 2018, Mark Zuckerberg was with a net wealth of US$71 billion the world’s fifth richest person. Google’s Larry Page and Sergey Brin were with a wealth of US$48.8 billion respectively US$47.5 billion the world’s twelfth and thirteenth richest individuals.
Tax avoidance strategies support digital capital’s monopolies. In 2017, Facebook UK achieved revenues of £1,3 billion, which amounts to more than 4 percent of the corporation’s global revenue. The reported profits of £62.8 million, however, only amounted to around 0.5 percent of Facebook’s global profits, which resulted in taxes of just £17.2 million paid to HMRC. In 2017, Facebook just paid a bit more than 1 percent of its UK revenue in taxes. Although the UK introduced a diverted profits tax of 25 percent in 2015, transnational corporations continue to pay very low amounts of taxes.
There is a desire among users for alternatives to corporate digital monopolies and anti-social social media. Regulation is an important aspect of challenging digital capital’s power. Besides data protection, introducing an effective online advertising tax and digital capital tax at the national and international level is an important policy measure. But regulation is not enough. Alternative Internet platforms that are non-profit and advertising-free challenge the logic of capital accumulation. They are a form of the digital commons. Platform co-operatives that are owned, run and controlled by users are one form of alternative platforms. The establishment of public service Internet platforms run by public service media companies such as the BBC is another important idea for alternative platforms. Alternative platforms should not simply copy the existing corporate ones, but come up with new concepts such as Club 2.0 that foster political debate, slow media communication, hybrid communication where humans meet face-to-face and online, and the social production of user-generated content in contexts such as schools, workplaces, local communities, unions, churches, associations, etc.
Those of us who have pessimism of the intellect and optimism of the will know that digital struggles for alternatives to digital capital monopolies can make a difference. The active hope for 2024, when Facebook plans to celebrate its twentieth anniversary, is that we will then be able to say: “Happy 20th birthday, Facebook. We today celebrate that public service Internet platforms and platform co-ops have successfully challenged your power during the past five years and have stopped the commodification of communication, data and the Internet”. Only history will show how the digital future will look like. Digital history is a history of class struggles over the control of communication(s).