A Traditional Remedy for the Facebook Problem: Competition

By Herb Bowie

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Competition Ahead

Facebook has been in the news lately due to renewed privacy concerns, and many observers have called for various solutions, including pledges from CEO Mark Zuckerberg to do better, as well as increased government regulation.

But there seems to be an obvious and somewhat traditional remedy that is not getting much consideration: good old fashioned competition.

Let’s consider a few interesting points about Facebook.

1. Facebook is one of the largest tech companies in the world.

Based on most financial criteria, it’s one of the top five US tech companies, along with Apple, Amazon, Google/Alphabet and Microsoft.

2. Facebook is one of the most popular websites in the world.

It’s right up there with Google, YouTube, China’s Baidu and Wikipedia.

3. It has over two billion users, and is still growing.

In other words, over one quarter of the world’s population is already using Facebook, and the company’s avowed ambition is to connect even more of us across the globe.

4. The company has no real competition.

If we consider Facebook as one social media company among many, then there are clearly others in the fray: Twitter, Snapchat, LinkedIn and a few more.

But if we consider Facebook as a tool for staying connected with family and friends, and for storing an individual’s timeline of photos and posts, then clearly it stands by itself.

5. It’s all software.

Companies that sell hardware have to manage complex supply chains, and are continually challenged to make their stuff more compact, more lightweight and more powerful. But Facebook has none of these issues.

6. Facebook’s technical “secret sauce” is negligible.

I say this with some reservations, because operating a service as large as Facebook’s is certainly a daunting task that presents many technical challenges.

On the other hand, it’s not a tough problem to put together a database system that allows users to post text and photos, to identify their friends, and to see what their friends have been up to lately. In fact, pretty much any college computer science class could put together one of these systems as a class project.

So sure, Facebook does lots of fancy things behind the scenes to keep users engaged, and to keep its customers happy, but it’s not clear that any of the basic ways that it adds value for its users would be difficult to replicate.

7. The company’s primary asset is the personal information of its users.

Sure, it’s got software, and servers and lots of smart employees, but that’s not why people keep using it, and why its customers keep paying them. Facebook’s treasure trove is the personal information it has learned about almost 30% of the humans on this planet.

8. Facebook’s business model is to help companies more effectively manipulate its users.

None of Facebook’s 2 billion plus users pay a dime for use of the service. So how does Facebook make any money? It sells information about its users to companies that want to manipulate us to take some action we might not take otherwise. We are all used to this sort of manipulation when we see an advertisement that is trying to get us to buy something. We recognize ads for what they are. We develop sales resistance. Let the buyer beware, and all that.

But all of the latest news about Facebook – as well as other, older indications, for those who were willing to look for them – indicate that Facebook’s business model goes far beyond traditional advertising. That’s the scary thing about the way Facebook works. Any one of Facebook’s users posts some piece of “news” – personal, or otherwise. There is no review or vetting or editing of any of this content. Other users “like” this news and share it. It spreads throughout Facebook’s network of “friends.” There is no attribution, no reliable source. And so now we each see some piece of “news” that has been shared by a “friend” that is part of our trusted network. And that news may be manipulating us to vote in a certain way, not just to buy some new product or service. And this news is not labeled as an ad, so it bypasses all of our normal sales resistance.

If what I’ve just described is not fairly labeled a “social virus,” then I’m not sure what would be.

A Unique Problem with a Traditional Solution

Now if you consider the list of assertions above, I think you will find our situation with Facebook is a unique one. It’s easy to find some ways in which Facebook is like some other large tech companies and websites, but none of them share this same entire set of attributes.

So, given the conditions identified above, I think three questions naturally arise.

First, why in the world would we want to allow this situation to continue?

Second, what makes us think that any of this can be “fixed” without fundamentally altering one or more these eight attributes?

And third, if we agree we need to improve the situation, why wouldn’t we start by taking steps to help open up the market to greater competition? After all, in a capitalistic economy, this is typically our first recourse when we’re unhappy with a single company’s products or services: let’s create some competition, give consumers some choice, and then let the markets work their magic.

But what could we do to create more competition?

A number of steps seem possible.

A. Break up the monopoly.

I said above that Facebook is unique among modern tech companies, but it’s not so unique if we look back a little. For Facebook today is much like the old Bell System. Back then we all used land lines to stay in touch with our friends and family. Now we use Facebook. The remedy for the telephone monopoly was to break up the old Bell system into a number of “Baby Bells.” It certainly seems possible to do the same with Facebook, creating a number of “Baby Books,” if you will.

B. Create and implement open standards.

I buy my phone from Apple and use AT&T as my service provider. But that doesn’t stop me from conversing freely and instantaneously with someone else who owns an Android phone being served by Verizon. How is this magic possible? Through the development and application of standards that all players sign up to.

Similarly, my primary email address is one provided by Apple, and I write my emails using Apple hardware and software, but that doesn’t prevent me from communicating instantly with a Windows user who has an email address at Gmail. Again, open standards allow this to happen without much fuss.

So what would it take to create open standards for social media? Again, there is nothing about this problem that seems particularly daunting from a technical perspective.

C. Encourage a diverse set of approaches.

Facebook is a for-profit company that makes its money through advertising and uses proprietary software.

In a more competitive environment, though, there’s no reason why we shouldn’t see:

  • Open-source social media software that anyone can run for free, as is the case today for the Linux Operating System, the Apache Web Server, and the Firefox Web Browser;
  • Non-profit companies that are mission-driven rather than profit-driven, similar to Wikipedia;
  • For-profit companies that charge their users, and don’t sell advertising, such as Fastmail or any of the phone companies;
  • Companies that allow users to understand and even specify the algorithms selecting the content they see, rather than forcing the unwitting use of secret, proprietary algorithms.

Choice is good, right? And in a normal competitive environment, we could expect to see options like these flourish, with each user given greater freedom to choose the provider, business model and features that they deem to be the best fit for them.

Next Steps

How do we move forward here?

We need people everywhere to recognize the scope and nature of the problem, and to demand a solution that offers a more competitive, less monopolistic landscape.

And then we need some major players in government, regulatory and standards bodies, open-source, civil liberties and human rights groups to take this on as a cause.

And heck, if Mark Zuckerberg is serious about his company’s mission – to give people the power to build community and bring the world closer together – then he might even lend us a hand.