Meta’s global affairs chief on the future of the metaverse, Apple getting away ‘scot free,’ and Elon Musk joining the social media club

Since then, Clegg has been a clear figure in Meta’s time of turmoil. He was the one who suggested the plan of indefinitely banning former President Donald Trump from the platform.

Prior to Meta, Clegg built a political career with the U.K.’s Liberal Democrats, eventually becoming Deputy Prime Minister to conservative Prime Minister David Cameron. Despite some difficulties in office that later led to a resignation, Clegg made enough of a name for himself that he was recruited to join Facebook by Richard Allan, a former Liberal Democrat politician.

As a British man dealing with the increasingly polarized and extremist political landscape in the U.S., Clegg has argued that the responsibility of regulation shouldn’t depend on a private company taking the shots, but a collaboration between companies and the government. To critics, this rhetoric appears as a defection from Meta’s responsibility. But other companies too will soon have to take responsibility for moderation. During Fortune’s CEO Initiative Summit, Clegg points out in a conversation with Fortune’s editor-in chief, Alyson Shontell that Apple and Elon Musk must now address how to monitor speech online.

He talked to Shontell about everything from investing in the metaverse to how the global internet doesn’t actually exist.

The highlights include: 

• His take on Elon Musk’s new job of regulating speech on social media, saying ‘Welcome to the Club’
• A peek into how the oversight board at Meta now monitors speech and makes sure power isn’t consolidated in West Coast employers
• Why he’s standing by the metaverse and how augmented reality will be a game changer
• His pushback on the “lazy headline caricature of the health of our existing businesses” from the media
• Why the U.S. government should get involved in making rules about how to regulate speech
• How Apple has been given a pass in terms of regulating and how the company won’t get away ‘scot free’
• The success of TikTok and the need for more transparency around the algorithmic systems that social media companies use

Here’s the interview, which has been edited for length and clarity:

Alan Murray, CEO, Fortune: Meta may have the honor of being the most controversial company in the world today. Its Facebook platform is frequently accused of having contributed to the political dysfunction we were just talking about. In response, the company is spending around $10 billion a year in an effort to build a kinder, kinder, gentler metaverse with all the hardware and software required. But there are clearly some headwinds in the real world slowing earnings, revenue growth, regulatory hurdles, threat to it’s ad business.

To discuss how this is going, how Meta is setting up shop in the metaverse and its stance on regulation and moderation, please welcome Nick Clegg, the president of global affairs at Meta, who is appropriately joining us virtually and although not as an avatar. So that’s good. Thank you for that, Nick. And in conversation with Fortune editor Alyson Shontell.

Alyson Shontell, editor-in-chief, Fortune: Good morning, everyone, and good morning, Nick. Thank you for being with us here today. So much to discuss with you. But I have to start with Elon and Twitter. Nick, what’s your take? Good, bad, scary? Are you talking to him? What’s going on? What’s your gut reaction there?

Nick Clegg, president of global affairs, Meta: Well, he’s a week into the into the job, isn’t he? And I think he, in his torrent of tweets, he tweeted yesterday saying being criticized from both the left and the right is a good thing simultaneously. I felt like saying, “Welcome to the club,” because that’s what happens when you when you run up social media companies. You can’t keep everybody happy. And certainly in the United States—half the country thinks that you’re taking too much content down, the other half thinks you should take down more. And it’ll be interesting to see the kind of journey he’s on because he’s made very big, sweeping promises about restoring free expression, as he put it.

But then in recent days, he seems to be implying that he’s going to take a slightly more moderate approach. We’ve certainly learned the hard way that it’s very difficult to strike a balance, which enjoys consensus from everybody. But remember Twitter and Facebook—they’re very different, very different creatures. Twitter’s much more of a kind of text-based thing, whereas we have much more visual these days. Short-form video is around 50% of content on Facebook these days. Twitter tends to get used as an elite product for people in the medium politics, cultural elites. Facebook, Instagram is used by billions of people around the world, who often don’t consider themselves to be part of the elite. And of course, Twitter is made for yelling at each other about the news, which is not something that actually a lot of people come to Facebook to do in the first place.

Shontell: I think you could probably give him some advice given he’s trying to create a moderation council, especially with a decision whether to bring Trump back on the platform. That’s something that you obviously had a heavy hand in over at Meta. Any key learnings that you can give him from your creation of the Oversight Committee, which has been integral to moderating or attempting to moderate Meta?

Clegg: Yeah. So what we did was, two or three years ago, we set up this independent oversight board populated by experts from around the world who, independent of the company, generally have a kind of belief in free expression that come from lots of different directions. This includes former heads of government, legal scholars, former journalists, and so on. It’s been very helpful to us because, look, we’re a tech company. We’re not equipped, if you like, as a tech company to take all those difficult, ethical, cultural, and social judgments.

But exactly what speech, what kind of ideas, what kind of forms of liquid expression with human communication—all those liquid things that you can possibly imagine if you take all the time having an independent view and they impose binding decisions on us. I think it is a good start in making sure that not all the power lies with these West Coast tech companies and make these highly, highly consequential decisions. I think everybody wants all of these tech companies who are dealing in human speech to be held to independence and account. And if he does the same thing, I think that would be a very good thing, actually.

Shontell: So I have a lot of questions to ask about moderation and that in a bit. But first, I want to go into what everybody is talking about, the metaverse. I want to start at the beginning and then obviously go into where things are now. Investors are not quite as excited as you guys are. So we’ll talk about that, too. But first to the beginning. You joined the company in 2018. Was the metaverse even on the radar then? Did you know when you were stepping into this big job that you were going to have to pivot the company all around this whole new thing that they’d be betting the future on?

Clegg: Oh, yeah, very much so. The company has been investing in augmented virtual reality products for some years. Oculus, obviously, had been part of the company for some time, well before I arrived. I think what in a sense we did last autumn was to make something explicit, which was already implicit, which was that a huge amounts of resources, headcount, engineers, people, money was being devoted within the company to play a role, because we’re not the only people who are making these investments—so is ByteDance in China, so is Apple, so is Microsoft, and so on, in helping to build this new computing platform. Because that’s what it is. It’s not a new app. It’s not a new feature. It’s not a new piece of hardware. You are literally building a new computing platform from the operating system output. So that is a multi-year project. It’s not a cheap product, and it has very different stages.

In fact, many of the most significant investments are invested in the stuff that is, at the moment, least visible, and that’s all around augmented reality, which everybody in the industry agrees is the real holy grail here, really will be the game changer. And that’s where a lot of the heavy investments are going at the moment. I totally understand that investors, who quite understandably have quarter-to-quarter pressures are saying, “When are we going to see a return on major investments?” But thankfully, they can see that the core business of the existing apps is actually incredibly healthy.

I think we’ve now got close to 4 billion people using our apps monthly. More people using Facebook than ever before. And almost 2 billion a day. You’ve got WhatsApp growing very, very fast, 140 billion reels of short-form video format every day—that’s monetizing at an increasing pace. So it’s about striking a balance between the here today and the long-term investments. We need to keep explaining that long-term investment we are facing that we’re not doing it on our own. The metaverse will be built regardless of whether Meta the company exists or not.

Shontell: So I think there are definitely things that are going well at Meta. I think Reels have taken off in a big way, short-form video, WhatsApp. But the core business is in a bit of decline. I think Mark said at a recent town hall meeting there that for 18 years, the company was growing, growing, growing, and now it’s not. And now we need to make adjustments, and it looks like things are going to be harder on the employees. There’s no quiet quitting allowed at Meta anymore, things of that nature.

But also just investors, I think, have really lost confidence. One of your long term shareholders said, “Hey, how about spending $5 billion on the metaverse instead of $10 billion a year?” And in your last earnings, you guys were like, “Nope, we’re going to be spending more. Get ready.” So almost like you don’t care which. You’re steadfast on it. Are you rethinking anything on this investment strategy within Meta? Is any of the 71% decline in stock making you pause, rethink, “Maybe we should go a little slower, invest a little less?’ It’s hard to predict the future, it’s hard to build the future. No one knows what the future is going to be like in ten years. A lot of ways this can go wrong.

Clegg: Sure, of course you can’t. No one can predict the future. But you can make informed and smart bets on it, and I think one of the exciting things at Meta—I’ve been here four years—is that the novel Innovator’s Dilemma is lucky enough to invent new technology, which is disruptive, and then enjoys explosive growth. What normally happens is that people rest on their laurels, get a bit complacent, and become vested interests and not really kind of looking around for the next big thing. I think one of the unusual things of having a founder-led company is that that restlessness to continue to invest in the next new wave of technological developments remains alive and well. I think, in the long run, that’s going to put the company in good stead.

In the meantime, to your point, yes, of course, we need to show investors who are being sensible about our costs, who are scrutinizing increases in headcount, who are scrutinizing significant CapEx expenditure that we’re investing, particularly in new A.I. capability, which is going to be the real kind of pumping heart, so much of these machine learning systems going forward. And I think you’ll see us making that very clear.

But at the same time, I think we are entitled to be pretty forthright in rejecting what is actually, I think, a lazy headline caricature of the health of our existing businesses. It doesn’t seem to me to reconcile with the pessimistic headlines about Facebook, Instagram, WhatsApp, and so on, when Facebook has more daily users now than ever. In fact, we added millions in the last quarter. WhatsApp is growing very fast indeed. It’s now up to 2 billion daily actives, and we haven’t even monetized a lot of those apps. If you look at the business messaging we have on Instagram, Direct Messenger, WhatsApp, and businesses use messaging to communicate with their customers. That’s a $1 billion+ story—that’s more than 1 billion people using those business messaging tools, but they can grow a whole lot faster in the months and years to come.

So look, I think, yes, we’ve got to be disciplined about costs where it’s right to do that, and we’ve got to explain to people why you can’t just invent these AR and VR computing platforms overnight. It does take time, it does take patience, it does take investment. And at the same time, I think we’re going to be pretty robust in explaining that our core business is doing very well indeed.

Shontell: Is there a reason not to build the metaverse as a separate company? I know it’s a huge investment in dollars, but it does seem like it’s something that you could do separately without kind of drawing all this attention away from the core business.

Clegg: I think that there is a fundamental principle reason not to do so: it’s all trying to do the same thing. It’s all trying to facilitate new technologies by which people can make connections with each other—particularly with family and friends—and in doing so, create wonderful, beautiful new things online, whether it’s new businesses, new relationships, new movements, new groups, new ideas.

The metaverse is, in many ways, a continuum of what you’ve seen develop over many years. Of course, it sounds revolutionary, sounds slightly like science fiction. I know that you had a session yesterday where people demonstrated how you could educate budding surgeons, how to give us to knee surgery using VR technologies. There’s huge health education potential involved in all of that.

But if you think about it, historically, we started with desktops, we moved to laptops, and we all walk around with a mobile clutched to the palm of our hand. We believe, as many others do, as well, that eventually we’re going to graduate from mobile phones to something you can perch on the bridge of your nose that uses optic technology to communicate with each other through avatars, through holograms and so on. And it’s all about making technology even more seamless, almost invisible, when you use it, and making communication with other human beings in a way, which can totally override geographic distance, all the easier. So it is much, much more intimately bound up, if you like, the mission of the company, than I think the suggestion of splitting these suggests.

Shontell: And so there’s a lot there. I think a lot of time will tell, and investors will have to decide if they want to stick around for that ride or not. I’d like to move over into content moderation. You stated at the beginning that for the Oversight Committee, it’s that sort of thing is helpful, is really hard to moderate a platform as big as Meta has become, the 3 billion people on it. At the same time, your stance is that it’s sort of seems to be it’s become too big for Meta to manage. They can’t possibly manage it by themselves. The government needs to step in. Is that a fair characterization of your stance?

Clegg: I think there are certain areas where it’s just not appropriate for the private sector in whatever guise to start taking decisions, which have such profound societal impact. We’re just a few days away from the midterms, we’re just a few days after this very consequential election in Brazil. We pour immense resources in trying to make sure that our apps are used safely, responsibly during the elections. We invested $5 billion last year alone in those kind of safety integrity tools. We have over 40,000 people working on it. There are very strict guidelines about what you can and can’t do on our platforms.

But in the end, the U.S. elections, to take a very timely example, they’re not our elections. They belong to the American people and their representatives in Congress. In the end, you would hope that the legislators in Congress sign off on what the rules should be about—what is and what is not allowed at election time or indeed any other time. And it seems to me very curious that in the United States, you don’t have any federal privacy legislation. You have privacy legislation in various states, but not in a way that gives people consistent legal privacy rights in the online world enshrined in federal legislation.

What else? Data portability sounds very technical. In some respects, it is. But it’s actually a really important concept because you want proper competition with these big platforms. It’s very important that the people should be able to pick up that proverbial data luggage and move it from one service to a competitor service. That has very big tradeoffs with privacy. When you move data around, it’s more likely to get lost from time to time. I think judgments between data portability and privacy need to be made by legislators; they can’t be and shouldn’t be made by private sector platforms.

So, look, I would love to go on, but I hope that’s an illustration of a number of areas where I strongly believe it is appropriate. One, of course, I spent 20 years of my life in British and European politics before I moved to Silicon Valley. So maybe I come to this with bias. But I just think there are certain things that should be decided on democratically—by the democratically-elected political class, not by basically tech leaders on the West Coast.

Shontell: So I think part of the issue that people have, though, is that they feel like it was scale at all costs, without really thinking about the long-term impact of what it would do to society. And now it’s spiraled a bit out of control, and nobody quite knows what to do. And so to dump it on regulators and to say, “This is your problem now, we don’t know,” that’s a bit of a red flag. And I think, as you look at building the metaverse, you wrote a blog post recently that said, “How can I trust that these new technologies will be built and governed responsibly?” as it pertains to the metaverse. If Meta is to scale that to the same level, 3 billion people, how do we make sure that we build that with hindsight, the benefit of hindsight, where we’re doing it better and we don’t just kind of throw our hands in the air?

Clegg: So first, if I may, I really didn’t mean to imply—and I don’t think it’s what I said—that we’re somehow trying to devolve any blame or responsibility from ourselves. Far from it. I’m just simply pointing out that when you have technologies, which operate at a societal level, you need societal rules. And those rules, at the end of the day, many of them, not all of them, should, of course, be decided upon by people who are democratically accountable to the voters.

But secondly, I worry sometimes about the pessimism, which I think infuses your question, as if nothing could be done, and it’s scaled massively, and it all went horribly wrong. And it’s simply not the case. If you look, for instance, hate speech, which is quite rightly been a real focus of societal commentary in recent years.

The prevalence of hate speech, in other words, how much hate speech can you see if you just keep scrolling on your Facebook app, is now down to 0.02%. That means if you just kept scrolling on your app, you find two bits of hate speech on Facebook for every 10,000 bits of content that you see. And by the way, that’s not just our figures. We are now independently audited by EY, our auditor, because most people don’t believe that we’re going to be the best judge and jury of our own homework. Now that is a prevalence figure that we publish and we update every 12 weeks along with all our financial statements as well. And that has been achieved through some of those investments that I referred to earlier, employing tens of thousands of people, including thousands of human moderators, but especially testing of machine learning and A.I. systems, which can identify that content, and either remove it all or down rank it. And I think you can see that on terrorism content, on content that is a threat to children, or hate speech, or bullying, or harassment. I think we are now the only platform, as I alluded to earlier, to every 12 weeks publish all that data, allow people to audit it, and allow people to make their own judgment about progress.

My only point to you is: it is real progress. We’ve made massive progress in reducing those harms while still keeping those apps going for the joy and all the wonderful things that thankfully tends to be the majority of content that you see on social media day in, day out.

Shontell: So in a few minutes, I’m going to open it up to audience questions to be thinking if you have a question or two to ask. But I want to jump, and Nick, I appreciate your points. There is positivity happening on Meta. There’s obviously more to solve. I want to talk a little bit about regulators. Obviously, they’ve been taking aim in the tech sector for quite a bit, especially here in the U.S. and abroad. The Giphy acquisition from Meta was just shot down. However, Apple seems to kind of get away with things. I’m curious your stance on that. You’ve described Apple’s iOS privacy changes as an effort to kneecap competitors. Do you feel like regulators are giving Apple a pass, and have you been in touch with them at all about any of these Apple changes?

Clegg: Oh, I don’t think Apple will get away with this scot free. Because firstly, I’m not revealing anything here. It’s public knowledge that regulators in Europe and elsewhere are taking a very close look, and they’re taking a very close look for a very good reason, which is that, if you look at the whole history of Internet—I’m caricaturing dramatically here—there’s generally speaking a kind of difference between open system and just kind of full interoperability, full interoperable use of different apps and services. The Linux model is one the most source kind of innovations you can think of.

And on the other end of the scale is Apple, who is highly successful, devastatingly successful, right? Now, what 11, 12, 13 times bigger, probably, at least ten times bigger than Meta as a company. They built these vertically integrated, closed stacks. Once you use that phone’s operating system, their services, you’re all locked in to it. It’s extremely difficult to get out of it. And they can charge these very high levees and fees for anyone who wants to get into that ecosystem. And it’s no wonder that the European Union just passed the Digital Markets Act, for instance, precisely to bust open that very closed ecosystem, which is often explained in terms of protecting people’s privacy. But it’s just as much as often as it is the case as we now see of Apple doing a fair amount of damage to some of their competitors when it comes to online advertising and then building up their own advertising. This is very rapidly using, in effect, exactly the same kind of data signal.

So I think everybody who does well and grows very fast should be subject to regulatory scrutiny. I’m certainly not suggesting that Meta should in anyway be exempt from that. But equally, I think it is fair to suggest that, particularly when companies create these very closed, walled gardens, if you like, at such a vast scale, and such unlimited scale, that should be scrutinized. And I think it is, and I think it will be.

Shontell: Audience, any questions? If not, I’ll close with one. No? Okay. So, given the regulatory backdrop and all that’s going on, Tiktok has risen quickly in China. A lot of Chinese companies have been; money is being pumped in. A lot of American companies are struggling to get into that market or are being kept out.

At the same time, they have access to our market. There is a chance, maybe, there have been discussions that TikTok could potentially someday be banned. That’s ongoing. The FCC commissioner recently said he doesn’t really see any other way but to do that in the U.S., given all the privacy and data challenges there. But do you think, given the broad scope picture of regulation on U.S. companies in China being able to grow as it wants, is Silicon Valley under threat? Do you think that companies like Meta can grow out of innovative companies here anymore, or is that being challenged?

Clegg: The first thing I’d say without being too dramatic about it is that the global Internet does not exist. We keep talking about these great American success stories doing so well on the global Internet. It doesn’t exist. You have a Chinese Internet, which is basically walled off from the rest of the world. Chinese citizens are very heavily surveilled in it. And then you have this non-Chinese Internet, which itself is becoming increasingly fragmented.

People talk about the increasing move towards the center, that if you look at some of the rules—and I deal with this day in and day out a great deal on behalf of Meta—new Internet rules in Vietnam, in Turkey, in India and elsewhere, there is a real risk that in ten years’ time, we will look back on this era as an unprecedented era of openness. And in that context, I think there is a real problem that there just isn’t a level playing field between some of the big, mega Chinese companies and the big American tech companies. TikTok is a good example. It has this vast domestic market in China, it competes directly with companies such as us in the United States. Yet we’re not able to compete with it in its home market. And I do think that there are legitimate questions going forward about how we create an open Internet, not a Balkanized one, but one which has a proper level playing field.

When it comes to TikTok, for instance, because I think Tiktok’s fantastic success—and it has been fantastically successful—is heavily driven by a much more algorithmically orchestrated approach to content than Facebook. Facebook, for instance, still relies very heavily on your friends and family, and on comments you’ve made, and what groups you’re a part of. Whereas TikTok is basically just a pure algorithmic flywheel. You watch a video, and the algorithm proposes the next one for you to watch, and so on. That algorithm is, of course, is designed in China, and more and more people in the U.S. are consuming their news on TikTok. I think the algorithm—people keep hearing people in D.C. talk about where the data is located—that’s not really the issue. The issue is a fundamental design about what you see and in which order. That’s the really key question about these social media apps, and I think it’s a legitimate question. To know who decides that, how is it decided? What are the values behind that? And I just hope across the space we see more and more transparency for all these algorithmic systems used by all these all these social media companies going forward.

Shontell: Okay. Well, Nick, thank you so much for this wide ranging conversation. Appreciate your time.

Clegg: Thank you.