Will Banks Legislate What Congress Can’t?


Money Quote Feb. 20 2018

A remarkable test case for the concept of “Business Must Lead.”

The theme of this year’s Shift Forum is “Business must lead.” The phrase is simple, but the ideas behind it are complicated: How might business actually take a larger, more positive role in the public sphere? Just in time for next week’s event comes a perfect example of “business leading” thinking — in the form of a column from Andrew Ross Sorkin.

In the piece, Sorkin acknowledges that our policymakers and politicians have utterly failed to execute their duties when it comes to gun control. A strong majority of Americans believe that sale of assault weaponry should be limited or banned, but the brute force of NRA money has stopped sensible legislation from moving forward. So how could business step in and lead? Sorkin argues that banks could ban the processing of transactions related to assault weapons — just as they already have with cryptocurrencies. In the case of bitcoin and its peers, banks claim they are protecting their customers from potential harm. And what could be more harmful to customers than, well…death?

Apple Pay, Square, and PayPal already ban transactions related to the purchase of guns. So why not JP Morgan, Citi, and Bank of America, Sorkin asks. All of these companies have devoted hundreds of millions of dollars to “corporate social responsibility” over the past decade, and they’re falling over themselves to agree with the high-minded musings of Blackrock CEO Larry Fink, who recently shook up the financial services sector with his proclamation that companies must have a positive impact on society.

As Sorkin puts it: “Jamie Dimon, chief executive of JPMorgan Chase, which issues credit cards and owns a payment processor, has talked about how he and his bank have “a moral obligation but also a deeply vested interest” in helping “solve pressing societal challenges.” This is your chance, Mr. Dimon.”

Sorkin is dead right. The banking industry could do something deeply impactful and positive for society, right now. The question now becomes: Will it? Or was its banning of cryptocurrency purchases perhaps a bit more…self serving in nature? Sorkin’s timely column is likely driving more than a few volatile C-suite conversations on Wall St. this week. Regardless, the very fact that such an idea has any currency at all is a testament to the shifting expectations now freighted upon the business community.

Related: One of the very first CEOs to speak out publicly against Trump’s Charlottesville comments gives his first public interview to the Times:

Meanwhile, it’s been a pretty terrible few days for Facebook, which has been working overtime to manage the narrative around Mueller’s Facebook-laden Russian indictments last Friday. Here’s a roundup of the most interesting stories in big tech. First, a tweetstorm heard round the tech and policy world, from Facebook ads VP Rob Goldman, went viral, sending the company scrambling:

The Times fact checks Goldman and finds him wanting:

And Om Malik digs into what really makes the company tick, noting “money and obsession with growth and engagement are what makes Facebook go around. … Facebook is about making money by keeping us addicted to Facebook. It always has been — and that’s why all of our angst and headlines are not going to change a damn thing.”

I find his observations about Facebook’s VPN service, Protect, which I hadn’t given much thought to, particularly interesting.

Lastly, Facebook was the subject of an unflattering profile of its political unit, a group that helps politicians achieve their goals, regardless of what those goals are:

Read the whole thing, if you have the time. It’s quite thought provoking.

Meanwhile, Facebook rival Google didn’t escape the long weekend unscathed. The Times magazine ran a feature length takedown of the search giant’s monopolistic business practices, focusing in particular on the company’s alleged bad behavior in vertical search like shopping and travel:

The piece notes that antitrust regulation against Google is still unlikely, in the US anyway, but that a movement against the company is building nevertheless: “There’s a loose coalition of economists and legal theorists who call themselves the New Brandeis Movement (critics call them “antitrust hipsters”), who believe that today’s tech giants pose threats as significant as Standard Oil a century ago. “All of the money spent online is going to just a few companies now,” says Reback (who disdains the New Brandeis label). “They don’t need dynamite or Pinkertons to club their competitors anymore. They just need algorithms and data.”

The piece notes the success of antitrust regulation in the EU, and concludes thusly: “If you love technology — if you always buy the latest gadgets and think scientific advances are powerful forces for good — then perhaps you ought to cheer on the antitrust prosecutors. Because there is no better method for keeping the marketplace constructive and creative than a legal system that intervenes whenever a company, no matter how beloved, grows so large as to blot out the sun. If you love Google, you should hope the government sues it for antitrust offenses — and you should hope it happens soon, because who knows what wondrous new creations are waiting patiently in the wings.”

The general counsel of Google and the head of Facebook’s News Feed, along with several prominent social media researchers and critics, will convene at the Shift Forum next week. Waitlist slots are clearing this week, find out more here.

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