Senator Josh Hawley delivered a provocative speech yesterday raising the stakes of the debates over big tech and expanding the scope of the discussion beyond privacy and free speech, questioning whether social media actually provides any real value to the American economy and American society. He likened the social media business model – “attention arbitrage” – to financial arbitrage, accused social media investors of investing in users’ addiction to social platforms, and raised concerns that the industry draws talent and capital from productive sectors while driving depression among users.
Selected Excerpts:
“One of the most difficult things about acting in this area is the fear that any significant change in this space, any significant adjustment to the rules of the road, whether it be privacy requirements or content requirements, might end up stifling Silicon Valley, which we are accustomed to regarding — certainly we’re told — is the great Crown Jewel of the American economy. But is it?”
“Is this really the best that our best minds have to offer?”
“The evidence is more and more strongly suggesting that there is something that is deeply troubling, maybe even deeply wrong, with the entire social media economy, that it does not represent a source of strength for America’s tomorrow but is rather a source of peril.
“Consider for a moment the basic business model of the dominant social media platforms. You’re familiar with them. You might think of it as akin to financial arbitrage. Maybe we’ll call it attention arbitrage. Users’ attention is bought by the tech giants and then immediately sold to advertisers, for the highest price of course.”
“Now, arbitrage opportunities, as those of you familiar with markets know, are supposed to close, right? The market eventually determines something is off. How is it that this attention arbitrage in the social media market is preserved and renewed over and over again? And that’s where things get really scary, because it’s preserved by hijacking users’ neural circuitry to prevent rational decision making about what to click and how to spend time. Or, just to simplify that a little bit, it’s preserved through addiction. Social media only works as a business model if it consumes users’ time and attention day after day after day. It needs to replace the various activities we did perfectly well without social media, for the entire known history of the human race with itself. It needs to replace those activities with time spent on social media. So that addiction is actually the point. That’s what social media shareholders are investing in. They are investing in the addiction of users.”
“And I think that social media users actually understand this intuitively even if they would put it differently.You don’t log on to Facebook to connect with a friend… You log on to Facebook to be on Facebook. The attention arbitrage market itself becomes the destination.”
“Day after day seems brings fresh data, fresh reports, fresh studies detailing the significant social consequences of social media use in such large quantities. Today’s Washington Post, for instance, I don’t know if you’ve seen it, has a chilling story about the rash of teenage suicide especially in younger teenagers. . . It’s not just an uptick, it’s a surge in teenage suicide, particularly among younger teenagers, [that] coincides eerily with the introduction of the iPhone particularly in its later models where the social media platforms and the social media apps were readily available and optimized for use. . . Many studies now suggest that the time spent on social media and on social media platforms at least correlates to some degree with increased depression, loneliness. All of these social consequences, these are significant, you might even say that they are severe, and the question we need to be asking is what is the role of social media in driving them, in encouraging them, in promoting them, and is this really something that is good for our society in the long term, or for our economy for that matter?”
“This is what some of our brightest minds have been doing with their time for years now. Designing these platforms, designing apps that integrate with them. I mean, what else might they have been doing? Just think about it. What else might these bright minds, these talented women and men have been doing that might’ve been truly productive for the American economy and for American consumers? We’ve encouraged an entire generation of our bright engineers in a discipline that provides a little or no productive value to the United States economy, sucking them from communities that need their talents out to outposts on the coasts, encouraging them to forget the problems of people they left behind, and of course capital then follows them to those places. These are economic developments that rewards some, there’s no doubt about that, but attention arbitrage like financial arbitrage is no foundation for long-term growth.”
“An economy that does not value the things that matter produces a society that is shaped in its own image.”