Platt Perspective on Business and Technology

Insiders, outsiders and hype in social media

Posted in social networking and business, strategy and planning by Timothy Platt on July 27, 2012

I recently ran a posting on the Facebook initial public offering (IPO) with Facebook and the Challenge of Initial Public Offerings and Fair Market Valuation. I focused there on how this IPO was mismanaged, and in ways that directed any short-term profit potential to a few insiders. And I note that concerns raised by how this was managed have provoked regulatory agency response from the US Securities and Exchange Commission as well as prompting Congressional hearings and review.

With that story in mind I find myself turning to consider the role that social media can play in both:

• Skewing the playing field, promoting the development of insider/outsider imbalances, and
• Leveling the playing field by exposing that type of activity, and not just for the management and marketing of IPO’s.

In a fundamental sense, I have already started this discussion with my two postings on crowd funding and its potential investor due diligence challenges (see Considering a Cost-Benefits Analysis of Economic Regulatory Rules – 10 and Part 11, with that entire series available at Macroeconomics and Business.)

And social media and its crowd-sourced public sharing of opinion and insight can be skewed precisely because it is so open and without mechanism for unequivocal disclosure of participant identity for most channels.

• I would argue the case that this crowd sourcing of opinion and insight in general should not include or require identity disclosure as a matter of practice,
• And that there are circumstances where requiring that, or where outing the identity of specific individual contributors to the greater conversation would cause great harm.
• Whistle blowing and the sharing of information that the public needs to know, but where disclosing sources could be threatened or harmed for so sharing comes immediately to mind. And in that, my default position would be to protect participant identities.
• Instances of disclosure that knowingly, intentionally cause harm as their reason for disclosure should be considered special exception cases. And there, as just one possible category of special exception I would cite the intentional libel of troll postings (see Trolls and Other Antisocial, Disruptive and Divisive Social Networkers – Part 1 and Part 2, and also Cyber-Bullies, Cyber-Stalkers, Trolls and the Individual Social Networker.)
• In all of this is it important to remember that only some community and crowd sourcing of information involves collective pooling of commercial marketplace ideas. Any and every area of discourse and opinion potentially gets included. And whether or not we directly enter into these online social media conversations we are all impacted upon by them and their consequences.

But so far I have been writing in terms of general principles. True, intentionally deceptive and predatory marketing and I will add malicious politicking and similar messages should not be shielded as to source. And intentionally damaging, knowingly false and libelous statements should not be protected as to source identity either. On the other hand, disclosure of information that saves lives for its being made public, as an extreme example, should be so protected where sources need to be protected as to their identity.

• Where should use of social media, through crowd sourced information sharing or other channels be protected as to source identity and where should full disclosure as to source be required?
• I would argue that any valid answer would have to balance public need and the needs of the individual who would share information, opinion and insight through the crowd.
• And in the interest of freedom of speech, and protection of minority opinions and perspectives if nothing else, the option of anonymity should by default be available with opportunity to share one’s identity online an opt-in option.

And in this I raise as a hypothetical, a possible alternative way that the Facebook IPO might have initially played out. The principle underwriters for the IPO and Facebook’s own executives publically proclaimed the positives of this public stock offering and touted Facebook shares as a path to riches, while privately representing this among themselves very differently. What if an analyst at one of the main underwriters had publically entered this conversation to declare otherwise and before that first day of public trading and with proffered proof of his or her contentions? This would have violated confidentiality agreements contractually agreed to with their employer, but it might have saved the public several billion dollars of what should have been avoidable losses from buying in on overly hyped, misrepresented stock shares.

I simply post this as a thought piece for which I have no resolving, neatly packageable resolutions. And in that I note that finding working resolutions as to when and where, and under what circumstances, people should be required to identify themselves has become a lot more complex with the advent of social media and the ever more complex array of information sharing channels that created. Personal opinion and public opinion, and issues of conflict of interest and their consequences have become more complex. And the challenges these and other considerations raise will simply continue to evolve – and in ways that cross all national and legal jurisdictional boundaries. I am sure that I will be coming back to this tangle of issues in future postings. Meanwhile, you can find this and related postings at Social Networking and Business and Business Strategy and Operations – 2 and also see Business Strategy and Operations and Ubiquitous Computing and Communications – everywhere all the time.

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