Facebook is special because, in network economic terms, its product is a platform, and successful platforms are few and far between.  For all its bells and whistles and features and privacy policies, Facebook remains—at heart—a place that people hang out.  As the proprietor of a popular hangout, Facebook gets to write the rules guiding all the folks who think it’s a good place to pitch their businesses or to make some sales.  In network economic terms, these businesses operating inside Facebook’s business comprise an aftermarket.

In a very real sense then, Facebook operates as a private-sector regulator of a vibrant commercial marketplace—the Facebook aftermarket.  Vendors in this marketplace develop and launch “apps,” literally software applications that run atop the Facebook platform.  Facebook has a symbiotic—and asymmetric—relationship with these Facebook app companies (or FBapps).  The symbiosis is clear: the more people who like Facebook, the bigger the potential audience upon which each FBapp can draw; the better the FBapps, the more popular Facebook will become.  The asymmetry is equally clear: each individual FBapp needs Facebook more than Facebook needs it.

The single most successful FBapp provides the clearest illustration of this asymmetry—and perhaps the single best justification of Facebook’s value.  Zynga created a suite of wildly popular social games running atop the Facebook platform.  Zynga worked hard to launch its games and to build a following.  To generate revenues, Zynga decided to sell game credits to its players.  That idea succeeded; players showered considerable real dollars on Zynga in exchange for those game credits.  Zynga excitedly projected its revenues forward and developed business plans capable of making investors salivate.

Investors were not the only ones to notice, however.  Facebook also noted Zynga’s success, and asked for a piece of the action.  Zynga demurred.  So Facebook announced that anyone selling credits inside an FBapp must sell Facebook credits—which, by the way, carry a 30% commission.  What did Zynga do?  The answer is in Facebook’s IPO filings: commissions from Zynga’s sales of Facebook credits generated $445 million in 2011 revenues for Facebook, or roughly 12% of Facebook’s total.

This story contains some key lessons for the modern economy.  First, it’s good to be a platform.  Second, aftermarket players need to pay closer attention to their platform providers.  It’s easy enough to cast Facebook as the villain in this tale—the larger company preying on its smaller symbiote—but that characterization misses the point.  Facebook worked hard to create an attractive platform.  Facebook let Zynga come hang out with a couple of hundred million of its closest friends.  Facebook handed Zynga a sizable potential customer base.  There’s no question that Facebook deserved some compensation for this work.  The only real question, then, is how much compensation Facebook deserved.

Anyone who understands and appreciates markets knows the answer to that question, too.  Facebook deserved whatever it could negotiate with Zynga.  From a consumer standpoint, as long as both Facebook and Zynga retained enough earnings to stay in business, the details of the negotiation are irrelevant.

Still, it’s hard to hear this story without concluding that Facebook played its hand very well while Zynga played it poorly.  By all public accounts, Facebook caught Zynga by surprise.  Zynga developed its entire business model and revenue projection unaware that Facebook could erode 30% of it overnight.  Why?  While it’s hard for an outsider to know, the most likely answer is also the simplest: fast-growing startups are understaffed, and they can’t see everything that might come their way.  Zynga’s attention was likely focused elsewhere, and Facebook exploited a blind spot.

That blindness should serve as a cautionary tale.  Today’s tech sector is dominated by aftermarket players—software and hardware developers toiling on applications or add-ons dependent on someone else’s platform.  Relationships between platform owners and the players in their aftermarkets can be tricky.  Rules governing patents, copyrights, antitrust, unfair competition, encryption, and circumvention all come into play in curious ways.  Strategic negotiations and contracting can all play critical roles.  And as the folks at Zynga can attest, getting caught blind can cost you a half billion dollars a year or so.  After a while, that sort of money can add up.

Welcome to life in the aftermarket economy.

It’s official.  Former Congressman Anthony Weiner (D-NY), who resigned in disgrace over a bizarre sexting scandal this past June, was NOT hacked.

Today, eight months after the congressman first claimed he was the victim of a hacking or a prank, the NY Daily News has broken the story that Anthony Weiner spent more than $13,000 in campaign funds to hire private investigators to track down a hacker that never existed.

Weiner paid T&M, a Manhattan-based firm, $13,290 for “legal services” in the fourth quarter of 2011, financial statements filed Tuesday with the Federal Election Commission reveal.

Sources told the Daily News, however, that Weiner hired T&M — a firm loaded with former NYPD sleuths — when he was in full spin mode over the controversy that eventually led to his resignation from the House.

[...]

Two sources familiar with Weiner’s downfall said the Queens pol told investigators the same story. T&M investigated — and learned Weiner had sent them on a fool’s errand.

“They did their job, and then it was time to sit down with lawyers,” another source said. “Self-denial, it dies a slow death.”

Surprised? No, neither were we.

The married congressman from Queens, NY initially told the public his Twitter and Facebook accounts had been hacked, after a tweet sent to a female college student in Washington state appeared in his public Twitter timeline, complete with a photo of a man’s bulging underpants.

The tweet triggered the unraveling of a series of sexually explicit online messages and additional photos Weiner had shared with numerous women. More than two weeks would pass before Weiner finally came clean about his extracurricular activities.  But not before embarking upon a media blitz to embellish his imaginary tale of hackers and pranksters and other political scapegoats:

“You know, I can’t say with certitude. My system was hacked. Pictures can be manipulated, pictures can be dropped in and inserted,” reported HotAir.

“At a time when the GOP is playing games with the debt limit, a member of the Supreme Court is refusing to recuse himself from matters he has a financial interest in, and middle class incomes are stagnant, many want to change the subject,” Weiner said in a statement emailed to POLITICO by his office. “I don’t. This was a prank, and a silly one. I’m focused on my work.”

Anthony Weiner indicated at the time that he’d asked a firm to look into whether his photos “could have been taken or manipulated,” followed shortly thereafter with the announcement that he’d hired an attorney to explore “civil or criminal actions” in response to the “prank.”  Now we learn that he used campaign funds to try and cover his hide.  And The Hill is reporting that Weiner continued to spend more than $130,000 in campaign cash even after his resignation.

This may be a good time for some to reflect on the unwarranted over-zealous scrutiny that fell upon Andrew Breitbart and other writers associated with these very websites who were accused of targeting, setting up, and/or hacking Congressman Weiner (or other ludicrous conspiracy theories), accusations that are often still repeated today, months after Weiner’s admission and resignation.  And one of the whistleblowers who stuck through the story has since had his life turned upside down, largely as a result of Weiner’s dishonesty (I won’t link to the horrid posts).

Might I remind these same critics that BigGovernment, which first broke the Weinergate scandal, reported the facts and did so responsibly, despite numerous claims to the contrary.  The dishonest party in this story is the one who no longer holds a seat in Congress.  And that’s a fact.

Over 100 entries were involved in the parade including marching bands, motorcycle groups, and military units. In addition, some 600 veterans, many in military uniforms and fatigues, marched down Market Street waving and giving salutes and thumbs-up to the crowd.

Organizers estimated the turnout reached 100,000. It was truly an honor and a privilege to be able to attend this parade and help welcome home and honor our brave soldiers. More photographs from the parade can be seen here.

When parades happen in downtown St.Louis, it is customary that many businesses along the parade route allow spectators to use their front steps in order to gain a better view of the parade. This access is incredibly helpful to those who are elderly or suffer from disabilities. A good example of this is the Peabody Opera House at 1400 Market Street as pictured in the background below:

The parade route stretched from 4th St. & Market St. down along Market St. to Union Station.
Click to Enlarge

Absolutely all of the businesses along Market Street allowed such access during Saturday’s parade welcoming home our U.S. military, well, all except the Bank of America Plaza. Bank of America was so adamant about denying access to their precious “patio”, as one security guard described it as he repeatedly told me to leave, that they made sure these large barricades were in place before many arrived.

This additional elevated vantage point would have been greatly appreciated by spectators to last Saturday’s parade wanting to show their support for our troops whether they were elderly, disabled, veterans or not.

For a bank that is already suffering from the image of being “against our troops” by their recent illegal foreclosure tactics against our U.S. servicemen, last Saturday was a real missed opportunity. As ABC News reported on Nov. 11th, 2011:

At least 160 active members of the U.S. military had their homes “illegally foreclosed upon” by the Bank of America, according to the Justice Department.

One thing the execs at Bank of America could have done was spend a few dollars and help area veterans, who could not easily make it to this event, and position them on their patio so they could enjoy the parade and show their support as well. I guess the brain trust at BofA missed that one.

Oh, but that would cost more than just requesting barricades to keep out those wanting to welcome home our brave servicemen and servicewomen. I suppose when you have presidents bail-out your bank to the tune of $45 Million, you don’t have to worry about PR or doing the ‘right thing’ like other businesses. No fear of failure here.

Liz Gannes of All Things D enlightens us about the new dual effort, reporting that:

It will consist of sentiment analysis reports and voting-age user surveys, accompanied by stories by Politico reporters. Most notably, the Facebook-Politico data set will include Facebook users’ private status messages and comments. While that may alarm some people, Facebook and Politico say the entire process is automated and no Facebook employees read the posts.

Rather, every post and comment — both public and private — by a U.S. user that mentions a presidential candidate’s name will be fed through a sentiment analysis tool that spits out anonymized measures of the general U.S. Facebook population.

Apparently, the fact that “no Facebook employees read the posts” is supposed to assure us that the quotes are not being hand picked to prefer one candidate over another. After all, since the posts will be published worldwide it can’t possibly be referring to privacy (plus, the quotes are “anonymized” so they can’t be attributed to any particular Facebook user).

But here’s the thing.

Whether or not the quotes are actually being hand picked or being “fed through a sentiment analysis tool” (whatever that means) isn’t really that relevant because we all know that more young people than old use Facebook. That means that in all likelihood those candidates that appeal to younger voters (namely Barack Obama–surprise, surprise, Mark Zuckerberg’s apparent favorite) will be getting lots of play on the pages of Politico as the national favorite.

And here’s something else: Don’t be surprised if the Republican Party’s quirkiest candidate, Ron Paul, also comes out the GOP front runner. After all, it’s no secret that Paul’s young followers have been passionate about vocalizing their support perhaps hoping to convince Americans that Paul really is the front runner.

The end game here is that there may be a perception that Obama is ahead in the general election and Ron Paul is ahead in the Republican Party, which (let’s face it) may send any number of undecided voters back over to Obama.

The results passed along from Facebook to Politico may be accurate in terms of what’s being posted on Facebook, but they are not indicative of what views are held by the majority of mainstream Americans.

One of the reasons many of us get our news and entertainment from the Net these days is because we find the legacy media lacking. We have turned our backs on old media because it has failed to serve us. We no longer have to tolerate obvious and unceasing news bias, or watch only boxed and packaged melodrama. We are now free to pursue news and entertainment where we like with the click of a mouse or a swipe of the Ipad.

Hollywood, and most of legacy media are unhappy about this and would prefer that we continue to listen to their propaganda and watch their terrible movies. I mean, how many sequels can these guys crank out? SOPA seeks to put we the media consumers back in line.

SOPA is being sold as a way to stop the piracy of movies and music from overseas sites, and this is a problem, but the bill goes much further than just addressing this issue.

For instance if you are the owner of a website and someone posts a bit of copyrighted material in a comments section or in a forum, the owner of the copyright can ask the government to take down your site. You may not even know that someone posted such content, yet you wake up one morning to find your site, and perhaps livelihood, gone from cyberspace with only digital tumble weeds left in its place.

Imagine how this would affect some of your favorite sites, Facebook for instance.

Facebook, Google, AOL, Twitter, and other online companies may go black in protest to raise awareness of SOPA, the so called “nuclear option.” The tech guys know that it’s DEFCON 5 for free speech and their business models and they are willing to forgo days of revenue to fight this bill.

So SOPA has become a fight between Hollywood and Tech. Hollywood has outspent Tech lobbying for SOPA 5 to 1, and the current situation in the House Judiciary Committee reflects this. The Chair, Lamar Smith (R) Texas, and the ranking member John Conyers (D) Michigan, are fully on board along with much of the rest of the House Judiciary Committee. I am sad to say the even Congressman Bob Goodlatte, a guy I have a great deal of respect for is currently supporting this bill.

However there is hope and it comes from northern California Republican congressman (they do exist) Darryl Issa.

Issa said recently at the Consumer Electronics Show in Las Vegas that, “SOPA was ill-conceived, written in Hollywood, and included all kinds of things that physically can’t be done, including the DNS blocking.”

He also called SOPA “Unconstitutional.”

Issa, who is also pursuing Attorney General Holder for the bungling of the “Fast and Furious” program, should know. He is a former, and very successful tech CEO.

Unsurprisingly the SOPA story has gotten little attention from the mainstream press. It is after all the mainstream which wants to regain (as much as it can) “only-stream” status.

I don’t know about you, but I like my internet free and wide open. It’s the last place that is.

This article was originally  published at AgainstCronyCapitalism.org

Contrary to recent media reports, the Brazilian Blowout hair treatment is safe for use.

Oregon OSHA and Federal OSHA had already attacked Brazilian Blowout’s product, steering the media to focus on faulty aspects of their respective studies, and burying the truth  –  that the product does not release formaldehyde in amounts that exceed state or federal short-term or long-term exposure limits.

Enter Rep. Earl Blumenauer (D – 3 – OR).  Ontheissues.org labels him a “hard-core Liberal”, and you know what that means when it comes to anything involving chemicals or the environment.   Rep. Blumenauer sponsored nonsensical bills like HR 3311 that taxes drivers based on miles driven; a ludicrous bill to jump-start the funding of streetcars; a bill to establish under-the-radar death panels; a bill providing environmental education grants for outdoor experiences (huh?); and even one quashing free speech by attempting to ban a website promoting the perfectly safe Yucca Mountain nuclear waste dump.

So Rep. Blumenauer reads about OSHA’s nonsense in the media and, because he’s a politician, doesn’t do his research, either.  Nor does he bother contacting the company to get their side of the story.   Instead, he grandstands by penning a letter to the Food and Drug Administration asking that they recall the product — a product already proven to meet OSHA standards!

I asked Rep. Blumenauer’s press secretary, Derek Schlickeisen, about this approach to policy.  His assertion was that politicians “can’t have a chemist on staff”, and thus rely on OSHA’s scientists to bring incidents like this to light.  When I mentioned that the company-funded study by Health Science Associates showed formaldehyde levels below OSHA standards, he inferred that the study held little weight because it was company funded.

Yet why is it that OSHA’s results are given any more credibility, especially when OSHA caused a panic based entirely on a faulty sample?  Are we to believe that OSHA scientists are somehow free of ideological bias?  Kermit McCarthy, one of the authors of the Oregon OSHA study, “likes” hard-core Liberal Sen. Ron Wyden according to his Facebook page.  Why isn’t his bias questioned?  If anything, a government worker is likely more biased than a private company to insert bias, because his very job depends on his work generating a result that permits the government to do something.  Otherwise, the agency’s existence, and the employee’s, have no purpose.

The FDA: Where Nonsense Meets Politics

Now the drama turns to the FDA, which should operate as an independent agency, but doesn’t.  It’s a political entity, and when a politician writes them a letter, they have to do something.  So they take several months to decide what to do.  In the interim, the Cosmetic Ingredient Review Panel effectively came down on the side of the company, saying:

“We urge FDA to work expeditiously with OSHA and appropriate state and local organizations to objectively determine if salon hair smoothing products emit levels of formaldehyde gas that are unsafe for consumers or salon workers under their intended conditions of use and taking into consideration salon ventilation practices [emphasis mine]“.

Meanwhile, FDA spokesman Arthur Whitmore confirmed that the FDA never conducted its own air sampling, which its Investigations Operations Manual permits.  Instead, Mr. Whitmore confirmed that the FDA “…did conduct experiments to simulate what occurs in a salon setting by heating the product at various temperatures and measuring formaldehyde production.”  But how much of the product did the FDA heat up?  The amount used in a treatment?  More?  Less?  And what about ventilation?  Did the FDA consider that salons are ventilated and whatever gross amount of formaldehyde that may have been released in a simulated situation does not in any way reflect reality?

Starting to see problems with the FDA’s approach?  I am.  This is ironic, considering the FDA’s own manual reads:

“4.1.3 – Responsibility.  Collect every sample as if you will be required to testify in court about everything you did concerning each and every event surrounding the sample collection. Mistakes or deficiencies, however trivial they may seem, can fatally damage the government’s case. Be objective, accurate, and thorough.”

Even worse, Mr. Whitmore said:

“FDA used information from a number of sources to support the warning letter including data obtained by Oregon OSHA, Federal OSHA, Health Canada, and FDA’s own laboratory studies. FDA data was obtained using HPLC and mass spectrometry, and it agreed with the data obtained from other sources. It also agreed with a recent study published in the November issue of the Journal of Occupational and Environmental Hygiene”

This is known as “fruit of the poisonous tree”, in that it relied on data I have proven to be inaccurate and misleading in my previous articles.  In my next article, I also debunk the cited Journal study (it used more product than directed).

Nevertheless, the FDA had all of the following to examine:

• Oregon OSHA report showing the product is safe.
• Federal OSHA report showing the product is safe.
• Health Sciences Associates report showing the product is safe.
• It’s own guide to chemicals that shows methylene glycol and formaldehyde are different substances.
• A Liberal environmentalist politician’s letter asking them to ban the product.
• Heavily biased media reports.

And what does the FDA do?

They issue a warning letter.

And yet another round of media hysteria follows….in which the company is granted one sentence in each report, “denying the allegations”.

MSNBC

Huffington Post

ABC News

Fox News

Headline News

CNN

ABC local news

Company Fights Back; Media is Silent

In truth, Brazilian Blowout agreed to cooperate with the FDA to demonstrate that the product was neither adulterated nor misleading, and although they disagreed with the FDA over whether or not their product was considered “formaldehyde free”, they removed that language from their product.

Still, not a single media outlet has asked the company about their side of the story.

In fact, the company’s response letter to the FDA laid out a coherent and comprehensive rebuttal to the agency (available for review).  In short, the company presented all the evidence presented in this series along with two other major points.  First, they insist the product is not “adulterated” because it doesn’t “contain a deleterious substance that may render it injurious to users under the contradiction of use prescribed in its labeling”.   In other words, if people (and OSHA) use the product as directed, no injurious substance gets released.   Second, in relying on OSHA’s data, the FDA relied on a third party’s inferior method of sampling formaldehyde, a method that itself actually produces formaldehyde!

Now we turn to the media coverage of this forceful response.

The Perfect Storm

I’ve repeatedly stated that I conducted this investigation as a real journalist should have.  The truth is available for those who seek it — and it is available cheaply, easily, and rapidly.   That the mainstream media has repeatedly presented the government’s untenable position regarding this product, and ignored the other side of the story, goes beyond the excuse that “fear sells”.   Rather, they have pro-actively partnered in a Liberal environmentalist vendetta against a successful hair product company.

This sordid affair is demonstrative not only of the media’s own Leftist bias, but the problem of government.  Don’t tell me there isn’t bias inside a government agency, especially in this Administration and especially in Oregon.  What does it say when a politician doesn’t even have to conduct his own due diligence, and instead just points to a government agency, and use their findings as gospel even if proven to be flawed, and then leverage that to engage yet another government entity to try and kill a business?

It says that government is over-reaching and harming private businesses –in this case, hair product companies, salons, and stylists.  Why isn’t Rep. Blumenauer being held to account for attacking a company without doing his due diligence?  Where is OSHA’s accountability?  Where is that agency’s checks and balances?

I’ve at least injected enough doubt into this mess to demonstrate that the government is no longer working for us.  It’s working against us.

Next time: I’ll present a definitive study that acquits the company’s position and present yet another flawed study — this one by a private entity.  The contrast will shock you.

City police have put a department employee under investigation following accusations she called Occupy Asheville protesters “nasty” in a Facebook post and complained they left “stinky belongings” on a sidewalk.

Police acknowledgment of the investigation Monday continued a string of developments tied to an Occupy Asheville demonstration last week.

An attorney with the movement was released after two days in jail on contempt-of-court charges filed when she demanded more information about weekend arrests.

Police also continued to use video from the demonstration at Pack Square Park to arrest Occupy protesters on trespassing charges.

The internal police investigation will focus on Lynn Fraser, a member of the department’s forensics team who helped shoot video of Occupy Asheville activities, police Lt. Wally Welch said.

In the post identified by police as being from Fraser, she writes that she is “glad to be off work and not dealing with (profanity) that want to preach their ‘Constitutional rights’ to me, then in the same breath tell me that videotaping them in a PUBLIC park (which none of them worked and contributed tax money to pay for) is an invasion of privacy.

“Hey (profanity), you gave up expectation of privacy when you flopped all your stinky belongings out on the sidewalk beside the Federal building. And by the way, stop pooping in public. You’re just nasty.”

Welch said he did not know how police would handle the issue.

“It was off-duty, and it was something on her personal Facebook, but it will be reviewed internally,” he said.

Read more here.