Facebook has joined Amazon in a show of alarm at the sudden rise of antitrust hawk Lina Khan to the position of FTC Chair by asking that she be recused from all decisions relating to the company. The argument, more or less identical to Amazon’s, is that before her appointment, Khan was too outspoken about her professional opinion that companies like these are in violation of antitrust rules.
In a letter filed with the FTC and obtained by the WSJ, which the agency could not provide and declined to comment on, Facebook explained that Khan’s last few years of academic publications and articles in other media amount to cause for recusal from decisions about the company. (I have asked Facebook for a copy of the petition and will update this post if I receive it.)
“Chair Khan has consistently made public statements not only accusing Facebook of conduct that merits disapproval but specifically expressing her belief that the conduct meets the elements of an antitrust offense. When a new commissioner has already drawn factual and legal conclusions and deemed the target a lawbreaker, due process requires that individual to recuse herself,” reads the petition.
Neither the FTC nor Khan in any other capacity have responded to the recusal requests from Facebook and Amazon. She did note in her nomination proceeding that recusal requests like these do happen, and are resolved on a case-by-case basis (unlike automatic recusals for things like financial or personal interest). Perhaps even now she is meeting with the ethics experts at the agency.
Khan has, however, certainly made her policy positions known in numerous articles and papers, many of which have argued that antitrust regulators have been highly conservative in their interpretation and deployment of their legal powers, and equally permissive in their oversight of the current crop of enormous tech companies. Things like acquiring competitors, artificially lowering prices to pressure a market, or misrepresenting the collection and use of customer data have gone either unchallenged or minimally punished.
In particular she acted as counsel for the House’s Investigation of Competition in Digital Markets, an antitrust report issued last fall. Amazon and Facebook lean on cases from 1966 and 1970 where an FTC Commissioner was recused for “prejudgment” of a case during a Congressional investigation in which he participated. It’s a promising hook to hang a case on to be sure, but the circumstances are by no means equivalent. I’m not a lawyer, but it seems to me that no case or even specific allegations have been prejudged, only the general idea that Facebook, Apple, Google, and Amazon all either have monopolies or otherwise possess market power. (They didn’t care much when the report was issued.)
The main finding of the House report, in fact, was arguably that there could be no legal case because existing laws and regulations are insufficient. Certainly Khan has shouted this from the rooftops for some years now — but the conclusion is a legislative matter, not an FTC one. It would be mighty difficult for Khan to have prejudged an antitrust case predicated on laws that haven’t yet been written.
Khan’s FTC has suffered an early setback on her watch though not of her making in the dismissal of some complaints in the agency’s current antitrust case against Facebook. It was for lack of evidence that the company exerts monopoly control over social media that the judge told the FTC to come back and try again. Perhaps Khan intends to remedy that with a supplemented filing, or perhaps she will take the loss and muster her forces for another go in a year or two — but either way it is probably best to resolve the question of her alleged “prejudgment” before that decision is announced. (The FTC declined to speculate as to whether the recusal request would affect the current proceedings.)
But the agency also has explicit backing from the White House in the form of President Biden’s request that it prioritize “dominant internet platforms, with particular attention to the acquisition of nascent competitors, serial mergers, the accumulation of data, competition by ‘free’ products, and the effect on user privacy.” So Khan probably isn’t feeling the sting of the aforementioned legal challenge.
The petitions filed by Amazon and Facebook have near-zero risk for the companies and an outside chance at provoking a recusal, so it makes sense strategically to file them. They also provide breadcrumbs later for their inevitable objections to the FTC’s (under Khan, equally inevitable) allegations of monopolistic practices. The legal repercussions are hard to predict but it is usually better to have a complaint on the table already rather than bring it out late in the process.
Given Chair Khan’s position that the FTC itself needs to be overhauled and empowered in order to bring actions like this against companies like Facebook, it seems clear that all these are merely the opening gambits in a long, long game.
POV: Facebook’s Change to Meta Blurs Lines Even Further
COM’s Michelle Amazeen worries if people will know the difference between real-world and virtual experiences
When Facebook announced it was changing its name to Meta in October, the 2008 Pixar movie WALL-E was the first thing that came to my mind. The sci-fi movie is about a robot left on an uninhabitable Earth to clean up the garbage left behind by humans. Rampant consumerism and corporate greed have left Earth a wasteland, and humans have been evacuated to outer space. In this same way, I envision Facebook abandoning the real world for the virtual “metaverse”—shared online environments where people can interact. They leave behind unimaginable quantities of disinformation, amplified by their algorithms, along with harassment, hate speech, and angry partisans.
To move beyond my initial reaction and gain more insight into the implications of Facebook’s name change (and strategic plans) from a communication research perspective, I turned to two research fellows who study emerging media within the Communication Research Center (CRC) at Boston University’s College of Communication (COM).
Media psychologist James Cummings, a COM assistant professor of emerging media studies, indicates that a metaverse—if successful—would produce new issues in information processing and would place a new emphasis on theories of interpersonal communication—rather than just mass communication. As I feared, he also says it has the potential to augment existing media effects of concern related to social networking, namely misinformation, persuasion, addiction, and distraction.
First, Cummings explains there would be major implications for how billions of people select, process, and are influenced by media content. To be successful, the metaverse platforms will need to transform current modes of information processing and digital communication interactions into much more immersive, cognitively absorbing experiences.
“For instance,” he says, “the mainstreaming of consumer-facing immersive ‘virtual reality’ [VR]—which typically places high demands on users’ processing—will be coming in an age of media multitasking. Interfaces will need to figure out how to immerse users while still permitting them to access different information streams.”
Similarly, he says, mainstreaming “augmented reality” (AR) experiences will also mean requiring users to skillfully juggle attentional demands. People will suddenly be forced to multitask between virtual and real-world stimuli. These are common practices for hobbyists, but may present more challenges for a broader population of users.
Thus, Cummings suggests, if the metaverse is the ecosystem of devices and experiences that Facebook CEO Mark Zuckerberg envisions, users will be switching back and forth between different types of immersive experiences and stimuli, from reality to augmented reality to virtual reality. This scenario may present some new and interesting psychological experiences, in the effects of in-person (e.g., chatting with a friend in the same room), mediated (e.g., reading a news alert on your phone), and augmented messages (e.g., a holographic personal assistant)—all interdependent and blurring together.
Second, Cummings expects that a successful metaverse would mean exchanges with virtual content and people that are much more like face-to-face or interpersonal interactions. “This will require the designers of these platforms to master key elements of media richness theory and factors influencing users’ sense of spatial and social presence,” he explains. For instance, social networking in the metaverse may not only consist of the informational experiences we are used to today (e.g., reading text, watching videos, viewing pictures), but increasingly also perceptual experiences (e.g., a sense of being transported into the story, a feeling of being next to someone on the other side of the globe, noticing nonverbal behaviors).
Finally, Cummings indicates that immersive media are rife for a whole new breed of covert persuasion—such as “native advertising,” or ads that mimic their surroundings—to the extent that users confuse the perceptually plausible with the real. He’s particularly interested in seeing the impact of immersion on users’ perceptions of message authorship and authorial intent.
Indeed, back in the real world, native advertising has been widely adopted to covertly promote not only commercial products, but also political candidates. Candidates are increasingly relying upon “influencers” to post supportive messages on Facebook and other social media without consistently disclosing they are being paid to do so, blurring the critical line between what is real news and what is merely paid advertising. As I have previously addressed here, if the regulatory agencies that oversee advertising—both commercial and political—have not been able to keep up with the digital transformation of our media ecosystem, how will they be able to regulate the metaverse?
For Chris Wells, a COM associate professor of emerging media studies, the promise and pitfalls of the metaverse depend entirely on how Facebook rolls it out. For example, the radical network effects we see from social media rely to some degree on the extremely shortened forms of communication—short texts and short videos—that allow information scanning and selection on a very rapid scale. He indicates the pseudo-social presence of virtual reality would seem to reduce the number of people you can actually interact with. “How will the metaverse be organized and who will you be able to interact with?” Wells asks. Are people going to have coffee virtually? Virtual meetings? He suggests that a site such as Second Life may offer rudimentary evidence of the kinds of interactions that emerge when people engage with strangers in a massive virtual world.
Presumably, Wells suggests, Facebook will still have to provide a great deal of content moderation in the metaverse if people are to have any interactions outside tightly defined networks. “Given Facebook’s track record with their current platform,” he says, “this could well be an unmitigated disaster; but expecting this may lead them to tightly control who interacts with whom and in what ways.”
Second Life notwithstanding, Wells also questions who will actually want to engage in such a virtual space. “My read of the pandemic is that people don’t particularly want to keep sitting in their bedrooms and interacting through Zoom,” he says.
“Will wearing an Oculus headset make that a lot better? I’m not sure,” he adds. “But I also suspect that there are at least a lot of people for whom going to a virtual concert or playing virtual chess with a friend in the park are paltry substitutes for the real thing.”
Wells concedes that there are a lot of millennials and Gen Zs who spend a lot of time in their bedrooms on video games, with digital avatars, and so forth. One possibility, he says, is that the metaverse becomes a niche space for these sorts of folks.
As these metaverse developments take shape, CRC fellows are well positioned to monitor these emerging media uses and perceptual effects. The CRC has multiple Oculus virtual reality headsets that can be paired with our psychophysiological measurement tools. For as technology takes us to new realms, we have a responsibility back in reality to analyze and understand how humans are affected.
Michelle Amazeen is a College of Communication associate professor and director of COM’s Communication Research Center.
“POV” is an opinion page that provides timely commentaries from students, faculty, and staff on a variety of issues: on-campus, local, state, national, or international. Anyone interested in submitting a piece, which should be about 700 words long, should contact John O’Rourke at firstname.lastname@example.org. BU Today reserves the right to reject or edit submissions. The views expressed are solely those of the author and are not intended to represent the views of Boston University.
Facebook’s centralized metaverse a threat to the decentralized ecosystem?
Facebook has been planning its foray into the metaverse for some time now — possibly even several years. But it’s only recently that its ambitious expansion plans have catapulted the concept into mainstream headlines across the globe. Renaming the parent company to Meta was perhaps the biggest, boldest statement of intent the firm could make. Suddenly, major news outlets were awash with explainer articles, while finance websites have been bubbling with excitement about the investment opportunities in this newly emerging sector.
However, within the crypto sphere, the response has been understandably more muted. After all, decentralized versions of the metaverse have been in development around these parts for several years now. Even worse, the tech giants’ cavalier attitude to user privacy and data harvesting has informed many of the most cherished principles in the blockchain and crypto sector.
Nevertheless, metaverse tokens such as Decentraland (MANA) and Sandbox (SAND), enjoyed extensive rallies on the back of the news, and within a few days of Facebook’s announcement, decentralized metaverse project The Sandbox received $93 million in funding from investors, including Softbank.
But now that the dust has settled, do the company-formerly-known-as-Facebook’s plans represent good news for nonfungible token (NFT) and metaverse projects in crypto? Or does Meta have the potential to sink this still-nascent sector?
What is known so far?
Facebook hasn’t released many details about what can be expected from its version of the metaverse. A promotional video featuring the company co-founder and CEO Mark Zuckerberg, himself, along with his metaverse avatar, looked suitably glossy. Even so, it was scant with information about how things will actually work under the hood. However, based on precedent and what is known, some distinctions can be made between what Facebook is likely to be planning and the established decentralized metaverse projects.
Facebook has some form when it comes to questions over whether it will adopt decentralized infrastructure based on its efforts to launch a cryptocurrency. Diem, formerly Libra, is a currency run by a permissioned network of centralized companies. David Marcus, who heads up Diem, has also confirmed that the project, and by extension Facebook, is also considering NFTs integrated with Novi, the Diem-compatible wallet.
Based on all this, it’s fair to say that the Facebook metaverse would have an economy centered around the Diem currency, with NFT-based assets issued on the permissioned Diem network.
Announcing @Meta — the Facebook company’s new name. Meta is helping to build the metaverse, a place where we’ll play and connect in 3D. Welcome to the next chapter of social connection. pic.twitter.com/ywSJPLsCoD
— Meta (@Meta) October 28, 2021
The biggest difference between Facebook’s metaverse, and crypto’s metaverse projects, is that the latter operates on open, permissionless, blockchain architecture. Any developer can come and build a metaverse application on an open blockchain, and any user can acquire their own virtual real estate and engage with virtual assets.
Critically, one of the biggest benefits of a decentralized, open architecture is that users can join and move around barrier-free between different metaverses. Interoperability protocols reduce friction between blockchains, allowing assets, including cryptocurrencies, stablecoins, utility tokens, NFTs, loyalty points, or anything else to be transferable across chains.
So the most crucial question regarding Facebook’s plans is around the extent to which the company plans for its metaverse to be interoperable, and metaverse assets to be fungible with other, non-Facebook issued assets.
From the standpoint of the decentralized metaverse, it doesn’t necessarily sound like great news. After all, Meta’s global user base dwarfs crypto’s. But there’s another way of looking at it, according to Robbie Ferguson, co-founder of Immutable, a layer two platform for NFTs:
“Even if [Meta] decides to pursue a closed ecosystem, it is still a fundamental core admission of the value that digital ownership provides — and the fact that the most valuable battleground of the future will be who owns the infrastructure of digital universes.”
Centralization could be the most limiting factor
Based on the fact that Diem is already a closed system, it seems likely that the Facebook metaverse will also be a closed ecosystem that won’t necessarily allow direct or easy interaction with decentralized metaverses. Such a “walled garden” approach would suit the company’s monopolistic tendencies but limit the potential for growth or Facebook-issued NFTs to attain any real-world value.
Furthermore, as Nick Rose Ntertsas CEO and founder of an NFT marketplace Ethernity Chain pointed out, users are becoming weary of Facebook’s centralized dominance. He added in a conversation with Cointelegraph:
“Amidst [the pandemic-fuelled digital] transition, crypto adoption rose five-fold. At the same time, public opinion polling worldwide shows growing distrust of centralized tech platforms, and more favorable ratings of the very nature of what crypto and blockchain offer in protecting privacy, enabling peer-to-peer transactions, and championing transparency and immutability.”
This point is even more pertinent when considering that the utility of Diem has been preemptively limited by regulators before it has even launched. Regardless of how Diem could eventually be used in a Facebook metaverse, regulators have made it clear that Diem isn’t welcome in the established financial system.
So it seems evident that a closed Facebook metaverse will be limited to the point that it will be a completely different value proposition to what the decentralized metaverse projects are trying to achieve.
Meanwhile, decentralized digital platforms are already building and thriving. Does that mean there’s a risk that blockchain-based platforms could fall prey to the same fate as Instagram and WhatsApp, and get swallowed up as part of a Meta acquisition spree? Sebastien Borget, co-founder and chief operating officer of the Sandbox, believes that decentralized projects can take a different approach:
“Typically, big tech sits on the sidelines while new entrants fight for relevance and market share — and then swoops in to buy one of the strongest players. But that strategy only works if startups sell. So there has to be a different economic incentive, which is exactly why Web 3.0 is so powerful. It aligns the platform and the users to build a platform that stands on its own, where users have ownership over its governance — and ultimate success.”
A metaverse operated by tech giants?
Rather than attempting to dominate, Facebook may decide to integrate with established metaverses, games and crypto financial protocols — a potentially far more disruptive scenario. It could be seriously transformative for the crypto space, given the scale of Facebook’s user base.
Therefore, could there be a scenario where someone can move NFT assets between a Facebook metaverse and a decentralized network of metaverses? Sell Facebook-issued NFT assets on a DEX? Import a $69 billion Beeple to the Facebook metaverse to exhibit in a virtual gallery?
This seems to be an unlikely scenario as it would entail substantial changes in mindset from Facebook. While it would create exponentially more economic opportunity, regulatory concerns, risk assessments, and Facebook’s historical attitude to consuming competitors rather than playing alongside them are likely to be significant blockers.
The most likely outcome seems to be that Facebook will attempt to play with established centralized tech and finance firms to bring value into its metaverse. Microsoft has already announced its own foray into the metaverse, but perhaps not as a direct competitor to what Facebook is attempting to achieve. Microsoft’s metaverse is focused on enhancing the “Teams” experience in comparison to Facebook’s VR-centric approach.
But it seems more plausible that the two firms would offer some kind of integration between their metaverse platforms than either of them would rush to partner with decentralized, open-source competitors. After all, Facebook’s original attempt to launch Libra involved other big tech and finance firms.
Make hay while the sun shines
Just as Libra created a lot of hype, which ultimately became muted by regulators, it seems likely that the development of a Facebook metaverse can play out in the same way with regards to its impact on the cryptocurrency sector.
Regulators will limit Facebook’s ability to get involved with money or finance, and the company isn’t likely to develop a sudden desire for open-source, decentralized, solutions.
However, the one positive boost that Libra brought to crypto was publicity. Ntertsas believes that this, alone, is enough to provide a boost to the decentralized NFT sector, explaining:
“Meta’s plans will enable a surge in utility for NFT issuers and minters. NFTs can then be used as metaverse goods — from wearables to art, to collectibles, and even status symbols — there is an infinite use case and utility to NFTs and what they can become in the ever-growing NFT ecosystem.”
In this respect, there are plenty of opportunities for decentralized metaverse projects to muscle into the limelight with their own offerings and showcase how decentralized solutions are already delivering what Facebook is still developing. Borget urges the community to seize the moment:
“Now is the time for us to double down on building our vision of the open, decentralized and user-driven metaverse. We also have to invest time and money in explaining the benefits of our vision over what the Facebooks of the world have offered thus far.”
Facebook hackers target small business owners to scam money for ads
It took just 15 minutes for hackers to infiltrate Sydney single mum Sarah McTaggart’s Facebook page.
From there, they also took control of the account she uses to run her small business, wiping out 90 percent of the client base she has been building up for the past four years – almost in an instant.
Their target? The PayPal account she uses to buy Facebook ads for her business.
Ms McTaggart is among many small business owners who say they have had their Facebook pages hacked and fraudulent charges made on their PayPal or bank accounts as the scammers buy up ads with their money.
It was last Thursday evening when Ms McTaggart first noticed something was happening with her Facebook account.
“I was just watching TV and I opened up Facebook. I saw I had received and accepted a friend request from some guy in in the US who I didn’t send a friend request to,” Ms McTaggart said.
“Then, about five minutes later, Facebook sent me an email saying my account had been disabled because I had breached community standards,” she said.
The hackers had used a well-known technique, previously reported on by 9news.com.au, which involves changing the profile picture of the account they have hacked to that of a flag associated with the terrorist group ISIS.
The ISIS flag breaches Facebook’s community standards and automatically triggers an alert which causes Facebook to boot the user out of their account.
In another measure designed to keep her out, the hackers also changed Ms McTaggart’s age on her account, making her too young to own a Facebook account.
Ms McTaggart said she immediately took measures to to try report the hack to Facebook and prove her identity and age, but they were unsuccessful.
Next, the hackers took control of her business page.
“I woke up the next morning and I received an email from PayPal saying a payment of $320 had been authorised for Facebook ads,” Ms McTaggart said.
Ms McTaggart had previously used the PayPal account to buy ads for her dreadlock business – Better Off Dread – where she creates and maintains dreadlocks for clients as well as selling accessories.
The mother-of-one said she was devastated to lose access to both her personal and business page.
Her business, which is largely run out of Facebook, was her livelihood, Ms McTaggart said.
“It is so distressing. Close to 90 percent of my new business inquiries come through Facebook,” she said.
“Almost all of my communications with my clients is on Facebook, so disabling is my account has completely cut off my capacity to talk to any of those people.
“I’m booked out with clients until mid-January, and I have no way of confirming appointments with those people. They’ve got no way of cancelling if they are sick.”
Ms McTaggart said she was initially confident she would be able to get access to her accounts back.
“I was thinking of course this will get resolved,” she said.
But, after exhausting all of the suggestions offered by Facebook’s customer service department online, Ms McTaggart said she was left frustrated by Facebook’s lack of accountability, with no number available to call the social media giant directly.
“It just dawned on me gradually that this was quite a complex situation, and there is actually no way to speak to a human at Facebook,” she said.
PayPal had also refused to refund the $320 the hackers spent on ads, she said.
“PayPal won’t refund that as I had an advertising agreement in place with Facebook,” she said.
“And I haven’t been able to communicate with anyone at Facebook to get them to refund it.”
Ms McTaggart’s story is familiar to Ianni Nicolaou, a US real estate agent from Alabama.
Mr Nicolaou had his personal Facebook page and his business page hacked two months ago in August and has been unable to regain access to them both ever since.
“It’s awful. I’m a realtor and it’s absolutely necessary to use the platform these days,” Mr Nicolaou told 9News .com.au.
“I have a business page that I run advertisements through.
“I have invested money for my following, and now it’s gone – out of nowhere.”
After his accounts were hacked, Mr Nicolaou said he had also been hit with about A$1800 in charges made to the bank account linked to his Facebook business page.
“There were charges; charges after charges. They started at about $100 each and then kept getting bigger and bigger,” he said.
“What frustrated me the most is that there is no acknowledgement from Facebook. There is no-one to call at Facebook and say you have got fraudulent charges.
“I have literally tried everything but it is robots you are talking to.
“The way I feel is this is actually fraud. I can’t talk to a human who wants to help me but they are happy to take my money just fine.”
When contacted by 9news.com.au, Meta Australia spokesperson Antonia Sanda said its investigations team was working to restore both Ms McTaggart’s and Mr Nicolaou’s accounts.
“We want to keep suspicious activity off our platform and protect people’s accounts, and are working to restore these accounts to the rightful owners,” she said.
“Online phishing techniques are not unique to Facebook, however we’re making significant investments in technology to protect the security of people’s accounts.
“We strongly encourage people to strengthen their online security by turning on app-based two-factor authentication and alerts for unrecognised logins.”
Tips to stop your Facebook page getting hacked
- Take action and report an account: People can always report an account, an ad, or a post that they feel is suspicious.
- Don’t click on suspicious links: Don’t trust messages demanding money, offering gifts or threatening to delete or ban your account (or verifying your account on Instagram). To help you identify phishing and spam emails, you can view official emails sent from your settings within the app.
- Don’t click on suspicious links from Meta/Facebook/Instagram: If you get a suspicious email or message or see a post claiming to be from Facebook, don’t click any links or attachments. If the link is suspicious, you’ll see the name or URL at the top of the page in red with a red triangle.
- Don’t respond to these messages/ emails: Don’t answer messages asking for your password, social security number, or credit card information.
- Avoid phishing: If you accidentally entered your username or password into a strange link, someone else might be able to log in to your account. Change your password regularly and don’t use the same passwords for everything.
- Get alerts: Turn on two-factor authentication for additional account security.
- Use extra security features: Get alerts about unrecognised logins and turn on two-factor authentication to increase your account security.
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