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Silicon Valley at the Intersection of Facebook and the iPhone

Irwin M. Stelzer

“Forgive me Lord, for I knew not what I was doing.”

No, not Victor Frankenstein after creating his monster. Instead, Tony Fadell, co-creator of the iPhone; and Chamath Palihapitiya and Roger McNamee, a former Facebook executive and investor, respectively. Even Mark Zuckerberg confesses concern with his creation, although in a roundabout way: “Facebook has a lot of work to do”, . . . and his “personal challenge for 2018 is to focus on fixing these important issues.”

We have here a test of whether corporate capitalism is capable of self-reform, or whether politicians around the world will seize this opportunity to expand the regulatory state, here and abroad. So far, self-correction, driven by the profit motive, seems to be the answer to a set of problems that threaten to convert a host of proudly self-styled “disrupters” from heroes to zeroes.

Eleven years ago, almost to the day, Apple ended decades in which we were tethered to the wires of telephone company monopolies; Facebook has provided 2 billion people with a news source and a platform on which to display pictures of their cats—and for Vladimir Putin to interfere in nations’ elections. Such radical change inevitably creates problems, just as, for example, Detroit’s creation, the mass-produced automobile, brought enormous benefits, but also created environmental problems. The car created a demand for regulations galore, from seat belts to standards on the content and use of gasoline. Now it’s the turn of the creations of Silicon Valley, which might have spawned social problems only now being understood.

Start with Apple, which has already bruised its reputation in some circles by refusing to help the FBI unlock a terrorist’s iPhone, bowing to Chinese censorship in order to retain access to its market, and turning tax avoidance into a (perfectly legal) fine art, becoming the corporate equivalent of David Goodhart’s rootless man from “anywhere,” described in his much-read The Road to Somewhere.

Apple is now charged with harming children and producing an iGen (born in 1995 or later) that is “on the brink of the worst mental-health crisis in decades” according to Jean Twenge of San Diego State University. Studies purport to show that opioids are not the only addictive substances available to teens. They also suffer from cell phone addiction that produces “depressive symptoms” (University of Basel), increased risk of suicide (San Diego State), and poor scholastic performance after sleep-deprived nights on their cell phones.

Then there is Facebook. Sean Parker, the first president of the social media firm says it was designed to “exploit . . . a vulnerability in human psychology [and] consume as much of your time and conscious attention as possible” by giving you “a little dopamine hit every once in a while, because someone liked . . . a photo or post.”

All of this angst has produced a reaction until now foreign to Silicon Valley: Major investors, driven by a desire for sustainable profits, are calling for reforms.

Investment managers Jana Partners and the California State Teachers’ Retirement System hold $2 billion of Apple stock—admittedly a drop in an almost $1 trillion bucket. But they’re still worthy of management attention: They believe that Jonathan Haskel and Stan Westlake (Capitalism Without Capital) are right that the value of these companies’ shares is based on the value of their intangible assets—their reputations and brands rather than their bricks and mortar. They want the company to advise its customers on how to control and, when they choose to do so, how to curtail use of their product. Not only to do good, but to do well by avoiding seeing itself converted from a Wall Street darling into a financial pariah.

Apple’s response—that it already has parental controls built into its iPhones—has been deemed inadequate. Its critics, who admire the company for such policies as refusing to allow pornography into its iTunes store, want the company to add more parental controls, make them easier to use, and provide data on that use, just as it does with your health metrics. With a day-in-the-life of a digital user before them, parents can make more informed decisions about use of iPhones and other devices. “That’s really easy to do,” says Fadell, who along with other critics awaits Apple’s more considered response, due in a few months.

It seems beyond dispute that kids are spending lots of time on smartphones and on social media. It seems, too, that youngsters can be said to be “addicted,” if by that we mean becoming enslaved to a practice to such an extent that cessation causes trauma. There is evidence from interviews that children feel “naked,” “abandoned,” “anxious,” perhaps “suicidal” if deprived of their phones. But here we must be careful: studies showing a correlation between depression and heavy use of cell phones might mean that use of these devices causes depression—or equally that depression causes people to become heavy users of these devices in a frantic attempt to “connect” with others.

The problem with social media is even more complicated. Libertarians would argue that if people choose to spend hours a day “friending” and “unfriending” others, “It ain’t nobody’s business but my own,” to quote the late, great Ella Fitzgerald. And there is the added problem of demands that Facebook control the content that it allows on its platform—an issue that has politicians in Germany demanding serious self-regulation and ours threatening to make the social media as responsible for what they “publish” as are newspapers.

So, as Lenin once asked in a different context, “What is to be done?”

No one can reasonably object to pressure on Apple management from owners of the company to increase the range and ease of use of various controls on their children’s use of these devices.

Or Zuckerberg’s effort to move from being a mere provider of a platform to a person responsible for how it is used. And his willingness to have his stock take a hit, as it did Friday, by changing Facebook’s News Feed in a way that might mean users spend less time on his social network.

But in the end there is little substitute for parental courage in the face of insistence on unlimited use. My firm’s technical advisor, Jeff Raben, tells me parents should start with the proposition that they, not their kids, own the smartphones and have every right to control their use. Dual wi-fi networks, one for kids that is turned off after 8:00 p.m. might be useful. (Although a work-around such a restriction is not difficult for tech-savvy kids unconcerned that it raises the monthly bill.) So would having cell phones charging at night, unavailable in a room far from the children’s bedrooms.

In the end, however, this father of about-to-be teenage twins says that the children will have more ways around parental restrictions than the less tech-savvy adults can imagine. So we are back to reliance on the disrupters to provide a bit of help to parents, lest the politicians decide that this is a job for them.

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