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Harry Rakowski: Two decades into the social media revolution and we’re still learning the power of these platforms

Commentary

In 1997 America Online (AOL) executive Ted Leonsis talked about offering users of their website “social media, places where they can be entertained, communicate, and participate in a social environment”. The explosion of social media and its impact on how people interact has continued to grow. There now are an estimated 3.6 billion users of social media with many addicted to or negatively affected by its use.

How did we get so far so fast, and has the tide for social media turned?

On February 4, 2004, Mark Zuckerberg, then a Harvard sophomore, launched a social media website, soon to be known as Facebook, to connect Harvard students. Its success was explosive. Today almost 3 billion people worldwide use Facebook monthly, with almost 2 billion logging in daily. Three-quarters of users are between the ages of 13-44.

In October 2021, Zuckerberg announced that Meta would be the new name for Facebook, bringing together its apps and technologies under a new umbrella. The goal was to bring the Metaverse to life with a vision for developing 3D immersive technologies to improve online social experiences and connect people better and grow businesses. The reality has not been as exciting as the hope. CNN reported that Meta lost $9.4 billion in the first nine months of 2022 on its Metaverse products, with larger losses forecast for 2023.Facebook’s core business, while still very large, is also contracting, losing viewers and ad revenue to other platforms such as TikTok. Meta’s stock market value fell from over $900 billion at the start of 2022 to only about $305 billion on December 20th, a drop of about two-thirds of its worth.

Facebook has also come under increasing scrutiny regarding its negative impact on society after the exposure of improper practices by whistleblowers and increased scrutiny by regulators. In October 2021 Frances Haugen, a former lead product manager for Facebook’s Civic Misinformation team, came forward to share internal documents that proved how the company prioritized profits over the safety of its users and facilitated misinformation, hate, and calls for violence on its platform. She also stated that the company was lying when claiming it was doing everything it could to fix the problems. Misinformation is valuable for their bottom line. It is estimated that it gets six times more views than the truth. 

Another major challenge is how people’s vulnerabilities are exploited by links to advertising that generates revenue. Canadian sociologist Marshall McLuhan once said, “All media exist to invest our lives with artificial perceptions and arbitrary values”. 

An example of the problem is the significant relationship between time spent on social media and negative body image, especially in young women. Social media posts tend to idealize the thin body image of influencers with unattainable and unrealistic expectations. This leads to body shaming and self-confidence issues.

A 2017 Harris poll estimated that two-thirds of Americans edit their images before posting, thus presenting an idealized rather than real version of themselves. Facebook has been criticized for capitalizing on this by linking ads for weight loss to users who already have eating disorders and may simply be looking for a fitness program. 

Another large social media platform is TikTok, developed by the Chinese company ByteDance. It freely lets users share short videos that are often interesting or humorous but keeps them addicted to watching the site. The risk is that TikTok collects user data and information and likely shares it with the Chinese government. In China, the government only allows children to use its TikTok-equivalent app for educational purposes, and only for a limited time. Everywhere else, no restrictions on its use mean it is addictive and deflects people from real-life activities.

The app also obtains detailed information about your phone, with the risk being the collection of private information stored there. There is also a risk of your phone being more susceptible to hacking due to the app’s less-than-ideal technical safeguards. For these reasons, U.S. government agencies and many businesses prohibit installing TikTok on their work phones. These safety concerns may ultimately lead to further restrictions on its use and perhaps its outright ban. Personally speaking, I have deleted my account. 

Twitter was started by an NYU student Jack Dorsey in 2006.He originated the idea at Odeo, a podcasting company, to create a platform that allowed users to share short messages similar to SMS texts, but for free. The platform grew rapidly as an easy and convenient way to briefly message for personal and business communications. Its popularity grew as a source of immediate news and was used by celebrities, journalists, and politicians with growing numbers of followers. It was also seen as a way to better get around censorship by undemocratic governments. Eventually, Twitter was monetized by supported and promoted tweets and content. Donald trump used it extensively during his presidency to get around a sometimes hostile press. By the end of his term in office, @realDonald Trump had almost 89 million followers. Barack Obama, by comparison, had more with 133 million. Trump was banned from Twitter on January 8, 2021, after his role in the January 6 Capitol riots.

Twitter has two major problems. Misinformation is too easy to tweet without verification of authenticity, and there is frequent cancellation and removal of users, potentially implemented with political bias. In March 2016 Twitter changed its algorithm regarding tweets were presented, such that popular tweets or those accounts that were followed most were presented first on users’ timelines. While this increased use and retweets, it also created information echo chambers, where exposure to a broader range of ideas or points of view was diminished. 

The recent purchase of Twitter by Elon Musk for an astronomical $44 billion has unleashed both excitement and mistrust. Musk has about 120 million followers and is determined to be its biggest influencer. He claims that he bought it at an inflated price to fix it and the hate and disinformation it promoted. He said “ I didn’t do it because it would be easy. I didn’t do it to make more money. I did it to try and help humanity, whom I love. And I do it with humility, recognizing that failure in pursuing this goal, despite our best efforts, is a very real possibility.”

His initial actions have been chaotic, with mass firings, high work expectations, and the reinstatement of many accounts—including that of Donald Trump—and the removal of others, including some journalists. The recent release of select Twitter Files to journalists suggests that the FBI influenced Twitter regarding freedom of speech. We need to see all the files to be clear as to the level of influence politicized government agencies may have on social media. 

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Social media has become a dominant place where many people get their information. McLuhan also said, “The medium is the message”. He meant that the medium used to create the message influences how the message is perceived. 

There is also growing concern about how social media platforms can shape how people think and can politicize the information landscape by shaping how content is both promoted or excluded. It also makes political interference by countries such as China and Russia much more effortless. 

There is an ebb and flow to most trends. Has social media finally peaked and is now starting to implode both in terms of commercial success and influence? Too many people remain addicted to the pull of social media. It’s a two-edged sword: both valuable and entertaining while facilitating abuse and disinformation.

There aren’t easy answers to the tension between freedom of choice and protecting society from the undue and negative influence of powerful social media giants who too often value profit above social responsibility. We need to ensure greater transparency in how social media platforms select or reject content, and how they track our behaviour and unfairly monetize the interactions we have. We need to prevent foreign government interference and their manipulation of information on these sites. We also need much harsher penalties for inappropriate or illegal behaviour. Facebook has already paid over $6 billion in fines for privacy breaches, and more is likely to come.

The European Commission has proposed a new Digital Services Act package to restrict illegal online content, but the challenge is who decides? And by what rules?

Freedom of choice shouldn’t mean freedom to abuse, but restrictions can’t be used to politicize debate and still voices of reasonable dissent. Can self-regulation work much better? Can a frenetic Elon Musk get it right where a more established Mark Zuckerberg has not? Stay tuned. 

Steve Lafleur: Crown corporation CEOs are underpaid, actually

Commentary

Via Rail made news over the holidays for all the wrong reasons. A crippling storm combined with a few related infrastructure failures caused massive delays between Toronto and Ottawa. Many passengers, myself included, were delayed by upwards of three hours (the unlucky ones were stuck for much longer). Some got stuck at home alone on Christmas (like my partner). It’s understandable that people are upset.

I won’t re-litigate the issue. As I’ve previously written, I don’t think there’s an obvious scapegoat, and improving rail service in Canada (or at least along the Windsor to Quebec City corridor) will take time. But the travel incident brought renewed scrutiny upon Via Rail, which extended to the CEO’s compensation package. Frankly, it was a reminder that we probably don’t pay executives at crown corporations enough to attract top talent in most cases. 

I don’t mean this to sound disparaging. I have no basis to evaluate the job performance of the current CEOs of Canadian crown corporations. However, failing to offer a competitive compensation package for top executives can mean a shallow pool of qualified applicants (not everyone has the experience to run a passenger rail company). It could be that public-spirited executives are willing to take a pay cut to serve the public or to potentially have a better work-life balance than private-sector comparators. That’s a bit like hockey teams shopping for hometown discounts during the off-season. Now and then they succeed, but more often than not top players won’t take huge discounts. Especially not the kind of discount CEOs of TSX-listed companies would have to take to run a crown corporation.

Just how big would that discount be? The total compensation range listed for the CEO in Via Rail’s corporate plan is $398,212 to $529,280. That sounds like a lot of money until you compare it to what private sector CEOs earn. I’m not talking about Jamie Dimon or Warren Buffet here either. This falls far short of what the top 100 CEOs earn in Canada. Not just at the higher end, but the lower end.

To get a sense of the difference, consider the Canadian Centre for Policy Alternatives’ annual ranking of Canadian CEO compensation. While I don’t tend to agree with their takeaways on the issue, and I’m sure they’d be mortified to have their research used in defence of paying CEOs more, it is nevertheless a handy resource. In 2021, total compensation for the top 100 Canadian CEOs ranged from $6,678,084 to $140,778,515. The latter is far from typical—nearly $100 million greater than the second-place CEO. Let’s focus on the lower-paid CEOs for comparison.

Much of private sector CEO compensation takes the form of bonuses and stock-based compensation rather than salary. In fact, as the CCPA study points out, salary made up around eight percent of total compensation for the top 100 Canadian CEOs in 2021. If we look just at salary, there were eleven CEOs with lower base compensation than the total compensation for Via’s CEO. That includes four CEOs who take zero salary but had compensation of over $10 million dollars. In other words, even if one of the top 100 best-compensated CEOs in Canada left millions of dollars in annual variable compensation on the table to work for a crown corporation, their base compensation would still be lower in most cases.  

That’s more than a haircut. That’s potentially the difference between having a penthouse in New York and a nice home in Oakville; between taking a cruise now and then and owning a yacht; between never worrying about money again and worrying a little bit about money. I’m not suggesting we shed tears for the only slightly rich CEO in Oakville. But I also doubt many readers would trade the yacht and the penthouse for a merely affluent retirement to do the same job at a company they like a bit more.

Money isn’t everything. Sometimes highly sought-after employees decide to take a job for non-monetary reasons. But compensation still matters. Consider John Tavares—the kid with the Maples Leafs pajamas who dreamt of raising the Stanley Cup in Toronto. He only took a 12-15 percent discount to play for the Leafs. It’s hard to picture a CEO at the top of their game taking a fifty or eighty or even ninety percent pay cut to run Via Rail—no matter how much you might romanticize trains.

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Now, of course, one might be morally opposed to high levels of compensation for CEOs. Fair enough. I happen to think that lightly regulated capitalism works pretty well. Maybe at the margins there are some things that could or should be done to tamp down on potential excesses of compensation. That’s not really my view, but reasonable people can disagree. 

I certainly don’t think paying the CEO of a crown corporation one-tenth of what the hundredth best-paid private sector CEO earns is going to attract a deep pool of applicants to run crown corporations. As someone who wants them to run well, I’d be inclined to dedicate a slightly tinier fraction of their overall budgets to executive compensation. Incentives matter, after all. 

That isn’t to say that Via Rail is doing a bad job under the circumstances. Maybe the CEO is doing a good job, maybe he’s not. If he’s doing a good job, great. If he’s not, they should pay someone else more. A national passenger rail operator shouldn’t sweat over a rounding error in its budget. And neither should taxpayers.