Musings on Facebook

Strategy credits and unintended consequences abound!

Image taken two hours outside of the capital of Rwanda, Kigali, where to many, Facebook = the Internet.

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…