Skin in the game: regulation vs. being sued

Take a company like Facebook. They leave millions of passwords in plain text, they created the news feed where dictators use the various Facebook products (Instagram, FB, Whatsapp) to spread fake propaganda, they violate our privacy repeatedly (even those of us who don’t use it, but are connected to people who do) and hijack our attention.

What would turn them around when their very business model is based on driving engagement, taking attention and stealing time?

In the book Skin In The Game – Nassim Nicholas Taleb, argues that in most cases taking a company like Facebook to court and punishing them or the threat of a massive law suite is the best route to have Facebook change their behavior. Hence it makes sense that FB founder MZ asked congress to regulate them. Once they are regulated, FB knows how to play the game of paying for lobbyist and contributing to political campaigns to get around or stay at the edge of regulation.

He argues in the book that “If you harm me, I can sue you” has worked really well in cases of pollution for example.

While many of us might have immediate negative reactions to law suites, forcing FB and it’s employees to have skin in the game, ultimately gives them a framework and the right incentives to do the right thing.

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