Facebook is fighting a lost cause, they just don’t know it yet

I’m not sure what to think about the different blog posts covering the interview Mark Zuckerberg has given recently. The tech community seems to be giving Mark a pop star status,leading to witch burning scenario’s, well described by Michael Arrington here. I guess techies are just like other people in need of icons.

Mark and his team do need to get credit for the way they have grown Facebook in a few years. Starting from scratch it is now on of the top communication platforms worldwide. There aren’t many examples of entrepreneurs being so successful in such short time. But now that the time has come to leverage that success, in other words, monetize the platform, I’m not much of a fan of Mark or the Facebook platform.

When it comes to monetising Facebook is constantly trying to balance on a thin line between the interests of the user versus the need for Facebook to generate revenue streams. The most obvious example is the release and backlash of their Beacon project. The main reason for their incredible growth but also this balancing act is that Facebook fell for the $16 Bln advertisement trap, just like many other web 2.0 companies did. In an interview with Marshall Kirkpatrick we can clearly see this balancing act. He says:

Zuckerberg told me today that he believes data portability is an important direction the web is moving in, that fundamental openness between sites is inevitable – but that Facebook is focusing on questions of privacy and user control as its contribution to that movement. That may be a fair, if frustrating, position for Facebook to take. It may also leave them on the sidelines of larger conversations.

Let’s translate this. I hear Mark is saying that data portability is great but that user privacy and the control of it comes first. While I couldn’t agree more, I have serious doubts Mark is there to protect the privacy of his users. Launching SocialAds and Beacon proves that Facebook isn’t there to protect privacy. That doesn’t generate revenues. Facebook’s sole purpose is to monetize the social network with advertisement. Which is fine, but hardly the “user” perspective. Facebook logs everything we do on the platform. We do not have the option to turn this data hogging off. It is the price we pay for getting the service for free. So let’s get one thing out of the way, Facebook isn’t there to protect our privacy. It is there to protect the Facebook network so that it can execute it’s business model without leaking value away outside the network. The biggest problem I have with this is that most Facebook users are completely naive to the working of this business model. They do not have a clue that Facebook collects their data, their interactions for monetizing purposes. It is the “below the radar” data hogging that creates the tension with user controlled privacy. Not the openness of the Facebook platform. Facebook is one big walled garden, and Mark isn’t going to open up that garden for data portability. He needs people to remain within that garden to make money. It is as simple as that.

On data portability he says:

“If you export your friends list, does their contact information come with that? What if they change their privacy settings later? Right now if you take an action that gets published to your friends’ news feeds, but then if you change your privacy settings later to be more restrictive – then those events disappear from the news feeds. If that data is published off-site, then there’s no longer any control over the data for users.

While this sounds like a real privacy issue which Facebook solves for its users, it really isn’t. Facebook isn’t actually deleting information or protecting the user when he changes settings. Facebook has your data, always, and never deletes it. The real issue is that the data isn’t owned by the user. He doesn’t have any real controls over it. Sure, he can ask Facebook not to display certain aspects of it in a newsfeed, but the data is still there, owned by Facebook. The Facebook user gets a false illusion of privacy and security, but in fact he doesn’t have the control. Always look who is in control, who owns, and you will know who is controlling privacy.

The answer to this privacy issue is really simple. Let the user own and control his data. Only then privacy responsibility is put where it should be, at the user. That doesn’t mean privacy is secure, users make mistakes or do not take their responsibility. It just means that the responsibilities lies there where it really belongs. I’m not sure if the user is ready for it yet, but it is the right thing to do. Check Dick Hardt’s work on identity 2.0 out. He knows what he is talking about and works on ways to solve this issue.

On Beacon Mark says:

On Beacon, Zuckerberg said: “There were sites that people wanted to share from, like Yelp, where you’re already making public comment. For shopping, maybe in a couple of years people will want to share that.” He said that it “was probably a mistake” to roll out Beacon in the context of user commercial activity. He emphasizes that Beacon is a part of the Facebook Platform more than it is an advertising effort.

I think Marshall gets it right when he says:

Zuckerberg’s assertion that people may be more excited about exposing their shopping activities in a few years may be correct, but it might also be the delusion of a man trying to monetize the tricky market of social networking.

I remember the speech Mark Zuckerberg gave when project Beacon was launched. He wasn’t talking to the users. He wasn’t addressing user issues or user value. He was giving his speech to top executives in the advertisement business. He was explaining to them that the world of advertisement was fundamentally changing due to Facbeook and Beacon. So let’s drop the “users want to share” part of this message and recall that the business model of Facebook isn’t about leveraging user value. It is about leveraging network value. Facebook is getting the Turkey ready for serving, the question is, who is the Turkey?

More on data portability:

I asked Zuckerberg if he was taken to the edge of a cliff and had to implement either OpenID, oAuth or APML immediately – which would he chose? He said he enjoyed the question, that OpenID was the one of the three protocols that had been most discussed internally, but that the bulk of actual developer demand seems to him to be focused on the Facebook Platform.

And finally Mark says:

“We are philosophically aligned [with the data portability movement],” Zuckerberg said. “We are pushing in our own way to make the world a more open place. It’s going to be good when it happens.”

I like the “philosophical alignment” part of it. Yeah we are committed to data portability (on a philosophical kind of way), but for now we will focus on the platform itself. Well, he couldn’t have said it any clearer than this. Facebook is holding on tightly to their walled garden. But it is a fight they will not be able to win. Human nature will not let them,. It is in our nature to look for freedom, not to be bound by some network value leveraging business model.

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See my about page, http://vanelsas.wordpress.com/about/ ;-)
This entry was posted in business model, Data Portability, Dick Hardt, Facebook, freedom, Mark Zuckerberg, Marshall Kirkpatrick, privacy, walled garden, web 2.0 and tagged , , , , , , , , , . Bookmark the permalink.

6 Responses to Facebook is fighting a lost cause, they just don’t know it yet

  1. Nice write-up. I think you got it right that in the end keeping a platform like Facebook closed will move people away from them. I believe in dataportability and openess, which in my opinion are the succesfactors for internetcompanies the next couple of years

  2. idmann says:

    An interesting observation. I love your blog, but you never seem to offer much in the way of suggestions for the right way for facebook to make money.

    What revenue generation system would you design?
    Do you think they should charge?

    Cheers

  3. Alexander van Elsas says:

    @eduard thanks for your input ;-)

    @idmann I actually believe that the choices Facebook has made in the past will prevent them to switch business models quickly. It is a very difficult thing to do. Their whole philosophy is build upon this walled garden advertisement trap. hard to get out of. But in reply to your comment that I don’t seem to offer alternatives, I have written a lot about possible alternatives. Interested, just click on one of the tags (try business model for example) on the right side of my blog. Or read a few of my own favorite posts on the subject:

    http://vanelsas.wordpress.com/2007/11/02/mark-zuckerberg-when-in-doubt-follow-the-money/

    http://vanelsas.wordpress.com/2007/11/13/20-bln-reasons-to-get-advertisement-right/

    http://vanelsas.wordpress.com/2007/11/27/its-about-interaction-stupid/

    http://vanelsas.wordpress.com/2007/10/15/free-ad-based-social-networks-versus-payed-social-networks/

    Hope this helps :-)

  4. Robert Buth says:

    I am happy about the saying ““philosophical alignment”, because facebook is one of the few big players in the game and it is good, that there is competitor to “big brother” google. And if we are talking about the users interest: Just imagine, that google gets entry through the backdoors of the “walled gardens” and in that way information about, what the people think. Let me explain it. If someone gives some information in his proflie on facebook about his desires and wishes, what music he likes and equal things. That can be right or wrong. We don´t know it. He might listen to rock music, but tells everyone, that he is into jazz and classical stuff. And so on. But if someone can combines the things he says and does and can prove it through tracking and other technologies,…. he has got damn important information about the person.

  5. Debasish Roy says:

    The basic rules of business entail that you must make something that customers want. They may pay you with either money or with their presence. Users of Facebook pay Facebook with their presence as they log in everyday and keep coming to “buy” the experience that Facebook or Orkut give them. Now the question is what is that experience all about. If that experience is all about just meeting other people who come to Facebook or Orkut to meet other people who come to meet other people who come to meet other people…..? Then one fine day, people will just stop using these sites. You can fool the customer for a few days but this cannot continue. You have to give the customer something substantial. It could be goods or experience.

  6. Pingback: From the Pipeline - 3.11.08 — Shooting at Bubbles

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