The importance of checks and balances in the tech world

August 12, 2019 10:29
Facebook co-founder Chris Hughes called for the breakup of the social media behemoth. Photo: Reuters

Chris Hughes, who co-founded Facebook with Mark Zuckerberg in their Harvard dorm room, said Zuckerberg has become far too powerful and his “focus on growth led him to sacrifice security and civility for clicks”.

Hughes is calling on the US government to break up the social media behemoth.

Zuckerberg not only controls Facebook but also the widely used Instagram and WhatsApp platforms. He could monitor, scrutinize and manage the conversations of 2 billion people across the world, easily making him one of the most powerful persons in the tech world.

Facebook would show customized content to its users by looking at what they like or share, and who they interact with. We read posts and news that are similar to our values. That could magnify one's biases over time as we get no chance to read those that are against our values.

US and European regulators have little oversight over this virtual empire that spans across nations, even if they want to.

"Power tends to corrupt, absolute power corrupts absolutely," as the saying goes. Thus, a mechanism of checks and balances is crucial.

Sadly, some governments or regulators tend to give up such checks and balances in exchange for benefits.

For example, stock exchanges have introduced the dual-class shareholding structure, which deprives investors of the right to influence the decisions of listed companies.

Zuckerberg, for example, has utilized the structure to shut down minority shareholders’ request to add more independent directors.

Thanks to the same structure, Hong Kong-listed Xiaomi Corp. was able to grant the company’s founder Lei Jun an incentive bonus of 9.9 billion yuan (US$1.4 billion) even though it posted a loss of 7.59 billion yuan in the second quarter of last year.

The decision was made without approval from its minority shareholders.

This article appeared in the Hong Kong Economic Journal on Aug 9

Translation by Julie Zhu

[Chinese version 中文版]

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Hong Kong Information Technology Federation Chairman