Facebook chief Mark Zuckerberg gives regulation game away

Facebook boss Mark Zuckerberg gave the game away in his congressional testimony yesterday.

Facebook chief mark Zuckerberg. Illustration: Sturt Krygsman

Facebook boss Mark Zuckerberg gave the game away in his congressional testimony yesterday, warning against regulation that entrenched the market position of the incumbents. “Our position is not that regulation is bad, just that it has a framework that works,” he said, adding, “you need to be careful it doesn’t cement in the current companies that are winning”.

That is exactly what he wants and his regulatory comments mirror those from Telstra bosses over the years and other dominant companies.

Their first wish is no regulation and their second is plenty of it to build barriers to entry that prevent competitors from grabbing market share.

Think Telstra and the universal services obligation that gave it automatic entry to extend its old fixed-line monopoly, and the present NBN rules that granted Telstra ownership of the ducts carrying cable to your home, which translates to ongoing streams of taxpayer revenue.

In Facebook’s case it’s all about data control, which Zuckerberg freely admits the company failed to do in the Cambridge Analytica scandal.

It’s also about how much information they have on you that you don’t know about and whether the privacy rules apply to the new platforms on the same basis as for other market players.

These are some of the issues the ACCC will be looking at in its inquiry.

Facebook earns the bulk of its $US40.7 billion ($52.5bn) in annual revenues from advertising, which is linked to customer knowledge through the control of data.

The federal government is working towards the concept of a comprehensive consumer right to data that gives consumers ownership of their own data.

This means companies like Facebook would have to seek permission to sell data to a third party and in areas like the present ACCC case against Equifax there would be no doubt over free access to individual credit reports.

The ACCC is alleging Equifax is guilty of false and misleading statements by suggesting people have to pay to get access to their own credit reports. The argument being people are entitled to their own reports free of charge.

ACCC chief Rod Sims told last month’s Global Food Forum that the Cambridge Analytica scandal served a useful purpose in highlighting the data issue.

He said questions to be asked included: “To what extent do Facebook, Google and other platform developers damage their competitors through the way they do business? To what extent do users know how the data is being used? To what extent are the contracts they’re signed up to fair?”

In the Cambridge case, as the Zuckerberg Washington apology tour shows, the issues were in fact straightforward: the company didn’t protect customer data.

The congressional questions centring on inevitable regulatory changes simply allowed Zuckerberg to complicate the issue, ­noting “we have a broader responsibility than what the law requires”.

This, of course, is not quite right but suited the narrative.

Harmer’s way

Just in case you missed it, IAG boss Peter Harmer made clear at yesterday’s strategy day that investors should remove “Asia as an ingredient for our investment case”.

Australia and New Zealand will be the drivers and the remaining Asian assets are being reviewed for likely sale.

Harmer is a data bull, noting through his 8.5 million direct customers IAG has a fair knowledge of just about every car on the road and the houses in which we live.

The problem was it wasn’t using that information better to improve the customer experience.

“Rather than just sell home insurance we’re thinking how sensor technology can help ... deliver more integrated safer homes,” he says.

Likewise IAG plans to use its platforms to help distribute other people’s products, from Airbnb to Amazon to banks, in what he calls “dual transformation”.

Harmer also notes people value experiences over products so the aim is to better serve them.

Harris to depart

Productivity Commission chair Peter Harris has decided to step down when his present term expires in September, giving him time to complete the present report on financial services and no doubt lobby the states for action on his productivity agenda.

Advertisements for the position will be posted shortly, but the internal favourite is present deputy Karen Chester.

The two are key members of the competition mafia dating back to the Keating years in the macro-economic unit at the Department of Prime Minister and Cabinet, where then treasurer Paul Keating gave them a brief of “making a difference”.

The unit was led by Rod Sims (now ACCC chief) and also included Philip Gaetjens (Scott Morrison’s chief of staff, a former adviser to Peter Costello and former head of the NSW Treasury) and the head of the Agriculture Department, Daryl Quinlivan.

Regan’s new hires

QBE boss Pat Regan has lured some top names to the company but is yet to fill the key new role of London-based chief underwriting officer to ensure the insurer runs a consistent book.

Regan is reportedly a couple of weeks away from the appointment that will put his stamp on the shop.

Former CBA executive Michael Ford lasted only a matter of months at QBE, seemingly failing to come to grips with the complexity of the numbers. He will be replaced by Inder Singh, who worked with Regan at Aviva. Insiders are talking up the combination as a return to the days of Frank O’Halloran and Neil Drabsch as chief and finance boss chief of staff.

The latter combination was seen as such externally but reportedly not so internally, so the Singh-Regan combination may be more promising.

Former Swiss Re reinsurance chief risk officer Peter Grewal will be the new chief risk officer for QBE and comes to the table with a strong background in climate-change risks.

After the industry catastrophe bill hit $US135bn last year, climate change is obviously a key agenda item and Grewal’s background will be a boost for QBE.

Matt Mansour, a London-based Australian, joins as chief technology officer from Barclays.

With the team now in place Regan has to unveil his new company culture, with Liam Buckley the key driver in his role as head of culture and talent.

Early next month the top QBE brass will meet in Sydney to lay down the cultural objectives for the company, based on staff ­surveys.

Staff suggestions for the new cultural base include a more customer-oriented business that is fast-paced, courageous, decisive and accountable. The conference will be organised in part by PwC’s The Difference.

The news didn’t boost the QBE stock price, which was down slightly at $9.55, down 15 per cent from the near-term high of $11.16 in November against a market fall of under 3 per cent.

Investors are still unconvinced at plans to simplify the business.