Strategy credits and unintended consequences abound!
As many analysts have argued, Facebook’s forced self-regulation will only entrench their incumbent position and strengthen their moat. I wonder, too, if Facebook’s PR nightmare increases the bull case on other tech companies like Google, or Apple.
Google, like Facebook, has an absurdly profitable ad businesses by nature of its massive fixed cost, zero marginal cost model. Google’s model, however, is less “creepy” by nature of being reactive (ads based on searches), as opposed to predictive, like Facebook (ads based on previously collected data). In “The Death of the Deliberate,” I discuss Facebook through the lens of having received one of those “predictive” ads for a therapist on the platform. That a platform’s algorithm is delivering ads for therapists as its founder acknowledges that platform’s propensity to erode the mental health of its users is more than a little ironic. It is also creepy, as I am left to wonder what, exactly, led Facebook’s algorithm to start serving me ads for therapists!
I am aware of the way Facebook makes money, so while these ads are creepy, I understand why, strategically, Facebook is delivering them to me. I do not believe I represent the majority (though I may); eventually, however, I will. And once I do, it will be clear whether or not Google is immune to the same troubles that Facebook is experiencing. (A scandal like Cambridge Analytica hitting Google in the meantime would certainly decrease the probability of said immunity.)
Apple is the other company I would argue benefits from the public’s increased consciousness about how their data is used. This 2013 memo is worth revisiting. Here is a particularly “Apple” quote:
“Apple has always placed a priority on protecting our customers’ personal data, and we don’t collect or maintain a mountain of personal details about our customers in the first place.”
Of course, it is also important to recognize that Apple’s ability to emphasize user privacy is a natural result of their business model. Apple has a relatively low incentive to collect user data because their profit comes from selling physical goods at an extremely high margin, not from the monetization of data. Ben Thompson calls this a strategy credit: An uncomplicated decision that makes a company look good relative to other companies who face much more significant trade-offs. I love Apple, but I agree with Ben: it is important to avoid giving a company too much credit for making a supposedly moral decision that aligns perfectly with the incentives their specific industry is — or in in this case, is not — subjected to.
And yet, it is also true that it would be foolish for Apple not to say anything. They are a business, and any successful business knows the power of the narrative. In this case, the narrative Apple can tell is that they care about user privacy even as Facebook does not. This is clearly a vast oversimplification of the issue, but that’s the power of the narrative: it is convincing precisely because it doesn’t tell the whole story, omitting the nuance and consequent insecurity that comes from a holistic viewpoint.
As all of these revelations were happening about Facebook at the end of 2016, I published “Finding the Road” in response to the question that was on everyone’s mind; that is, what is Facebook’s responsibility over the use and misuse of its own platform? The article attempted to examine both sides of the debate: should Facebook take more control over what its users are presented with, or less? I didn’t land on an answer, other than to say that Facebook having even more power that it already does scares me. It appears that a little over a year later, regulators are reluctantly leaning towards more — and that this regulation may have precisely the opposite effect they would hope.
Regardless of what you think of Facebook, it is clear that the platform has become more than a social media outlet. Decisions from Facebook, from regulators, and above all, from Facebook’s users, will come to shape not only the future of the company, but also the future of the Internet, and the future of the world. It’s time to start paying attention.