Will Wall Street Get In The Way Of Jack Dorsey's Lofty Plans To Turn Twitter Into A Protocol?

from the that-would-suck dept

A year ago, I was at a round table discussion, where someone was doing one of the standard rants we've all heard, about how big internet companies were evil because they were focused on profits over the health of their user base, etc. I pointed out that while this narrative had taken hold among many people outside of these internet companies, it didn't seem to reflect what I was hearing from those within those companies -- especially as they were investing heavily in "trust & safety" teams, including both hiring people and building technology, that would provide better overall experiences on the platform. Instead, I suggested, their complaint seemed to be more with Wall Street investors, and the short term profits that it demanded from many public companies. There are the Jeff Bezos/Amazon exceptions -- where he basically told Wall Street to go put their head in a bucket for many years while he re-invested in the business as they demanded profits -- but for the most part, public companies are put on a short leash, not so much by management expectations, but the demands of investors.

I'm thinking about that a lot again, following the news of the proxy fight over Twitter's management that was raised just recently. At the beginning of the month, it was revealed that Paul Singer's massive hedge fund Elliott Management had taken a large stake in Twitter, and wanted major changes, including getting rid of founder/CEO Jack Dorsey. A few days later, it was revealed that a deal was struck between Twitter and Elliott Management to keep Dorsey in charge... for now. However, it seems that the situations is fairly tenuous. Elliott Management now has a board seat, and a promise of some very tricky "growth" targets (especially tricky in the face of who knows what's coming with the economy during a pandemic).

The details of those metrics makes it seem clear that Elliott Management is forcing Twitter down a specific path -- one that is likely to make the user experience for Twitter users much, much worse:

As part of the deal, Twitter has committed to reach certain growth and revenue goals. It promises to grow its average number of daily users who can see ads by 20 percent or more in 2020. This is not impossible; in 2019, Twitter nosed past that threshold. But it may be tougher this year, what with a pandemic and maybe a recession. Twitter also vows to “accelerate revenue growth on a year-over-year basis and gain share in the digital advertising market.” (This will be tied to specific numbers as yet undetermined.) This bigger share would most likely have to come at the expense of Google or Facebook, which aren’t exactly pushovers. If Jack doesn’t perform, the committee won’t be happy.

This is crazy on multiple levels -- and seems likely to harm Twitter's long term objectives in a demand to focus solely on the advertising model to make it work. That's going to piss off users, and potentially drive down usage, just to make these Wall Street short termers happy.

My even bigger fear, however, is that this will make it nearly impossible for Dorsey and Twitter to follow through on the company's stated belief in moving to an open protocol, rather than remaining a proprietary platform. Moving to a protocol, while potentially opening up new revenue streams, would likely cause at least a short term problem for Twitter's traditional ad revenue business. And given the short term nature of the investor's mindset, they seem unlikely to allow the company to really push forward with such a radical change. And, of course, if Dorsey is eventually pushed out by the board, whoever takes over may not care at all about the open internet and a protocols-based approach. I think that would doom Twitter over the long run, but Wall St. doesn't much seem to care about that.

Hopefully this isn't how things play out, but it is concerning. It's also a reminder that whenever people insist that it's the folks at the internet companies driving for profit over all else, it might actually be Wall Street and the broken structure of our public markets, that basically require a short-term, profit-maximization model over a long-term sustainable model.

Filed Under: advertising, jack dorsey, paul singer, platforms, profits, protocols, short term, wall street
Companies: elliott management, twitter

Twitter Makes A Bet On Protocols Over Platforms

from the well-this-is-nice dept

It looks like Twitter is making a bet on protocols over platforms for its future.

Nearly five years ago, I first wrote about the idea of why protocols are a better approach than platforms for various internet platforms struggling with content moderation issues. In that first post discussing it, I talked about two companies that I thought might benefit most from such an approach: Twitter and Reddit. Over the intervening years, I've been thinking, talking, and writing on this subject quite a bit, including the big paper I released with the Knight First Amendment Institute at Columbia University, Protocols, Not Platforms: A Technological Approach to Free Speech. That details a variety of different ideas regarding how we might move to a world dominated by protocols, rather than just centralized, proprietary, siloed platforms.

In the paper I talk about whether or not it makes sense for a larger company to adopt a protocol approach and to move away from a platform-based world. I've been talking this over with a variety of folks in and out of the tech world for years, and kept getting told that there was no way any company would voluntarily move in such a direction. And, after watching Facebook's weird approach with Libra (which is already looking like a flop), it only seemed to confirm that many of these companies are simply too entrenched in the platform model.

And yet... just a little while ago, Twitter co-founder and CEO Jack Dorsey has announced that Twitter is going to start experimenting with protocols as a different approach to how the company might architect its business (and, yes, he cites my paper in his announcement). This is not, by any means, them jumping off the high dive into the world of protocols, but more a toe in the water. Basically, Twitter is going to seed fund an outside team, called BlueSky, that will be charged with creating an open and decentralized protocol standard for social media which Twitter might eventually use for its own system.

There are a lot of challenges here -- and many reasons why this project could fail. There are a bunch of existing teams trying to build their own protocol approaches for this as well. But, I think it is notable that Twitter, specifically (the same company I first wrote about regarding this approach five years ago) has decided to take a serious look at moving in this direction. I appreciate that Twitter is not shying away from the challenges and potential pitfalls to this approach, but going in with eyes wide open, suggesting that this is an experiment worth exploring.

If you're worried about the dominance of certain social media platforms, or if you're concerned about privacy online, or if you're uncomfortable with leaving the decisions for how content moderation works in the hands of a few internet company bosses -- this is big news and something you should be paying attention to. It won't change the way the web works overnight. Indeed, it might never have that big of an impact. But it certainly has the potential to be one of the most significant directional shifts for the mainstream internet in decades. Keep watching.

Filed Under: distributed, jack dorsey, platforms, protocols, social media
Companies: bluesky, twitter

After Jack Hack, Government Starts Taking Wireless 'SIM Hijacking' Seriously

from the yeah-maybe-get-on-that dept

Wireless carriers have been under fire for failing to protect their users from the practice of SIM hijacking. The practice involves posing as a wireless customer, then fooling a wireless carrier to port the victim's cell phone number right out from underneath them, letting the attacker then pose as the customer to potentially devastating effect. Back in February, a man sued T-Mobile for failing to protect his account after a hacker, pretending to be him, ported out his phone number, then managed to use his identity to steal thousands of dollars worth of cryptocoins.

Like the ongoing wireless industry's location data scandals, the FCC has so far refused to utter so much as modest condemnation of carriers that have failed to protect users.

But with Twitter CEO Jack Dorsey having his Twitter account recently hijacked thanks to SIM hijacking, the government appears to have finally gotten the message that we have a bit of a problem.

For example, the FBI issued a warning last month to its private industry partners, noting that two-factor authentication can be bypassed thanks to the hacks:

"The FBI has observed cyber actors circumventing multi-factor authentication through common social engineering and technical attacks," the FBI wrote in a Private Industry Notification (PIN) sent out on September 17. The FBI made it very clear that its alert should be taken only as a precaution, and not an attack on the efficiency of MFA, which the agency still recommends. The FBI still recommends that companies use MFA.

Carriers, for their part, don't much like to publicly talk about the problem. In part because it's frequently their employees who are helping to facilitate the scams for a little money on the side. Identity thieves use SIM hijacking to do everything from cleaning out bank accounts, to stealing valuable Instagram usernames and selling them for Bitcoin. The process isn't particularly complicated, and more often than not involves the social engineering of a cellular carrier's support employees. Until the Dorsey hack, their refrain has been this is a small problem that's very unique. It's not.

There are some steps users can take, including changing passwords frequently. T-Mobile users can also, for example, call 611 from your cellphone (or 1-800-937-8997), then tell a support staffer that you want to create a “port validation” passcode (here's a guide for other carriers). Still, like the SS7 wireless exploit that has been in the wild for years, it's clear wireless carriers might want to spend a little less time on mindless mergers and consolidation, killing net neutrality, and jacking up prices, and a little more time training their employees and protecting their customers from security threats.

Filed Under: fbi, fcc, identity fraud, jack dorsey, sim hijacking, telcos

Rep. Kevin McCarthy Continues The Parade Of Stupid Anti-Internet Grandstanding

from the playing-to-a-dumb-base-is-dumb dept

In the last few months, we've seen a fairly astounding amount of idiotic grandstanding from both parties in Congress, basically trying to out stupid themselves in attacking internet companies. On the Democratic side, they've been peddling incomprehensible nonsense about how internet companies have to stop bad information from spreading (and also some misleading claims about antitrust). On the Republican side, they keep dragging internet companies up to Capitol Hill and making ridiculous and blatantly misleading claims about how they're "censoring" conservatives, which is a bunch of utter nonsense.

And here's the thing: most of the politicians spewing this stuff know it's pure nonsense. But, they also know that it's an effective money raising tactic. When Democrats and Republicans clash over an issue, all too frequently, it's really about riling up people for donations, rather than any actual policy agenda. And it appears it's not going away any time soon. Despite multiple hearings that have only served to make Congress look incredibly hypocritical and/or ignorant, House Majority Leader Kevin McCarthy is now joining the fray, saying he wants Twitter CEO Jack Dorsey to testify about Twitter's made up censoring of conservative voices.

And while I'm not sure whether or not some other members of Congress grandstanding on this issue actually understand what's going on, McCarthy of all people should know better. He actually has at least some history of understanding tech issues better than many of his colleagues. But, apparently, these days, the way to raise money is to make blatantly false or misleading statements against tech companies, and thus, McCarthy feels the need to join in on this silly dog and pony show. I'm sure we'll get another stupid hearing out of it that demonstrates to anyone just how clueless Congress is, but I guess if it gets a bunch of ignorant people to kick in to his re-election campaign, that's all good, right?

Filed Under: bias, censorship, content moderation, grandstanding, jack dorsey, kevin mccarthy, politicians
Companies: twitter