Mark Zuckerberg, the 31-year-old founder and CEO of Facebook Inc. (NASDAQ:FB), recently told an adoring audience of Silicon Valley developers:
We’ve gone from a world of isolated communities to one global community, and we are all better off for it… [Our mission] is to connect the world… [The danger is in] people and nations turning inwards against this idea of a connected world and community…[i]
All great founder-CEOs have vision. Bill Gates foresaw a computer in every home at a time when most people would have scoffed at the notion. Steve Jobs foresaw that every handbag and man-bag would hold a smartphone. But these visions drove clear business strategies. My question is: is what the Zuck articulates a business strategy or an ideology? And if it is the latter, what are the implications for us and for the future of Facebook?
Facebook tells us that it has 1.6 billion users – up from a mere 100 million in 2008. According to Worldometers Population[ii], there are 7.423 billion people alive today: so 22 percent of everybody alive is on Facebook. Actually, though, the Facebook user number is almost certainly exaggerated. For one thing, there are a lot of people out there with more than one Facebook profile. (I know one senior who creates a new profile every time he logs on. When I told him that he was confusing everyone with his multiple personas, he would not have it.) For another, an indeterminate number of those 1.6 billion “users” are not individuals but corporate entities including businesses (from cupcakes to cruise missiles), churches, campaigns, charities, or just “communities” of people who come together to pursue a common interest – much as they do elsewhere on the internet. And another thing: a lot of profiles are actually empty husks with just one photo and no data. (Is it possible “to resign” from Facebook? What happens when people die…? How would they know how many user profiles are dead people?)
That said Facebook has an unimaginably large following. Although I still reckon that more people use Google (NASDAQ:GOOGL) more regularly. I mentioned in my piece on Google earlier this week that there are 3.5 billion searches on Google every day; but I don’t know what is the average number of Google searches per Google “user”, so I can’t work out how many individuals search on Google per day. In my case, I search on Google maybe 50 times a day – but then I have an enquiring mind.
Anyway, I think it’s fair to say that Facebook and Google between them – dominate (even control) the internet – which is a big deal. Just as Google owns YouTube and much more, Facebook owns Instagram, a phot-sharing service, which has 400 million users, and WhatsApp, a mobile communications tool, which has more than one billion users. I presume that virtually all Instagram and WhatsApp users are Facebook users, though not vice-versa.
Moreover, access to Facebook opens up an Aladdin’s Cave of functionality. Facebook Messenger enables people to communicate privately, even if they don’t have an email account. Of course, Facebook is listening in, using “bots”, which can for example monitor brand loyalty and commercially sensitive social trends. Eventually, the goal is a computational model of social interaction. Chatbots (horrid word, I know) allow businesses to offer automated customer support. Imagine that you are telling your friend that you can’t find a taxi – and then Uber emails you to say that there’s a taxi waiting for you, just outside! Already Livestream enables users to stream video feed from their mobile phones straight to their Facebook page. So you can be at a wedding (or a rave) and your friends can watch it live. This is in direct competition to Twitter’s Persicope.
Apparently, in the US the average 18-34 year old spends 26 hours a month on Facebook. Is that all? I remember, as a 13-year old, receiving a lecture from a tweedy schoolmaster lamenting that the average British child spent a pernicious three hours a day watching (rubbish) television. Come on Zuck, you can do better than influencing the young for just 50 minutes a day!
Facebook has also rolled out a free package of apps to mobile phone users across 37 countries. This suite allegedly enables the Zuck and his team to herd users towards the Facebook cyber-sphere – just as Google’s Android operating system favours Google-inspired content. But fundamentally, despite the “community” vision thing, Facebook and Google are the same. They are generally benevolent (Do No Evil!) snoops, using algorithms to convert your every click and “like” and (later regretted) “comments” into a profile of what you might buy – for purely commercial reasons. And yet, the really spooky thing is, we can’t live without them.
Of course it works both ways. Facebook’s satellites nudge us towards Facebook; and once on Facebook, we click on links to outstanding media posts (such as the Master Investor website). Win-win. But, hang on; that means that Facebook is influencing us as to what media we consume. Is Facebook giving us a menu and asking to choose what news we read; or are they “guiding” us towards their preferred agenda? Especially since Facebook, some way behind Google, is developing artificial intelligence (AI).
Last week there were reports in the USA that Facebook suppressed stories with a conservative bias. The Zuck said that he would meet with conservative leaders to discuss the allegations[iii].
The fact that an algorithm can recognise our photo and identify us (and they don’t even have eyes, let alone brains) should give us pause. The next stage is to use algorithms fashioned by anthropologists and psychologists to interpret our expressions and body language in those photos. Perhaps, eventually, analysis of our present emotions will yield the secrets of our intentions – things that we don’t even know about ourselves.
There are still alternative technologies snapping at Facebook’s heels. Facebook tried to buy Snapchat (a messaging service favoured by youngsters) in 2013 for US$3 billion, but was rebuffed. So they tried to replicate it – Slingshot – and failed.
On 27 April Facebook announced Q1 2016 revenues to 31 March of US$5.382 billion[iv] – that’s about one quarter of Google’s revenues over the same period. Like Google, those revenues were overwhelmingly from advertising, with only US$181 million coming from “Payments and other fees”. Net income after tax was US$1.510 billion giving a diluted EPS of US$0.52. This was beyond analysts’ expectations and the share price jumped from US$116 to US$119.
The real downside risk for Facebook and Google is that, in disrupting conventional consumer models through technology, they might end up disrupting advertising itself, which is where, this side of the AI economy, they make their money. Of the two, Facebook is the more vulnerable because it is smaller and because its technological reach, although extraordinary, is more limited than Google’s. Google will remain the dominant player until such time as the world changes again in way that we cannot foresee.
In my reading of history ideologies are belief systems which serve those who seek to take, and then hold, power. People believe in them to the extent that they extract advantage. And then they drop them when they cease to work. I’d give this one maybe ten years. And when the technology and the ideology part company, the Zuck will depart from Facebook and will no doubt do something remarkable elsewhere.
The Iron Lady said: There is no such thing as a free lunch. At some point we shall cease to see Facebook as a social good and see it as the technology it is. We shall pay it micro-pennies each time it connects us to what we seek. I wish the Zuck, and his grey T-shirts, and Priscilla and Max and Beast all the very best. But remember what they say in Silicon Valley: If you’re not paying for it, then YOU ARE THE PRODUCT.
[i] Reported in The Observer, Sunday, 24 April 2016: One Site Fits All? By Olivia Solon, page 23.
[ii] http://www.worldometers.info/world-population/ accessed 19/05/2016.
[iii] See Zuckerberg in row over ‘Left-leaning Facebook’, by David Lawler, Daily Telegraph,Saturday, 14 May 2016, page 21.
[iv] See: http://investor.fb.com/releasedetail.cfm?ReleaseID=967167