Is Silicon Valley Headed For A Reckoning?

LATimes | There are calls to eliminate "safe harbor" for platforms such as YouTube, Twitter and Facebook so that they can be regulated like media companies. Other ideas include turning Google into a public utility like its counterparts in the telecommunications sector. And Amazon is forcing new ways of thinking about monopolistic powers beyond just consumer prices.

One recent sign that Washington is willing to take on the industry occurred Wednesday when the Senate overwhelmingly passed the Fight Online Sex Trafficking Act, which penalizes sites that facilitate prostitution. Silicon Valley opposed the law, fearing it was a slippery slope that would make tech companies liable for content. Already, Craigslist has removed its personals section, and Reddit said it would ban certain transactions.

Still, it may be unreasonable to expect wholesale change without public opinion turning irrefutably against Silicon Valley. Consumers remain captive to technology and investors aren't exactly ready to dump internet stocks.

That said, Facebook shares fell nearly 6% this week amid calls from some users to quit the social network. Similar public pressure led to the ouster of Uber's controversial CEO last year. Perhaps to quell such speculation, Facebook's board took the unusual step of releasing a statement in support of the company's executives Wednesday.

The harsh backlash belies the general sense of fatalism about privacy in the digital era. A Pew Research poll from 2014 showed an overwhelming majority of Americans lacked confidence in internet companies to keep their information private and secure.

Despite that, a Pew survey from this year showed how beholden Americans are to some of these companies after finding 73% of U.S. adults use YouTube and 68% use Facebook.

It's why advertisers won't abandon the platforms anytime soon, even if they have to weather scandals such as Facebook's and cry foul once in a while for placing their ads next to objectionable material.

"The reality is, right now, [Facebook's] profits are still rising," said David Kirkpatrick, author of "The Facebook Effect" and founder of the tech conference Techonomy. "Advertisers for the most part are still going to be there. This is not a fundamental break with their commercial success. Not yet. It depends entirely on what they do now."

Facebook says it has matured from its "move fast and break things" days (its motto was amended in 2014 to "move fast with stable infra," shorthand for infrastructure). And Zuckerberg's response to the current crisis, however late, shows how much more seriously he's acknowledging privacy concerns.