Silicon Valley investor Roger McNamee has gone from being one of Facebook’s earliest financial backers to one of the company’s harshest critics.
He’s gone so far as to call the social media giant a danger to democracy, and has written a book — published earlier this year — called Zucked: Waking up to the Facebook Catastrophe.
It’s a startling evolution for someone who was an early investor, served as a mentor and sounding board for CEO Mark Zuckerberg, and also recommended the hiring of Sheryl Sandberg as company COO.
At the Collision tech conference in Toronto, McNamee talked to the Star about his change of heart, why he thinks shutting Facebook down is “a completely rational thing to do,” why Toronto should be wary of Google’s Sidewalk project, and why big tech companies are similar to the robber barons — only worse.
Toronto Star: How are you enjoying Toronto so far?
Roger McNamee: It’s really interesting to be here, because you guys are at the centre of something that’s a huge issue right now, and that’s how companies treat consumer data. Should there be limits to the rights of corporations to gather data and exploit it? And what rights should consumers, what rights should communities, and what rights should governments have?
We’ve operated in this world where those questions didn’t get asked. And we largely, in North America, operate where the business community has been unrestrained, where smart people are free to grab whatever they can grab. For a long time, that seemed like a perfectly reasonable approach. But it feels less reasonable all the time now.
RN: We’re way past that. These guys look like the robber barons, but they’re global. The robber barons were never global. But it’s the same principle. And I think a lot of the same techniques will work. You have to limit what they can do — you have to take away some things that they have historically been able to do, and you have to actively promote alternative business models.
TS: At what point did you make that transition from a believer to a critic?
RN: I thought Facebook was different. They weren’t founded on the principle of breaking the law, the way that YouTube was, or Uber, or Airbnb, or on taking advantage of the ignorance of either customers or suppliers, the way Spotify, Uber and Lyft and the fintech companies work. And so I missed some signals, and I’m really embarrassed about that. Until 2016, then I started to see them. Over the course of 2016, I got progressively more concerned. I finally reached out to Mark and Sheryl in October 2016, nine days before the election. I reached out as a friend, trying to warn them. I spent three months trying to persuade them that they needed to do what Johnson and Johnson did after the Tylenol poisoning — they need to protect the people using the product, they need to co-operate with investigators. And they just weren’t interested.
TS: At what point do the moral and philosophical objections become a business risk. Are we already at that stage with the antitrust suits in Europe?
RN: I wish we were, but investors have shown no concern about this at all. What’s weird is that we can see what the black swan is. The government of Sri Lanka had no choice after an act of terrorism. The only way they could protect themselves was to shut down Facebook and Google, so they did. And that’s now on the table. And you can easily see a country in the European Union doing the same thing, if faced with the same choice. … I think it becomes viral. If a first country does it, why wouldn’t the adjacent country do the same thing? Platforms have no one to blame but themselves. Their total lack of co-operation has essentially left countries with no choice. I view the hierarchy as having three things. If you want to prevent election interference, privacy violations, public health problems and restore your economy, shutting down these companies is a completely rational thing to do. Failing that, ending their business model is a completely rational thing to do. … You roll it back to zero. You get back to the only thing that’s allowed is what the data was originally given for. … The third choice would be to simply tax the advertising at 95 or 100 per cent, to change the incentives.
TS: Publishers have a responsibility to make sure the information they produce is accurate. How has Facebook avoided that, given the amount of information that’s produced on their platform?
RN: In the U.S. there’s a law that was intended to protect a brand new industry from nuisance litigation, which has been interpreted over the last 20 years to be a safe harbour from all kinds of things. … But the problem with that interpretation is that by definition, that means they’re a common carrier, which means that they shouldn’t be allowed to do things like scan emails, which Google does, and which presumably Microsoft does also. That should in fact be a felony as it would be if you were a postal service or a telecom company. And we should have these conversations, because we’ve essentially allowed these companies to behave as though they’re little tiny startups with no damage, as opposed to undermining civilization as we know it.
TS: Do you still have any stake in Facebook at all? And if so, why?
RN: I do. I chose not to sell my stock when I became an activist, because I didn’t want to be accused of speaking out against a company whose stock I had just sold. So I chose to hang onto it. I recently sold some, and I expect to sell the rest of it, because that issue is no longer relevant. I’ve been out in the market for more than two years, and whatever impact I’m going to have, I’ve long since had. At the beginning, I thought there was a risk that by speaking out I would harm the stock, and I wanted to be taking the same risk that the employees were taking, but obviously nobody cares what I’m saying.
TS: How much of a problem is the dual-class share structure, which basically assures that Mark Zuckerberg will be able to maintain control as long as he wants?
RN: The silver lining of the dual class is that if Mark has an epiphany, and decides that he wants to be the hero in his own story, he could get rid of that business model today. He has the moral authority and the voting authority to do that. … Same thing with Larry (Page) and Sergei (Brin) at Google. In the absence of that epiphany, the dual class structure is simply a way of evading accountability. And it has been a perfect evasion of accountability.
TS: Since you’ve become a critic, and particularly since your book was published, how has your relationship been with Mark and Sheryl?
RN: What relationship? I have’t heard from either Mark or Sheryl since Oct. 30, 2016. And I haven’t heard from anyone at Facebook since February of 2017.
TS: Does that disappoint you, on a personal level?
RN: Obviously. I came to them as a friend. And I spent three months without saying a word to the outside, just talking to them. Then I spent months, just making sure I understood what I was talking about. And then I started to speak on the outside. I don’t how I could possibly have been more reasonable.
This interview has been edited and condensed.
Josh Rubin is a Toronto-based business reporter. Follow him on Twitter: @starbeer