MIT professor needs to overtake ‘The Hype Machine’ that powers social media – TechCrunch
More than 3.6 Billions of people use social media, and their runaway success has brought the industry to a crossroads. There is currently heated debate in Washington and Brussels about the future of antitrust regulation for this market, whether platform operators should filter certain content (and if so, which content) and how the market can be opened up to new innovators.
To find my way through this thicket of interesting questions, I spoke to Sinan Aral, professor of management at the MIT Sloan School of Management, who also leads the MIT initiative on the digital economy. He has analyzed the social media market for years and has been directly involved in its development as the chief scientist of SocialAmp and Humin and as a founding partner of Manifest Capital.
This fall, he published his latest book, The Hype Machine, exploring what’s next for social media giants. In our discussion we talked about today’s market landscape, what responsibility companies and users have among each other and what comes next when the industry continues to develop.
This interview has been edited and compressed for the sake of clarity.
TechCrunch: Why don’t we start with how the book was made and how you got interested in this digital media topic and how it affects our decision-making?
Sinan Aral: I started researching social media four years before Mark Zuckerberg founded Facebook. I’ve worked with all the major social media platforms for the past 20 years: Facebook, Twitter, Snapchat, WeChat, Yahoo and the rest. I’ve published a number of very extensive studies and am also an entrepreneur. So I have a position as a practitioner, but also as a longstanding academic director in this area.
We really have a full blown social media crisis on our hands, as evident when you turn on the TV on a given day.
The reason I wrote “The Hype Machine” is because it has been coming to a head for many years. We really have a full blown social media crisis on our hands, as evident when you turn on the TV on a given day.
My book starts where the documentary “The Social Dilemma” and Shoshana Zuboff’s “The Age of Surveillance Capitalism” leave off. In other words, what specifically can we do to solve the social media crisis we are in? The book argues that we need to stop theorizing about how social media works and we need to stop debating whether or not social media is good or bad. The answer is yes.
The book walks through the basics of how social media works. So there is a chapter on Neuroscience and Social Media, and Business and Social Media, which eventually includes the solutions in the book, which cover everything from antitrust and competition to federal data protection laws. How do we secure our elections and our democracy? What are we doing about Section 230 of the Communications Decency Act? How do we balance freedom of speech and hate speech? How do we deal with misinformation and false news?
I think for a lot of us in tech we’re a bit stuck. On the one hand, these technologies have created tremendous wealth in the tech industry, but they have also caused a great number of damage. What do we do next?
First, let me say that the general framework of the solution is what I call the four levers: money, code, standards and laws.
Money are the business models that create incentives for the behavior of advertisers on the platforms and users. We use code to design the platforms and the algorithms underlying the platforms, which I will discuss in detail. Standards are how we adopt, apply and use the technology. And of course laws are regulation.
In terms of solutions, I think the ticket to solving the social media crisis creates competition in the social media economy. Uncompetitive platforms have neither an incentive to turn away from the attention economy and its committed business models, nor a real incentive to eliminate its negative external effects in our information ecosystem, be it hate speech or misinformation or manipulation.
Now when I say competition the first thing everyone thinks is, “Oh, you mean break up Facebook.” But the point I make in the book – and I take a very clear stance on it – is that breaking Facebook in this economy doesn’t solve the problem. This economy runs on network effects. The value of these platforms depends on the number of users on the platform. Network economies tend to be concentrated and monopoly.
So if you break up Facebook, it will lead the next Facebook-like company into dominance. What we really need is structural reform of the social media economy that includes laws on social network portability, data portability and interoperability.
Let me push that back a little. Terms like “data portability” always sound good as a solution, but have we ever used this tool effectively to open a market?
This is not the first time we have done this. During the merger of AOL and Time Warner, we forced AOL’s AIM product to become interoperable with Yahoo Messenger and MSN Messenger. A year later, the market share rose from 65% to 59% to 50%, and three years later the entire market was sold to new entrants.
Another good analogy is number portability in the cellular market. It used to be that you couldn’t take your cell phone number with you when you switched from one cellular operator to another, and then we stipulated by law that you had to take your number with you. It was like a social network back then because all of your friends knew they were calling you at that number.
Research has shown that the portability of numbers over the years and years after its introduction in Europe created a quarterly consumer surplus of around $ 880 million and created a lot of competition. We should have something very similar on social networks in terms of social network portability and data portability so that we can create competition.
If you dissolve Facebook after such structural reforms in the market, that’s another question, but breaking Facebook without structural reforms in the market is like a band-aid against a tumor. It won’t fix the underlying lack of competition that the social media economy has.
“The Hype Machine” describes how we could do that and suggests that there might be a stack of commodity messaging formats that would need to be interoperable. In addition, you can use unique messaging formats for each platform. But things like texts, short videos, stories that either persist or disappear, things like that should have a legally required level of interoperability. The ticket to solving the social media crisis creates competition.