Read Roger McNamee’s entire transcript from our interview
My conversation with Roger McNamee ran the gamut from the impetus for his new book, Zucked: Waking Up to the Facebook Catastrophe, to his familiarity with Claremont, to his music career. Due to space concerns the COURIER could only use a portion of our 45-minute discussion for the main story. The following is a transcript of that conversation, with some edits and additions for clarity.
Mr. McNamee will be in town Saturday, March 9 at Bridges Hall of Music, 150 E. Fourth St., to speak as part of Claremont Graduate University’s Drucker Day. The free and open to the public talk, focusing on his new book, Zucked: Waking Up to the Facebook Catastrophe, takes place directly after 20th Century Fox Senior Vice President Bettina Sherick’s 9 a.m. keynote address.
Since 1982, Roger McNamee has believed technology to be a force of good. The 62-year-old Silicon Valley titan was not only an early investor in Facebook, but also mentored its founder, Mark Zuckerberg.
He got his start when tech’s primary focus was government. The Space Shuttle was literally the hot new tech vehicle, and the personal computer industry was in its infancy.
He’s retired now, but is the co-founder of the venture capital firm Elevation Partners. Before that he co-founded the private equity firm Silver Lake Partners and headed T. Rowe Price’s Science and Technology Fund.
Has family member who have gone to the Claremont Colleges, two at Pitzer and one at CGU. “So, it’s familiar territory to me and I like it very much. The other thing that’s really fun for me is I began my career in the ending phase of the industrial economy, when Peter Drucker was of course the management guru. So, I read his core set of books as part of my education to go into the real world. So, I suspect there’s a few people in Claremont who go, ‘Peter who?’ but I would not be among them.”
“What’s interesting to me is we’ve transitioned from the industrial economy, which is what his philosophies and his stuff was all about, to a different one where quite candidly we could use Peter Drucker coming back in and helping all the cubs in Silicon Valley understand that, ‘CEO: there are these other stakeholders besides shareholders, and you really need to pay attention to them.’”
It seems to me like it is both the moral choice and a smart business model to protect customers from being influenced by bad actors. Why wouldn’t these corporations see things that way?
“That’s exactly, right, and I would take that even further to say that even if you’re completely amoral, there are really good business arguments for not stealing the last penny from your customers, your suppliers and the communities they live in. The current models are very short sighted.”
He spent a 34-year career being a technology optimist and being part of and at the fringes of all of the really cool things that came out of Silicon Valley since 1982. He was there when tech’s primary focus was government. The Space Shuttle was literally the hot new tech vehicle. The personal computer industry was just getting started.
“I was a little like Zelig, a little like Forrest Gump,” Mr. McNamee said. “I found myself either at or adjacent to many of the most interesting things that happened.”
“From that I developed a sense of optimism about technology for at least the first 30 years of my career was justifiable. This notion that that vision that Steve Jobs had that technology would empower, that in his words, computers would be ‘bicycles for the mind,’ that what was we did in Silicon Valley. And I couldn’t imagine any circumstances where we would stop going that. And so I was for a while blind to the early signs that there was something really wrong with Internet platforms. And when it finally pierced my thick skull, I was like Jimmy Stewart in Rear Window, or like Howard Beale in Network. I was somebody who was surprised by what I saw, didn’t understand it, pulled on the thread and discovered issues that I frankly could not have imagined, and yet were staring me in the face.”
“The epiphany didn’t happen over one day. It was a series of events over the course of 2016 in a variety of areas, but mostly around civil rights and democracy. It exposed in me an ignorance about the inner workings of Facebook that candidly I’m embarrassed about. I could have understood how all that stuff worked, but I was at a point in my career, retired by then, that I didn’t need to know and I didn’t put the time in to understand it. So I got a slower start on figuring it out than had it come earlier in my career.”
“The purpose of the book was not tot tell the entire story but to prepare people for what I think is an issue of huge import that will continue to unfold for years and maybe decades, that requires every person in America—every person in the developed world—to play an active role. Essentially, the absence of regulation has enabled internet platforms to re-architect the economy, and frankly re-architect democracy, without any accountability.”
“I think you can legitimately applaud the economic successes of these companies, and the quality of the products they make, and still be deeply alarmed at the fact that they dominate the public square in every country in which they operate, and that their impact on politics and government in those countries has been uniformly negative. There are lots of examples of people organizing events in the public interest, whether it be the Women’s March or the original Arab Spring or Black Lives Matter, or the March for our Lives, but it turns out that these platforms have been a far more effective tool in the hands of authoritarians, would be authoritarians and troublemakers, and that the damage done has the exact same architecture and algorithms that make these platforms the best advertising tools ever invented.”
“What I look at here is these are unintended consequences of well-intended strategies, but that the problem has been compounded by a culture that denies accountability for the side affects of success. And those side affects have becomes dangerous to public health, they’ve become dangerous to democracy, to privacy, to innovation in the economy as a whole. Hardly a day goes by without an announcement of something that should disturb us all. Today’s big announcement is the Wall Street Journal story about how there are dozens of applications, a meaningful minority of the applications of both IOS and Android, that pass very private data to Facebook without user knowledge or permission. And that sort of thing should be illegal.”
“There’s a lot of commerce in data today that is sinister in ways that would not have been true 10 or 15 years ago, before the advent of artificial intelligent systems that could be used to manipulate attention and potentially the ideas and actions of millions of people.”
“The punch line of the book is that I’m actually very optimistic because the human beings formerly known as users have far more power to affect change than they realize. We all have the power to change the way we interact with these platforms, to deny them the same attention we’ve given them in the past, to deny them the ability to play with our emotions. And that’s a really hard thing for all of us to do because to one degree or another we’re all addicted. That addiction is something we’ll all have to battle, but politically speaking we have this great advantage because there’s so many of us that we can find buddies to work with and do this together.”
For example, “We ran an experiment on a whole generation of kids, exposing them to technology early and aggressively. The data that’s coming in now suggests that that was at best a challenge, and at worst a disaster, and that really little kids—kids under two—should have no exposure to screens is the current thinking in pediatrics. Kids between two and 12 should have really limited exposure, and certainly not have a smartphone of their own. And kids above 12 you want to be really careful about the interactions they have. With really little kids you have products like YouTube Kids that are loaded with age-inappropriate content that undermines the early development of the brain in ways that may permanently limit the child’s ability to concentrate. With pre-teens, applications on smartphones have become a weapon in the hands of bullies. With older teens there’s enormous added stress with fear of missing out and other social stigma.
“With older adults you have the concept of ‘filter bubbles,’ where platforms like Facebook and Google allow people to live in an artificial environment where they only are exposed to ideas that they agree with, which magnified polarization.”
“There’s no technology to fix problems like that. You have to actually decide you want to do something different. And what’s beautiful about it is we can change our behavior, and we can change how we expose kids. We can go to schools and say, ‘Let’s get the computers out of the classrooms, except special needs kids, and have the computers be something people do at home. In the classroom they learn how to concentrate and how to socialize, they do the things they need to do to develop.”
“Parents can arrange play dates that are device-free. They can arrange play dates where they’re encouraged to be outside. There are lots of things we can do.”
“The second thing we can do is we have political power. I believe in 2020 the role of Internet platforms is going to be a meaningful issue. And it won’t be a right versus left issue; it will be a right versus wrong issue. And in that context you’re going to see a Litmus test for candidates of both parties, because the argument that the business practices of these companies are legitimate is one that the companies have not successfully made, and I don’t see how any politician’s going to be able to make it on their behalf.”
Politicians have long been in the pocket of bad actors, so what’s to stop them from putting their heads in the sand on this issue, just like big pharma, the gun lobby, etc.?
“But they don’t normally do it in a situation where there are millions of voters who are actively expressing concern about it. Normally they need darkness to support bad actors. Or they need obscurity. The problems of these platforms are so pervasive, and the harms so obvious now.”
“One of things that’s been so challenging is that we need a new vocabulary to describe the problems. People come up to me and say ‘Roger, my data’s already out there. I can’t get it back.’ And I say, ‘Those two things can both be true and still not be relevant.’ And the reason it’s not relevant is when it’s your data only, what you’re dealing with is something like the hacking of your credit card or bank account. With Facebook, Google, Instagram and YouTube, the thing that you’re fighting against is they have so much data, their surveillance is so invasive. They buy up everything from your credit card transactions to your location from your cell phone carrier, and everything else they can get, and they use the artificial intelligence to find patterns and relationships that often have nothing to do with you. So that everybody I know, their data can be used to my detriment.”
“Economists now have a vocabulary for this. They call it ‘the behavioral surplus.’ The reason you collect data in a business is to improve the product or service. That’s not what Facebook and Google do. Most of the focus is to collect data to do products the person who from whom they get the data derives no benefit.”
“Google, for example, is designing products from this data that aren’t necessarily advertising supported, artificial intelligence, facial recognition, etc. They’re looking to create AIs for driverless cars. CAPTCHA used to be a way to confirm whether or not a person was a robot. “They can figure out if you’re a robot from the motion of your mouse,” Mr. McNamee said. “The reason they show you those pictures is so they can smarten up their driverless car system. That’s all that is about, training and AI for cars. My point is, they’re not honest about any of this stuff. They didn’t tell you that all the Nest products have a microphone. There’s a sense of exceptionalism and superiority that causes them to dismiss the rights and needs of the people who use their product, and to treat them as a metric rather than people with a right to self determination.”
“It’s not because they’re bad people,” Mr. McNamee said. “It’s because they have had a very incomplete education, and there’s no one inside there who values anything other than achieving the explicit corporate goal of, in Google’s case, collecting and sharing all the world’s information, or in Facebook’s case, connecting all the world’s people.”
Again getting back to how we could use a Peter Drucker today.
“Precisely my point. I look at this and think it’s embarrassing that I have to be one of those people. I know the people around Facebook and Google. They’ve had a lot of people in their immediate world that could have played this role. There were well-educated, experienced board members on both companies who could have, and should have, spotted these problems and raised a flag,” he said. “These are companies where the founders and CEOs have total control. They don’t have to worry about getting voted out by shareholders.”
It sounds a little like a cult.
“There are cult-like aspects of both companies, but here’s my optimistic take: In the case of both Google and Facebook, the founders are just one good night’s sleep away from getting this right. They could have an epiphany. I had an epiphany. Why can’t they?”
His recipe for reversing the damage? Use the products on themselves.
“The impact would be really large,” he said. “The business models are extremely predatory as currently constructed. They would have to take a significant earnings hit to fix this, but it’s not like they’d have to be permanently down. They create so much value that there are lots of other ways to monetize them.”
Will they go willingly?
“I spent two years pleading directly to the top people in both places,” Mr. McNamee said. “At Facebook I went to Mark [Zuckerberg] and to Sheryl [Sandberg], and here we are at the two-plus year mark now, I would say the answer is no.”
When do you predict that we will see a movement to stand up to this predatory behavior?
“To be clear, it’s already begun,” he said. “People are coming out to talk about it in astonishing large numbers relative to a couple years ago. I take great comfort that we are making progress.”
“We have a national election coming up in 2020, and all that the humans formerly known as users really need to do is to make clear that this is an issue of right versus wrong, and insist that every candidate for every office stand up for the rights of their constituents in online transactions.”
Last year the California legislature passed a sweeping privacy law, California Consumer Privacy Act of 2018 (“CCPA”), which goes into effect in January 2020. Based on the European model, (the EU General Data Protection Regulation), it makes it easier for consumers to sue Internet companies in the event of a data breach. It also gives California’s attorney general more leeway to fine companies that run afoul of the new regulations, and makes it more difficult to share or sell data on children younger than 16. Mr. McNamee said he thinks the new law will be difficult to enforce.
“What I would like to do is address the most invasive of the data economy, the ones that were harmless before AI got to its currently level of capability. To ask questions like, why is it legal to sell personal credit card and finance information? Why is there any market for that at all? It’s being sold in a marketplace where it doesn’t just harm the person who’s data is being used, it harms people who know them, and people who have similar life experiences. Why is it being used to sell geo-location information from cell phones or from anything else? In fact, why is it legal for Google to spy on you using Google Maps? Why is it legal to gather, much less sell, data on children? Why is that legitimate? I think these are important questions.”
“My point is that if you eliminated those things completely and just said, ‘I’m sorry, you just can’t do that …”
“When I look at Gavin Newsom’s proposed dividend, that’s fine for the impact to you and me, but what do I get paid for the impact on me for the data you sold? Nothing. And so, that’s the flaw in going after the symptoms. I want to go after the root causes.”
“To me the root cause of this whole thing is the data economy starts with people collecting data and then exercising eminent domain and saying that they own it, and they have the right to do with it as they please. I think that that concept has not been debated in public in a way where you legitimately say the country has bought into that notion. In fact, I think you can legitimately say that they’ve been misled into thinking that what’s going on there is much less than they realize.”
He also said he’d like to “absolutely blow up” the terms of service used by these companies, making a point to call out the requirement to use arbitration to resolve any legal dispute.
“I think the incentives are wrong,” he explained. “Of course any use of data can give rise to legal action if the data is improperly used. If a company is reckless and gets hacked, or gives away data without permission, all of these things should give rise to litigation,” from government or private sources. “In some ways these are like oil companies. If you have a spill, and people get hurt, of course they’re legally liable. Everybody else in the economy is liable; why aren’t these guys?”
“People get hooked on the products, because in the days before this stuff was harmful, these guys built habits. The reason the terms of service are coercive is because the deal is, by using the product you accept the terms of service. And, you have this huge investment in the product, and the old alternative to the terms of service is to give up this massive investment that you’ve made. I think we can agree that that is coercive.”
“To me what really matters is we’re dealing with a difficult situation that none of us saw coming. Everyone was optimistic about tech until 18 months ago, and then we got our first signal that there was a problem. So Washington, which, correctly, trusted tech for a long time, now recognizes that there are all kinds of problems that we didn’t know were there and we need to get on top of. We have some catching up to do, but I’m extremely optimistic that that’s going on.”
Are you saying you are seeing equal enthusiasm in Washington from both sides of the aisle?
“There is appetite on both sides,” he said. “Equal is the wrong term. Everybody is getting up to speed but they’re getting up to speed at different speeds. There is interest on both sides of the aisle from people who really matter.”
“Almost everybody started in the same place, that this is an American success story that we’re all proud of and that constituents love. There was almost a universal sense that there’s nothing to worry about here, and now there’s a very clear sense that, ‘Oh my God, there are a lot of things to worry about here.’”
Privacy, democracy and public health are the primary foci, he said.
“A lot of people on the Republican side are hyper-focused on the innovation side, particularly the antitrust issues. With my friends on the Republican side, that’s the place that I’m making the most progress, and it totally makes sense, because if you can introduce the competitive alternatives, that’s going really, really help everything.”
If you could only focus on one thing, what would you do first?
“That [innovation, antitrust issues] would be a pretty reasonable thing to do first. My perspective is I want to go where the members want to go first. I’m pretty easy on which one we pick. Let’s just get at it.”
“The issues related to privacy are growing rapidly, because they get at the issues with kids too,” Mr. McNamee said.
“All this stuff all interrelates,” he said. “It all starts with a highly manipulative technology, and once you understand what they’re doing, and how hard they work to prevent the people who use the products from understanding what the goals of the system are …”
“People think they’re going on Facebook to look at family photos of puppies, and they’re really playing a multidimensional game of chess with an artificial intelligence that knows everything about them. And it’s just not a fair fight.”
So, the real flags were raised during the 2016 election?
“I first saw it in an electoral sense, right,” he said. “But it turns out the bad actors are doing that all over. I met a woman at one of my events the other night that said, ‘My kid came home and told me that Pearl Harbor didn’t happen,’ because the kid had seen a video on YouTube that said Japanese planes couldn’t possibly have flown from Japan to Hawaii, which demonstrably untrue and completely irrelevant.”
“Recent studies say most of the medical information on Facebook is not true. There was a story last week that an alarming rise in belief in a flat earth is due entirely to a few channels on YouTube. And then they found a pedophilia ring on YouTube. I mean, this is what the term WTF was designed for. I mean, there is nothing about these products that says you have to hurt people. This shouldn’t be tobacco. Artificial intelligence should be the technology Penicillin of the 21st century, but if they’re not mature enough and wise enough to eliminate bias against gender or race from these products, then they shouldn’t be allowed to make these products.”
What action would you like to see on the regulatory side?
“It has to happen with both the people who use the products and with regulators. This isn’t going to work if it’s over the objections of the people who use the product. They have to consent to the changes. Europe has taken an approach of using antitrust to try to limit competitive damage and Global Data Protection Regulation to address privacy concerns. GDPR looks at the failures that we’ve seen to date, and tries to create a policing network so that when those failures occur, you have a right of appeal. The antitrust thing has mostly been directed at Google and fining them for anti-competitive business practices. In the United States we have a somewhat different situation, because unlike Europe we don’t have a national right of privacy, and we do not have currently an antitrust regime that allows prosecution for anti-competitive behavior.”
He’s not convinced Europe’s strategy has been effective. “It’s basically a cost of doing business,” Mr. McNamee said of the small-potatoes fines Google has been hit with in Europe.
Can you give me a quick explainer as to why they should be worried about this, and further, what we all can do out here in the suburbs, to affect positive change?
“There are two problems: One, Internet platforms have created a new business model based on the exploitation of data. They gather data from everyone, everywhere, almost always without permission. They use machine learning and AI to find patterns. They use the result to extract value from the broad population, even people who do not use their products. Two, Google, Facebook, and to a lesser extent Twitter, dominate the public square in every country in which they operate. Their code and algorithms have far more impact on our lives than the law does. They were not elected and are accountable to no one. As a result, Google and Facebook represent a threat to public health, democracy and privacy, and to the economy by suppressing competition and innovation.”
You’ve described positive gains made in the 2018 midterm elections. How have these changes left you feeling hopeful?
“According to the campaign manager, Brad Parscale, the Trump campaign targeted their voter suppression effort at three groups—white women in suburbs, people of color and idealistic young people. Four million people who voted for Obama in 2012 did not vote in 2016, and Parscale’s voter suppression efforts accounted for at least some of that. In 2018, there was a big increase in turnout, especially from white women in suburbs, people of color, and idealistic young people, despite an increase in disinformation.”
Mark Zuckerberg and Sheryl Sandberg have so much at stake. Why aren’t they teaming up with you, a known quantity, a friend, and an investor, to try and get in front of this issue?
“Evidently I was the wrong messenger for Mark and Sheryl, both in 2016 and now. Unfortunately, no other messenger has been able to get through to them.”
If you could design your own blue-sky legislative package, what would it look like?
“The top priorities should be to protect children, protect democracy, restore privacy, and create opportunities for competitors with alternative business models. My priorities would be to ban the sale and trading of personal financial data, geo-location data, health data, and any data related to children under 18; to use antitrust to create space for competition; and to give every user a right to sue internet platforms for damages, which are currently not allowed, as terms of service require arbitration, to change the incentives of the business.
Mr. McNamee believes the data economy has had a corrosive affect on the free press as well, both in the US and abroad.
“Facebook and Google traded convenient services for data. In the process, they gathered the largest audiences in history. They placed themselves between publishers and their audience, who demanded that all media be available there. Facebook and Google were able to dictate terms to all publishers, effectively controlling their distribution and taking a huge share of revenues, without contributing anything to editorial.”
Mr. McNamee is also a musician. He played in the Flying Other Brothers from 1997 to 2006, and now plays bass, guitar and sings with the band Moonalice.
You’ve been wildly successful as an investor, advisor and manager. I imagine you have a method of identifying new and emerging markets. Do you put this same intensity to bear on your music career?
“Yes. Success in music is harder than investing, especially if you are older than 25. Fortunately, economic success is secondary to artistic success in music. My bands are successful artistically, which makes the whole thing worthwhile.”