Updated Apr 27, 2018

Facebook's deserted island

Illustration: Sarah Grillo / Axios

Facebook is used to being the cool kid. But now it’s eating lunch alone: Companies are trying to figure out how to be as un-Facebook-like as possible.

What’s happening: Several tech companies, including Apple, IBM and Salesforce, have publicly differentiated themselves from Facebook. Now that lawmakers are getting more interested in regulating tech, other companies are considering launching their own campaigns to stay as far away as possible from Facebook's privacy drama, D.C. tech lobbyists tell Axios.

What’s driving it

A new era of distrust: For years, policymakers were reluctant to take action if tech lobbyists warned it would “break” the internet or “kill” innovation.

  • The bipartisan anti-sex-trafficking bill that President Trump just signed into law was a turning point for all tech companies, even those not directly affected by it.
  • It showed that the “trust us” and “we’re different” lobbying arguments tech has been used to is no longer working.
  • “Members and staff started to say, ‘I don’t buy that argument, I don’t believe you.’” said an industry lobbyist.
  • That’s a big shift from the last decade, and has tech companies of all stripes are worried that lawmakers are growing more willing to challenge the industry more broadly.

Regulatory risk: Even though there’s no imminent threat of tough bills coming from Congress, Facebook CEO Mark Zuckerberg’s openness to regulation in the recent hearings rubbed some rivals the wrong way.

  • “What regulation means to Facebook isn’t necessarily the same that it would mean to us,” said a senior staffer at another internet company. “I think some people were frustrated by how casually it was thrown around” in the hearings.
  • Zuckerberg pointed out in the hearings that any new rules should be carefully and narrowly tailored and could disadvantage smaller firms. Still, companies worry that Congress may try to address the issue with a hammer rather than a scalpel.
  • The Klobuchar-Kennedy privacy bill introduced this week in the Senate generally gave Facebook what it asked for. Other firms complain they weren't consulted.

Congress’ confusion: At this month's hearings, many lawmakers were clearly confused about how data flows across the web and between companies.

  • To tech firms, uninformed lawmakers are not just frustrating — they are terrifying. All the product demos, headquarter visits and campaign contributions don’t count for much if members of Congress don’t fully get what your company does and, more importantly, why it’s beneficial.
  • Before the Cambridge Analytica scandal, Congress was most interested in Russian election interference on social media, leaving most tech companies out of the line of fire. Now that the focus is on data privacy, a larger part of the industry feels vulnerable.
  • "In being responsive to questions, there's a natural tendency to set themselves apart from Facebook," said a tech lobbyist. "Everyone has an answer — no matter how close they are to Facebook — making it clear that they're not Facebook."
What to watch

The risk of a one-size-fits-all regulatory approach will prompt more deliberate differentiation. Companies that have kept a low profile may start to be more vocal.

This week, a coalition of app makers explained to lawmakers how they collect data and how they interface with Facebook and other platforms in more than 150 meetings on Capitol Hill, said Morgan Reed, President and CEO of the App Association. During the hearings, many app developers felt they'd been mischaracterized as data-thirsty hackers.

  • "We were disappointed that there wasn't enough distinction made between the kinds of information we share and the data that, frankly, Facebook's platform encourages us to engage with," Reed said. "Our message is, watch out for overly broad legislation that tries to capture all the business models. That will backfire."

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