[liberationtech] How Cooperatives Could Fix Social Media's Net Censorship Problem

[Yosem Companys]

http://liberationtech.tumblr.com/post/28442687690/how-cooperatives-could-fix-social-medias-net

How Cooperatives Could Fix Social Media’s Net Censorship
Problem<http://liberationtech.tumblr.com/post/28442687690/how-cooperatives-could-fix-social-medias-net>

Recently, a scandal broke
out<http://www.huffingtonpost.com/2012/07/31/guy-adams-twitter-nbc-olympics_n_1724597.html>
over
Twitter’s and NBC’s collusion to censor users as a result of a flurry of
criticism about NBC’s Olympic coverage, which culminated with journalist Guy
Adams <https://twitter.com/guyadams/> being suspended over a tweet
disclosing the corporate email address ofGary
Zenkel<http://www.nbcumv.com/mediavillage/sports/nbcsports/executives?bio=contents/biographies/ExecutiveBios/V_Z/Zenkel_Gary.xml>,
the man in charge of NBC’s Olympic coverage, even though Zenkel’s address
was already publicly available.  Adams’s suspension generated such a
massive outcry that Twitter was forced to revoke it.

The incident, however, has left me feeling as though all of us social-media
users are living in the movie “Groundhog
Day<http://en.wikipedia.org/wiki/Groundhog_Day_(film)>.”
We have seen this script play out many times before, whether that company
is Facebook, Google, Twitter, or others.  Even in politics, we see the same
phenomenon play out in the recent NationBuilder
flap<http://techpresident.com/news/22556/nationbuilders-mammoth-deal-state-level-republican-committee-sparks-calls-boycott>.
And the script often unfolds in the same way:  Company censors user.  Users
complain en masse.  Company apologizes, usually by saying that such
incidents are rare.  The company and users then go back to business as
usual but no substantive changes are made.  Instead, as in “Groundhog Day,”
we continue to wake up every morning to the same flap, with different
actors being censored and different companies doing the censoring, with the
same symbolic verbal responses but no substantive action.  Why?  The
fundamental problem lies in the legal template that is used for organizing
startup firms in Silicon Valley, that of a for-profit corporation.

*Silicon Valley’s For-Profit Model*

Say that you are a programmer/hacker, and you have written some very cool
code for reinventing the social-media space and perhaps even changing the
world with it for the better.  So what do you do?  You’ll meet others in
Silicon Valley who will tell you that you need to start up a new venture.
But how do you do that?  Typically, the process will end up in a legal
firm.  The lawyer will speak to you in a foreign language that you barely
comprehend and give you lots of forms to sign that you sign because “that’s
the way things are done around here.”  Lo and behold, you now have a
for-profit corporation and can get down to the business of enhancing your
code and getting users.

What are you in fact signing when you agree to found a for-profit firm?  In
short, you are saying that the sole goal of your organization is to make
money.  You are selling the cheapest product at the most expensive price.
Or in the language of economics, revenue maximization with cost
minimization yields optimal profits.  Legally, you are also saying the
following things:  You (and your co-founders) own this firm, you will most
likely seek investors and offer them stock so they become shareholders, you
will seek customers to monetize <http://en.wikipedia.org/wiki/Monetization> (a
fancy Silicon Valley way of saying “to make money”), you will hire people
to work for you, and you will pay taxes on your profits.  Legally, your
company will only be accountable to its owners, who are usually you and
your co-founders and any investors you bring in as shareholders.  Some of
you will serve on the board, which will run the firm and appoint its
officers.  Notice what is NOT mentioned above. There is no mention of
changing the world, empowering your users, making a difference, or creating
public goods.

There is also no mention of your customers and consumers (or users).
Customers only matter to the extent that they bring in revenues.  This
implies that not all customers are created equally.  Those customers who
bring in more revenues more quickly at the most affordable cost become more
important to the firm than those who bring in less revenues over a longer
time horizon at a higher cost.  This translates into a focus on large
corporate customers at the expense of individual users.  To get Procter &
Gamble as a customer means millions of dollars in revenue, an amount that
would be much more time-consuming to get if you focused on thousands of mom
and pop stores, or millions of individual users.  Silicon Valley knows this
and has discovered over time that millions of user accounts can bring in
large corporate accounts like Procter & Gamble, leading technology firms to
treat their users’ personal data as the product being sold.

*Social Media User Ideals & Myths*

So why were Twitter users so angry about the company’s censorship?  The
simple reason is that there is a gap between users’ perception of Twitter
and Twitter’s business reality.  Users see Twitter almost as a cool public
utility.  They see it as a disruptive technology that is radically changing
the world, providing tools that empower users to promote social change, and
making the world more open and transparent.  But this is all rhetoric, not
reality.  Twitter may say otherwise because it’s good marketing and
advertising.  But all Twitter really cares about is making money.  It
doesn’t have the public’s interest at heart.  That’s what all those
investors who gave it millions of dollars want it to do: make money.  And
Twitter must perform in a reliable and accountable fashion to these
investors by making money, or else they will pull the plug on Twitter by
taking their money elsewhere.  But Twitter has an interest in propagating
these myths of disruptive innovation, individual empowerment, social
change, openness, and transparency, as long as these myths are effective
enough to encourage millions of users to join it.  For Twitter, more users
only mean more data, which means more opportunities for data mining, along
with more opportunities for monetizing that data by selling it to corporate
customers.

We as users, however, have so internalized the myths that Twitter and other
social-media for-profit firms propagate, however, that we act like someone
trapped in a vicious cycle of emotional or physical abuse.  We continue to
use the service because we are comforted by the firm’s rhetoric and thereby
choose to ignore the firm’s actions.  When Twitter CEO Dick
Costolo<http://en.wikipedia.org/wiki/Dick_Costolo>
 declared<http://online.wsj.com/article/SB10000872396390443477104577549373137242122.html>
that
Twitter is “the free speech wing of the free speech party,” we believed
that a company that chooses to refrain from censorship means that it will
never censor.  But there is nothing in Twitter’s legal status to prevent it
from doing anything its owners want to do.  If Twitter’s owners tomorrow
decide to censor everything in sight, users have no recourse to stop it.
Like a natural person, a corporation can do anything it wants as long as it
doesn’t violate the law.

What Costolo is not telling you is that Twitter as a for-profit firm has a
competitive strategy of becoming the only company to provide you with a
real-time status-updating service.  It may not say so publicly, but in
Twitter’s ideal world, it would slay Google and Facebook and any other
company that dare challenge it.  And Twitter won’t tell you who controls
the controller.  Since there are no net
neutrality<http://en.wikipedia.org/wiki/Network_neutrality> rules
that apply to it as they would to ISPs, Twitter could easily choose whose
free speech to protect and whose not to protect.  After all, there are a
lot of bad things Twitter needs to contain to maintain its image in the
eyes of its shareholders, and it knows the easiest way to contain those
things is through censorship.

Take another example.  NationBuilder, a for-profit firm founded byJim
Gilliam <http://nationbuilder.com/jgilliam?page=3>, who describes himself
as “a geeky activist building Internet tools to shake up a broken political
system.”  NationBuilder’s mission <http://nationbuilder.com/mission> includes
the following:  “1. People connected create everything great in the world.
2. The Internet makes it possible for everyone to be a leader. 3. The tools
of leadership should be available to everyone. 4. Service is scared. 4.
Creators must become leaders.”  But notice what is missing here.  You could
“shake up” and “fix” the “broken political system,” but who controls the
new shaken up and fixed political system?  Who connects people to
everything great in the world?  Who enables you to be a leader?  Who
provides the tools of leadership?  In NationBuilder’s world, it would be
NationBuilder.

As a for-profit firm, NationBuilder seeks monopoly profits.  It wants to
vanquish its competitors and to do so will resort to any tactics that don’t
break the law (and that the founders don’t consider unethical).  Don’t
believe me?  Read the Bible of Strategy that is taught to MBAs every year
at the premier business schools across the United States.  It’s called
competitive
strategy <http://en.wikipedia.org/wiki/Porter_five_forces_analysis>, and
the main reason why Harvard Business School professor Michael
Porter<http://en.wikipedia.org/wiki/Michael_Porter> has
tenure.

But think of the implications of the new world NationBuilder would
construct.  NationBuilder would own this world:  They would connect you to
everything great in the world, so if you moved away from what they wanted
you to do, they could easily disconnect you.  They would enable you to be a
leader, which means that they could easily prevent you from becoming one.
They would provide the tools of leadership or exclude you from accessing
them.  In short, in NationBuilder’s world, the firm’s shareholders would
only be happy if NationBuilder shook up and fixed the broken political
system to enable itself to control that system.

This is not to say that the people who run technology firms don’t care
about their users.  Going back to our earlier example, as an entrepreneur,
you may have started wanting to make a difference, bringing about social
change, or changing the world.  But there is a conflict between what you as
an entrepreneur wants and what your investors want.  They want to make
money.  You want your firm to succeed.  You compromise, or else you don’t
get the investment.  When it comes down to a push and shove, these
technology firms are just profit-oriented institutions that will trade
principled rhetoric for making money.

Does this mean that tech entrepreneurs are manipulative sociopaths seeking
world domination?  No.  Gilliam may have the best intentions in the world
when he founded NationBuilder, but the dictates of the for-profit
organization are going to align any tech entrepreneur’s incentives and
shape his or her behavior in ways that s/he may not have anticipated before
founding.

*How Do We Fix This Problem?*

Given the dictates of the for-profit organization, what recourse do
social-media users and tech entrepreneurs wanting to make a difference
have?  One approach would be to organize en masse, something that
economist Mancur
Olson <http://en.wikipedia.org/wiki/Mancur_Olson> and political scientistElinor
Ostrom <http://en.wikipedia.org/wiki/Elinor_Ostrom> have shown is
notoriously difficult to achieve given the collective action
problem<http://en.wikipedia.org/wiki/The_Logic_of_Collective_Action>
.  One reason<http://press.uchicago.edu/ucp/books/book/chicago/P/bo5939918.html>
is
that, since most users don’t know each other or even know about the efforts
of tech entrepreneurs wanting to change the current state of affairs, they
cannot easily organize a movement to change things.  Moreover, if they use
social media to try to organize, the for-profit firms providing the very
same social-media tools that would be used to organize such an endeavor
could censor it at any time that it begins to challenge their dominance.
The NBC-Twitter case illustrates this perfectly:  You can say anything you
want over social media owned by a for-profit firm, as long as this “speech”
doesn’t conflict with the profit motive of the firm.  In this sense,
technology changes some things but not others.  Alexis de
Tocqueville<http://en.wikipedia.org/wiki/Alexis_de_Tocqueville>’s
dictum during his visit to the United States in the 1800s still applies:
“In America… within barriers, an author may write what he pleases, but woe
to him if he goes beyond them.”

A second approach would be for a tech entrepreneur wanting to make a
difference to be extremely disciplined at running his or her for-profit
firm.  For example, the tech entrepreneur could make sure that s/he only
accepts investment money from those who share his or her values and/or
maintain a majority share in the company.  (S/he would also most likely
have to give up on any dreams of ever going public.)  Under such a
scenario, the tech entrepreneur could choose not to maximize profits and
not feel any external pressure to cave in to profit-maximization.  But for
a tech entrepreneur founding a risky venture, to choose what investment
money to accept increases the new venture’s risk significantly.  Moreover,
there is no guarantee for users, however, that the tech entrepreneur or the
shareholders won’t change their minds and decide to change the direction of
the firm at any time.  Remember, the legal provisions afforded to
for-profit organizations means that whoever owns and controls the firm
decides how the firm is to be run.

Confronted with this situation, some entrepreneurs have turned to the
non-profit model.  But here lies yet another myth:  Both entrepreneurs and
users have the misconception that non-profit implies “for the public good”
or even “communal ownership.”  It does not.  A non-profit status for the
most part is the same as the for-profit status.  Non-profit organizations
can sell products or services.  They can accept donations but so can
for-profit firms.  Diaspora, and many of the other Kickstarter funded
startups that are set up as for-profit corporations, is a case in point.
The only difference between a for-profit and a non-profit organization is
that the latter must spend or donate all of its profits at the end of the
year.  But non-profit organizations suffer from the same shortfall of
for-profit organizations:  The firm is owned and controlled by a small
group, usually its founders, upon which rests the ultimate authority about
how to run their firms.  In fact, most non-profit organizations don’t even
have federal tax exempt status, as that status is notoriously difficult to
obtain, meaning that most are run as private foundations that are almost
identical to for-profit firms.  With non-profit organizations, once again
we find that the ideals of disruptive innovation, individual empowerment,
social change, openness, and transparency are only enacted to the extent
that the owners of those firms want those values enacted.  Should those
owners change their minds or leave their firms altogether (and other, less
idealistic individuals take their place), the ideals could be gone with
them.  This is why institutions such as Mozilla, Craig’s List, and
Wikipedia are so rare in the non-profit world.

So is there any solution to this conundrum?  Perhaps there is one.
The cooperative
model <http://en.wikipedia.org/wiki/Cooperative> has rarely been tested for
technology startups in the United States but has yielded results in other
countries, such as Canada, Finland, and Sweden.  A cooperative is a legal
entity owned and democratically controlled by its members, who are often
the producers, consumers, and/or employees of its products or services.
For our purposes, the cooperative model would allow social-media users to
own the firm that makes their tools and, at the same time, jointly share in
its profits.

Thus, the cooperative status, if organized properly, looks like the best
alternative for those who want social media firms that are accountable to
their users.  Rather than have to beg for-profit social-media firms like
Facebook and Twitter to adopt and respect the right to free speech, the right
to be forgotten<http://www.stanfordlawreview.org/online/privacy-paradox/right-to-be-forgotten>,
and the right to privacy, and the right not to be arbitrarily sanctioned
for exercising these rights, among others I often hear mentioned, users
could run their own social-media firms and choose what values they want
adopted.  For example, deeply religious users may choose to design a
cooperative that censors for explicit content, whereas more Libertarian
ones may design one that protects civil liberties at all costs.  [Of
course, this still wouldn’t solve how to overcome Facebook’s and Twitter’s
network effects and how to maintain interconnectivity (or federation) with
other social media sites, which are issues I’ve discussed in greater length
in previous posts<http://liberationtech.tumblr.com/post/13377461578/how-the-next-generation-diaspora-should-be-built-to>
and
that are beyond the scope of the present one.]

I find it surprising that for a place as innovative as Silicon Valley no
one has tried to adopt this legal template.  [One exception is Calyx
Institute founder Nick
Merrill<http://news.cnet.com/8301-31921_3-57412225-281/this-internet-provider-pledges-to-put-your-privacy-first-always/>,
who is grappling with the same problems outlined in this post.]  But then
again, it’s not so surprising, since Silicon Valley is a place that
produces routine innovation.  In other words, while entrepreneurs will
innovate with the product or service offering, they will rarely question
the for-profit legal model that is offered as a template to them.  Silicon
Valley entrepreneurs — especially, social-media entrepreneurs — are
typically programmers/hackers.  They’ll take the time to innovate on the
technical problem at hand but won’t bother with questioning Silicon
Valley’s routines or taken-for-granted assumptions, such as its
human-resources or organizing models.  I don’t blame them:  It is expensive
and time-consuming to hire a lawyer to get innovative about legal status.
Moreover, lawyers are not popularly known as being innovators.  And the
programmer is trying to build the most pragmatic solution for the task at
hand, so it is tempting just to assume whatever is the most
widely-accepted legal status.  Unfortunately for users, as a result, they
end up trapped in “Groundhog Day.”

*About the Author: **Yosem Eduardo Companys is a PhD student in engineering
at Stanford University and a coordinator for the Program on Liberation
Technology at Stanford University.  Yosem also worked as adviser, mentor,
and consiglieri to the Diaspora* founders and as President & CEO of
Diaspora*. He may be reached at companys[at]stanford[dot]edu.*
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