THE IMPATIENCE ECONOMY™: Social Media Enlightened Regulation | The Goldilocks Zone

Anyone who’s ever watched a U.S. Congressional panel discuss technology issues could be forgiven for thinking that enlightened social media regulation policies have about the same chance of emerging from these representatives—working on their own—as would a responsible set of aviation standards from the First Continental Congress.

My own views are more hopeful. I’ve seen governments step up and do an effective job regulating the telecommunications industry. Although they lacked a deep understanding of the technology, they knew what was good for protecting the consumer, what was good for regulating the industry—and they balanced those concerns with what was good for economic development and what would promote innovation.

Governments have the responsibility to protect the public and create a level playing field, while promoting economic prosperity.

As in the story of Goldilocks and the Three Bears, the young girl found the chair, the porridge, and the bed that was “just right”, but not before trying three options each time. There must be a proper balance between protecting the public and regulating social media, while promoting economic development and ensuring consumer freedoms. Hopefully, it doesn’t need to take too many trial and error regulations to find the right balance: the Goldilocks Zone.

I see three priorities for governments around the world in order to achieve an enlightened social media regulation, the “just right” balance.

First, governments need to make digital identity and ownership issues a priority. They haven’t yet shown much willingness or action in doing that. Rather than targeting fundamental issues like this, they’ve taken an ad hoc approach that looks like opt-in privacy laws, ignoring the bigger picture of consumers’ rights to ownership of their profiles and data.

Second, governments need to partner with consumer advocacy groups, industry, and academia, as alone they lack the expertise to fully understand and stay current on technology issues and find the “just right” solutions on their own. Regulating the social media industry demands a cooperative effort from all the players in the ecosystem. Everyone wins with checks and balances that benefit consumers, protect their rights, and increase their freedoms. To act otherwise, is to invite a regulatory backlash that hurts consumers, sellers, and those in-between.

Third, governments should focus on large-scale framework issues rather than operational details. In this, I’m following the distinction between “formal law” and “substantive rules”, as established by Nobel Prize winning economist Friedrich Hayek: “The difference between the two kinds of rules is the same as that between laying down a … Highway Code, and … commanding people which road to take.”

How do we apply Hayek’s “formal law” to government action with respect to social media regulation? First, we need laws to protect a consumer’s digital identity. Governments need to step in and establish regulations here the same way they need to post ONE WAY (à) street signs to prevent head-on collisions.

Modern social media and digital technologies have alchemized once useless consumer profiles and data from lead to gold.

We all see that big-Tech monetizes consumers’ digital profiles and behaviors. They drill for oil on consumers’ land, we they little in return, and governments turn a blind eye.

Why shouldn’t consumers be worried or upset? How can consumers be protected? Why shouldn’t they own their digital identity?

I’m certain the vast majority of consumers will be willing to knowingly part with and share their personal information—if they could do so safely and were in some way compensated for it. Given a choice, they’d grant Facebook, for example, permission to use their profile, but they would demand something in return. For now, they get convenience, an absolute false sense of “granting permission” by clicking “I Agree” at the beginning or end of numerous pages of legal text that no one reads, and what appears to be a “free” service. But why not get a piece of the profit from the advertising revenue social media giants get from monetizing consumers’ digital identity and behavior? Something like a discount or credit to spend on whatever they want to buy. That would change the paradigm: consumers would be telling big-Tech that access to their data is a privilege, not a right.

This being said, with the same emphasis I make that enlightened governments should assert themselves in big-picture situations, they should also absent themselves from small matters. Regulating social media from co-opting a consumer’s digital identity for unregulated private gain is one thing. Restricting access to information a consumer chooses to share in exchange for specific benefits is something quite different. The first is a clear-cut protection from harm; the second is an equally clear-cut example of paternalism, an encroachment on basic freedoms.

The government justifiably sets “rules of the road”, like speed limits, to protect drivers from themselves and others. But it doesn’t require us to take a specific path to the supermarket because that route is 0.0001 percent safer than the route we prefer. For the vast majority of digital interactions, enlightened governments should trust the free market to work out the best compromises. Such governance is a necessary condition for unleashing the profound benefits of Social Retail Marketing.

Finding the perfect regulatory Goldilocks Zone—neither too hot nor too cold, too hard nor too soft, too laissez-faire nor too paternal—will determine whether we rapidly unlock the full benefits of “The Impatience Economy”. Social media enlightened regulation is a necessity for Social Retail Marketing to thrive!