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Facebook: A Cooperative Transformation

According to Mark Zuckerberg, Facebook’s 2 billion users represent a global community whose interest are served at no charge, a community that facilitates and encourages historically unprecedented social interconnection on a global scale Unquestionably much of this is positive.

Facebook was an easy and available means to help launch the Arab Spring, OccupyBlack Lives Matter, the Women’s March in response to the election of Donald Trump, the Students March for Our Lives and the movement in response to gun violence.

Facebook also represents the crystallization of series of global problems. Facebook’s rise is contemporaneous with the emergence and the rapid consolidation of a global netocracy, an internet based capitalism, enriching a billionaire class at the expense of the many. Facebook has become the tool not just for interconnection, but for the growth of sequestered and divided groups as the new normal for whom different opinions are considered “fake news” as well as the tool used to propagate outlandish conspiracy theories and a thousand flowers of bigotry.

Global Netocracy

Facebook is the poster child of the global netocracy. Facebook now has a market capitalization of more than $450 billion dollars with annual revenue in 2017 of $27.6 billion dollars, up from $7.9 billion in 2013, a 350% increase in 4 years. Earning before taxes were $20.6 billion, and after taxes $15.9 billion, soaring from $2.9 billion in 2014. This is an astounding economic success. Mark Zuckerberg has not only become one of the planet’s richest men as Facebook CEO. He has maintained control of the majority of voting shares. It is literally his company until death do them part.

Facebook represents a standard for a global model of concentration of wealth and power in the 21st century, joined by companies like Google, Amazon, and Uber. Entrepreneurs with computer skills and good or lucky timing have privatized and enclosed the global information commons and have enriched themselves by providing services for free or for reduced prices to the billions. These are so-called Unicorn companies, the right place at the right time and have achieved global market dominance supported by their ability to use enormous piles of cash to purchase would be competitors, often for billions, or related internet companies in traditional corporate fashion.

Wealth is channeled upward in pyramidal fashion from users, whose information is the product, to a relatively small cadre of technical and marketing staff to stockholders and, at the peak, to founding billionaires, now aspiring trillionaires. Who needs hard assets when you control the gateways to cyberspace.The netocracy, of course, feeds on an ever expanding underclass created by upward transfer of wealth. This is what Alexander Bard calls the consumtariat. The billionaires and their well paid minions thrive while the middle class shrinks, wages stagnate or fall along with taxes, and the social safety net is shredded in the name of economic necessity and support for economic growth. The afflicted working class is turned by politicians against competition from immigrants and minorities. MAGA. Brexit.

Regulation of Facebook as a preeminent global media company is certainly necessary. Britain, just decided that the broadcast propaganda of Fox “news” will not be welcome on State controlled airways. But Facebook is different. It is at the heart of the internet;s global social interconnection.

What we need to recognize and take action on is that Facebook can be transformed not merely as a vehicle to build wealth for Zuckerberg and friends, but, over time, as a user owned and worker owned cooperative that share the benefits and assets, and makes the global internet commons a venue for common wealth for all users and for its workers. It is not in either the national or the common global interests of the billions for a handful of billionaires to own and control the portals and tools that characterize the global internet commons.

The kind of global monopoly power now wielded by a small number of corporations, enriching a small number of individuals, needs to be recognized as an intolerable and unsustainable model for a global economy in the 21stcentury. For me, the most effective means of dealing with the Facebooks of the world is not simply breaking them up into smaller national companies, or treating and regulating them as public utilities. Classic examples are trustbusting in a manner similar to the break-up of Rockefeller’s Standard Oil Company into a number of what would be giant, vertically integrated oil majors; or dividing the utility empire of Samuel Insul into regulated “public” utilities; or, more recently, the break up of ATT into today’s competitive telecom giants.

Internet Users Bill of Rights

A model new internet user’s bill of rights should be passed by all nations. The internet users bill of rights mandates that as a matter of U.S. law that any internet company operating in the United States in exchange for the ability to sell user data for advertisers must take a number of mandated actions:

+ Incorporation as a B or Benefit corporation with social mission.

+ Social mission includes crediting users with 10% of income from sale of their data that is converted into voting stock ownership.

+ Workers would also purchase stock under a profit sharing employee stock ownership ESOP structure. (ESOPs are classic tools for corporate owners t csh out their interests over time to workers.)

+ A user seat and a worker seat would be guaranteed on the company board immediately.

Overtime Facebook would be transitioned to a company owned by its users and by its employees. Mark Zuckerberg and his cohorts would still be rich, but the wealth and power of the internet would be democratized, with large scale and distributed asset building and broad based ownership and control.

Where does the money come from? Facebook’s revenue in 2017 was $27.6 billion, almost all from advertising.This means on average the data harvested from each user each member of the Facebook “community” produces $10 per year in add revenue for Facebook.

In the U.S., the Facebook add Cost Per Mile (CPM) is $6.27–add speak for 1,000 views of your add — for an E-commerce company add. The Click Through Rate (CTR) is 1.72% for the add which means a Cost per Click (CPC) of $.31.

Facebook Cooperative Transformation

If users were entitled to 10% of add income for the use of their data, about $2 billion a year divided among 2 billion Facebook users, or one dollar a year per person on average. If this ten percent was converted to fractional stock ownership with voting rights, the consumer members of the Facebook Community would become equity holders, not just a resource whose data is mined for the profit of Facebook and advertisers.

Two billion a year would mean building a significant voting block of user stockholders in addition to stock holding employees. 5% ownership or more, plus board seats , is viewed as exercising significant influence over a corporation which eventually would become a worker and user owned and controlled cooperative.

The transformation of Facebook over time into an appropriately regulated cooperative could keep the successful management team in place while cashing out owners interests through the Employee Stock OwnershipPlan (ESOP) and Facebook user stock purchases through 10% share of add revenue. Mark Zuckerberg would still be a very rich man, but the internet Titan would no longer bestride the word as a colossus.

Facebook Then and Now

The significance of Facebook’s negative influence stretches beyond economic inequity and the ability to spread fake news and manipulate elections through using tools designed for targeted advertisements. This is.of course, the basis for Facebook’s “free” service and economic success. Facebook has also proven to be an effective means to incite ethnic cleansing in Myanmar. By its nature, Facebook is tailor made to manipulate and appeal to parochial interest as the new normal, to define contrary opinions as “fake news”, to further outlandish conspiracy theories like pizza gate, and serve as a comfortable gathering and organizing realm for Nazis and bigots and terrorists. Its hermetical online nature challenges traditional assurances that free speech by its nature is self-equilibrating, where the problems raised by the abuse of free speech is cured by more speech.

Facebook instead puts devotees inside an echo chamber of self-reinforcing, cult-like propaganda without the necessity for government interference. We are watching the creation of a Manichean world of red states and blue states, or Crips and Bloods, of Shia and Sunnis. Facebook’s media and business ecosystem is based on self-selection that is completely compatible with maximizing add revenue pitched to self-selected groups for consumption that suits their life style. Padded mats, comfortable clothes, meditation paraphernalia are targeted to for yoga and meditation enthusiasts. AR-15s, banana clips, and bullet proof vests are offered to militia members and to followers of ISIS.

The future of our economy and our world can no longer be ceded to the self-interest of billionaire lords and masters of the netocracy. It’s time to open our eyes and for our democracy to take action in our collective self-interest, to embrace freedom and justice not honor slavish obedience.

 

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