--:-- Sean Rameswaram: Welcome to Today Explained. I'm Sean Rameswaram.
--:-- Casey Newton: Thanks for having me on the show.
--:-- Sean Rameswaram: Today, we're talking about Facebook's latest scandal. Casey Newton, you cover social networks and how they're futzing about with our democracy for The Verge. Is Facebook okay?
--:-- Casey Newton: Facebook has been in two years of what I like to call perma crisis. It's kind of been lurching from one major problem to the next. Russia. Cambridge Analytica. Hate speech. 2016 election. And it seems to have stepped in it yet again.
--:-- Sean Rameswaram: This is like the post-Cambridge Analytica scandal. So it all starts in January 2018. Good evening. And a very cordial welcome to the 48th annual meeting of the World Economic Forum.
--:-- Casey Newton: That's during the World Economic Forum in Davos when all of the fancy people go to talk about the future of the world. Yeah. And at Davos this year, George Soros, the wealthy financier, philanthropist, stands up on a stage and he says...
--:-- Sean Rameswaram: The internet monopolies have neither the will nor the inclination to protect society against the consequences of their action. That turns them into a menace. Facebook and Google are a menace to society.
--:-- Casey Newton: This lands like a bombshell inside of Facebook. They had not previously known that George Soros thought they were a menace. A few days after the conference, Sheryl Sandberg, who's the chief operating officer of Facebook, sends an email to her team, and she says, We need to look into this and we need to see what's going on.
--:-- Sean Rameswaram: And we know that because the New York Times reported it just a few days ago. It's more fallout from what I've been calling the definer scandal.
--:-- Casey Newton: So in the wake of this Soros menace to society speech, Facebook decides it needs to start paying much closer attention to Soros. And in fact, Soros did provide funding for a couple of nonprofit organizations that were challenging Facebook to do better across a variety of civic issues.
--:-- Sean Rameswaram: Soros has a history of being an activist investor. He has shorted company stocks before and made a lot of money doing so. He's known for being quite good at it.
--:-- Casey Newton: So the immediate concern inside of Facebook was that Soros might be becoming an activist investor in Facebook, and they wanted to look into whether he had taken a position in the company, and if so, what that might be.
--:-- Sean Rameswaram: And so Facebook hired a PR agency called Definers. It's a Republican PR agency operating out of Washington. And one of its specialties is what's often called opposition research. Oppo research. Just digging up dirt on people who may wish you harm.
--:-- Casey Newton: Now, they also did normal PR stuff. They pulled clips of what people like me were writing about Facebook, or they would email me when Facebook was launching some new feature. But they were also going out to reporters and pitching stories that not just made Facebook look good, but that might have made its enemies look bad.
--:-- Sean Rameswaram: And one of the things that they did was to encourage people to look into George Soros' financial backing of some of Facebook's critics.
--:-- Casey Newton: Now, from Facebook's perspective, there's nothing scandalous about this. Companies all the time will ask you to consider the financial interests of their critics. But with George Soros, it was a much more sensitive subject.
--:-- Sean Rameswaram: And the reason is because George Soros is the subject of absolutely crazy anti-Semitic conspiracy theories. He's Jewish, he's a Holocaust survivor, and you don't have to stumble far into a dark corner of the internet to find people saying absolutely crazy things about George Soros ruling the world.
--:-- Casey Newton: And so the reason that the definer scandal became a scandal was because people accused Facebook of trying to use anti-Semitic conspiracy theories to take down one of their biggest critics.
--:-- Sean Rameswaram: Okay, where does this definers scandal go from there?
--:-- Casey Newton: So there was another aspect of this scandal that did and didn't involve Soros, and that was something called NTK. NTK is a website that writes stories, kind of conservative-leaning, partisan clickbait. It was housed in the same office as Definers.
--:-- Sean Rameswaram: And NBC News talked to a former employee who said that Definers viewed NTK as, quote, their in-house fake news agency.
--:-- Casey Newton: NTK would go out, would write really scurrilous stuff. It would get picked up by Breitbart. And then from there, it was all the way into the conservative media ecosystem.
--:-- Sean Rameswaram: And so when Definers had an angle it wanted to advance, it had this willing partner sitting literally in its office.
--:-- Casey Newton: So why is this ironic? Well, ever since the 2016 election, Facebook has been saying it's going to clean up misinformation on its platform, right? It's going to become a better home for accurate news.
--:-- Sean Rameswaram: And what the definer scandal suggested was that one of the PR agencies on its payroll was actually creating misinformation of its own.
--:-- Casey Newton: Is this like par for the course? I mean, you don't just cover Facebook, you cover all sorts of Silicon Valley goings on. Is this kind of just how they do out there? Or is this especially ill-advised?
--:-- Sean Rameswaram: Well, it's especially ill-advised because when people see you playing these kind of cynical, paranoid games with reporters, they get kind of cynical and paranoid about what you're doing too, right?
--:-- Casey Newton: We all want to believe that if companies are just honest with us and straightforward about what they're doing, then they don't need to hire agencies to go flood Breitbart with stories flattering to them and critical of their enemies.
--:-- Sean Rameswaram: Now, is this the way that things gets done in Washington, D.C.? Absolutely. But Silicon Valley is a happy, optimistic, sunshiny place. It wants to believe that it's changing the world for the better.
--:-- Casey Newton: And so these kinds of tactics just don't look great. Right. And they really kind of clash with Facebook's self-image as this, you know, happy place of positive connections.
--:-- Sean Rameswaram: Yeah. And in the meantime, Facebook's been running this like propaganda campaign about how they're getting back to the essence of Facebook. Friends, right? We came here for the friends.
--:-- Casey Newton: And we got to know the friends of our friends. Than our old friends from middle school, our mom. Right. Yeah, Facebook is about your friends, and it's also about taking down your enemies.
--:-- Sean Rameswaram: But, you know, for those of us who've been covering Facebook for a while, though, these kinds of tactics weren't totally unfamiliar.
--:-- Casey Newton: In 2011, Facebook hired another PR firm called Burson Marsteller to try to smear Google and to try to get USA Today and some other publications to write about Google's privacy policies.
--:-- Sean Rameswaram: And that, of course, was coming at a time when Facebook's own privacy policies were getting a lot of attention.
--:-- Casey Newton: And this was a mini scandal at the time, although, of course, in 2011, Facebook was much smaller.
--:-- Sean Rameswaram: I remember when the news came out, and feeling really, really icky about it because Burson Marsteller was pitching me on a bunch of other things at the time.
--:-- Casey Newton: And I didn't realize that they did that kind of dark arts work. And because there was such blowback, I assumed that this would be the last time we would see Facebook do something like this.
--:-- Sean Rameswaram: And in truth, it just took them seven years.
--:-- Casey Newton: The funny thing about all these Facebook scandals, Facebook's doing better than ever. So what do you do if you want to take a stand? And why doesn't anyone do it? Why You Can't Quit Facebook. That's next on Today Explained.
--:-- Sean Rameswaram: Remember that podcast, Missing Richard Simmons? It was a big hit about you know Richard Simmons disappearing off the face of the planet. How about Y2K? Remember that That whole Armageddon that never happened?
--:-- Casey Newton: Well, the team behind Missing Richard Simmons now has a podcast about Y2K. It's called Headlong Surviving Y2K.
--:-- Sean Rameswaram: It's all about the hysteria at the turn of the century when the world was bracing for disaster. But you know, of course, nothing really happened.
--:-- Casey Newton: From an evangelical family preparing for the apocalypse, to the coders who fixed the Millennium Bug, Surviving Y2K follows their stories through New Year's Eve 1999 and reveals what happened at midnight.
--:-- Sean Rameswaram: I remember I was sitting at my neighbor's house playing Nintendo 64, playing Mario Kart, I was Wario, I was in first, and I was really hoping I would win, but I was worried that at the stroke of midnight the whole thing would just turn off, but I won.
--:-- Casey Newton: Anyway, you can binge the entire season of Headlong Surviving Y2K now. Find it wherever you find your podcasts.
--:-- Sean Rameswaram: Casey, where does this Facebook scandal, hiring a PR firm with ties to a fake news agency to run a campaign against an already vilified Jewish person, where does that fit in with all of the other recent Facebook scandals?
--:-- Casey Newton: I feel like people aren't even mad at Twitter and Uber anymore. It's all Facebook. Look, I think we are in the middle of a huge cultural reckoning over social media.
--:-- Sean Rameswaram: I think it started right after the 2016 election. I think part of it was that Trump got elected and there was a suggestion that people on Facebook were using it to manipulate our emotions.
--:-- Casey Newton: I think that made a lot of us really uncomfortable. But there are a lot of other things about Facebook that make people uncomfortable too.
--:-- Sean Rameswaram: People are uncomfortable with how much time they're spending on the platform. People are reporting that the more they use it, the more lonely and depressed they feel.
--:-- Casey Newton: And so you have all of these strands kind of converging together. You also have a company that has gotten absolutely enormous, has over 2.2 billion users.
--:-- Sean Rameswaram: And in some of the countries where it's operated, it has been found to spread hate speech and incite violence and really destabilize democracies.
--:-- Casey Newton: Months after Mark Zuckerberg said he was working on the problem, Reuters today revealed it's found more than a thousand Burmese posts spreading hate.
--:-- Sean Rameswaram: In the West, it's horrible. Over there, it can be fatal.
--:-- Casey Newton: Facebook has done its best to hire a bunch of janitors and go clean up the mess, but it's operating at a scale where the messes are breaking out faster than it can clean them up.
--:-- Sean Rameswaram: So is it still an incredibly successful company? Yes, it's making more money than ever.
--:-- Casey Newton: And we shouldn't lose sight of that. It generated $13.7 billion in revenue during the last quarter compared to $10 billion during the same quarter a year ago.
--:-- Sean Rameswaram: But at the same time, the company's reputation is in tatters.
--:-- Casey Newton: And when you think about the services on the internet that you lose, my guess is of the biggest ones, you would probably tell me that you would find Facebook the easiest to leave.
--:-- Sean Rameswaram: You would give up Facebook before you would give up Google, before you would give up Apple, before you would give up Amazon.
--:-- Casey Newton: And so to me, that's the real danger for Facebook here. It's not, you know, that one scandal is the end of the company.
--:-- Sean Rameswaram: It's that bit by bit, more and more people just have reasons to say, you know what, the hell with it.
--:-- Casey Newton: And the less time they spend on Facebook, the less valuable it is to all of their friends.
--:-- Sean Rameswaram: And you start to see this reverse network effect thing happen, where people just start walking away from the platform, and it just kind of ossifies.
--:-- Casey Newton: At Facebook size, that is a process that'll take years, if not more than a decade.
--:-- Sean Rameswaram: But I do feel like you're starting to see some cracks in the surface there.
--:-- Casey Newton: A thing I hear over and over though is that like, you know, I don't use Facebook anymore. I just like, I just hang out on Instagram, which I always just roll my eyes at.
--:-- Sean Rameswaram: Like, bro, do you have any idea who owns Instagram? You know, we actually surveyed people on this and the answer is that mostly they don't.
--:-- Casey Newton: Because Facebook's smart, they've been very good at like keeping their brand off of Instagram right. They don't want you to know they have been.
--:-- Sean Rameswaram: Let's remember something else that happened this year which is that Instagram's co-founders Kevin Systrom and Mike Krieger quit.
--:-- Casey Newton: And so Facebook now views Instagram as basically just another team.
--:-- Sean Rameswaram: I think it's actually impossible to overstate the degree to which Instagram is the future of Facebook.
--:-- Casey Newton: And I think that over time you will see Instagram transform into Facebook. Like, look at the features they're adding. See if they remind you of things that you once saw on Facebook.
--:-- Sean Rameswaram: So, to truly walk away from Facebook, do you have to walk away from Facebook and Instagram and WhatsApp?
--:-- Casey Newton: Yes, and also Oculus and Portal and maybe a couple of other things too. It's a big company.
--:-- Sean Rameswaram: But, you know, Sean, if you want my hot take for what 2019 is all about. 2019 is going to be the year of the group chat.
--:-- Casey Newton: Like, I just believe this in my heart. I think we're all going to come back to just texting like our five friends, our six friends.
--:-- Sean Rameswaram: We're going to laugh. We're going to miss the drama of keeping up with the Joneses and trying to look good in our swimsuits.
--:-- Casey Newton: And we're just going to text.
--:-- Sean Rameswaram: I've never looked good in my swimsuit. I don't need it.
--:-- Casey Newton: Same here, brother.
--:-- Sean Rameswaram: Do you still have a Facebook account, Casey?
--:-- Casey Newton: I do. I do still have a Facebook account.
--:-- Sean Rameswaram: And I think honestly, Even if I didn't cover the company, I think I would. For me, Facebook is a phone book and an events manager, right?
--:-- Casey Newton: When I need to get in touch with somebody who I haven't talked to in a long time, I know I can look up their name and I'll find them right away.
--:-- Sean Rameswaram: If I want to invite folks to my improv show on Friday night, I'm going to go ahead and create a Facebook event.
--:-- Casey Newton: I think all of that's fine. Because Facebook is so vast, we have a hard time talking about it because there are just so many different layers to it, right?
--:-- Sean Rameswaram: It's a place where many, many things are true at the same time.
--:-- Casey Newton: And honestly, I think that's one of Facebook's biggest challenges.
--:-- Sean Rameswaram: But when we draw back and just use Facebook to get in touch with that one cousin in New Zealand or for like to RSVP to a friend's event and nothing more, that still helps Facebook, right?
--:-- Casey Newton: They're still making some coin off of that. They're still tracking your movement, tracking your gestures, and that's serving this big behemoth that keeps tripping on its shoelaces, right?
--:-- Sean Rameswaram: So they make the vast majority of their money from the news feed on mobile devices.
--:-- Casey Newton: So if you open up Facebook on your phone, you start scrolling, you're starting to see ads right away.
--:-- Sean Rameswaram: If you stop using the news feed, you will hurt Facebook's revenue, right?
--:-- Casey Newton: If you use Instagram and you don't scroll through the feed, you will hurt Instagram's revenue.
--:-- Sean Rameswaram: If you maybe post your own stories on Instagram, but never look at anyone else's, you will hurt Instagram and you'll hurt Facebook.
--:-- Casey Newton: So the way that this company makes money is by showing you ads in the feed.
--:-- Sean Rameswaram: I just wonder if Facebook's really accountable in all of this.
--:-- Casey Newton: Mark had to go before Congress. They released these apology ads, but they're still making so much money and they're growing.
--:-- Sean Rameswaram: Is there anything to really make them want to do better?
--:-- Casey Newton: I think at the end of the day, we're talking about some really wealthy people, right?
--:-- Sean Rameswaram: And so, you know, we should acknowledge that.
--:-- Casey Newton: At the same time, particularly for the top executives, this is their legacy now, right?
--:-- Sean Rameswaram: They either fix this or they go down in history as goats.
--:-- Casey Newton: When you talk to people in Facebook even at a much lower level, you get a sense of the the worry and the fear there that it's not going to come together right.
--:-- Sean Rameswaram: There is a there is a sense that they have been like in a bunker taking shelves for a long time.
--:-- Casey Newton: Uh and by the way, many of them are quick to say but you know what we deserve some of it or even we deserve a lot of it right.
--:-- Sean Rameswaram: There is an awareness inside the company that they have made a lot of mistakes.
--:-- Casey Newton: I've even talked to people who have joined the company since shortly before or even during Cambridge Analytica.
--:-- Sean Rameswaram: And part of their motivation was, we think we can fix this or we want to fix this. We want to be part of a solution here.
--:-- Casey Newton: There is still a lot of idealism inside that company.
--:-- Sean Rameswaram: Have they paid for it? Like you said, they're still making phenomenal money.
--:-- Casey Newton: But, you know, are people a little bit more reluctant to say where they work at a cocktail party now?
--:-- Sean Rameswaram: I think you probably are starting to see some of that happen, honestly.
--:-- Casey Newton: So it's a very, very minor consequence in the grand scheme of things.
--:-- Sean Rameswaram: But it hints at something larger.
--:-- Casey Newton: And if the past two years have been any indication, we have not seen the last Facebook scandal.
--:-- Sean Rameswaram: Casey Newton reports on social media for The Verge. I'm Sean Rameswaram. This is Today Explained. You cannot find us on Facebook, but we are on Twitter at today underscore explained.
