by: Jemima Kiss of The Observer, Saturday 4, 2013
Facebook, the ubiquitous social networking site, is the brightly burning star of Silicon Valley. It has reached an unprecedented scale with 1.1bn users every month, growing faster in Africa, Asia and South America by subsidising mobile access for a new generation of users for whom Facebook is the internet. In established markets, it is aggressively positioning itself as the web’s default identity provider on tens of thousands of third-party sites. And now on mobile, its new android super-app Home channels all your mobile content through your Facebook account. Business, it seems, is booming.
Accepted wisdom among consumer internet companies is that most people only use seven apps – if your business wants to be big, it has to be one of them. For 751m people in the world, Facebook is one of those seven apps. Its latest financial results showed revenue up 38%, and nearly a third of its $1.25bn (£0.8m) advertising revenues are now generated by ads on mobiles and tablets. It’s a remarkable turnaround in 12 months for a company once almost derailed by the absence of a convincing mobile strategy.
But there are still challenges for Facebook that can’t be fixed with algorithms. Most immediately, it has to hold the attention of notoriously fickle internet consumers. Veteran entrepreneur Dalton Caldwell knows this only too well; at 23 he founded the social music network Imeem, which was later acquired and then folded by MySpace.
“There’s a lot of instructive lessons from the fall of MySpace, which was over-monetised, did a lot of user-hostile things and was very vulnerable to disruption. It went from the number one site in the world to zero and it’s interesting that it happened so quickly. People are fickle and will move if there’s something better – and if that wasn’t true, we’d all still be using MySpace.”
Facebook’s surprise $1bn acquisition of photo-sharing app Instagram last April demonstrated its defensive strategy to keep the competition at bay. “The Instagram deal was not about what the company was worth, but what it was worth to Facebook to take it out of competition. And they can’t afford to keep doing that,” said Caldwell. “The next big thing will be some mobile app built by a guy and a girl in a garage somewhere.”
Facebook also faces a more human problem. While its engineering is world-class and its business increasingly robust, it has demonstrated little sensibility or empathy for the true human condition, the unpredictable and unique human behaviour that can’t be averaged, or aggregated or predicted.
Regular controversies around inappropriate content include two graphic videos of beheadings that Facebook refused to take down for more than seven days, while it defended publishing an unexpurgated video of a woman beating a baby.
Facebook will point out that, like other consumer sites of scale, it has to automate content moderation and rely on users to flag content – yet poor and inconsistent decisions are made by individuals when extreme cases surface in the media.
Facebook’s monopoly of our online identities and model of monetising our data has raised the hackles of privacy campaigners from the outset, yet Facebook is at pains to point out that it does not “own” our data. Rather, it has to provide a framework that gives the site permission to handle our material. It is also under such intense scrutiny that real abuses of data are more likely to take place in darker corners of the internet.
Its mantra “move fast and break things” illustrates a certain mentality, a corporate developer culture created in the image of its maker, founder Mark Zuckerberg. But the process seems to ignore the ethical and interpersonal implications of these rapid developments, and its powerful datasets are inadvertently creating far more controversial insights.
Psychologist Dr David Stillwell at the University of Cambridge psychometrics centre has identified ways of concluding a person’s sexuality, religion, politics and even IQ from their “likes” on Facebook. “These companies are probably measuring personality and IQ without realising,” he said. “The data goes into the black box and it determines which user sees which advert, but it’s also quite likely that behind the scenes where no one knows what’s happening, this black box is also working out people’s IQ, or sexuality, or religion too. There’s a big gap between what people in the industry know is possible and what consumers understand.”
Nonetheless, there is an increasing consumer awareness about the value of their data and online identity, a resentment that our social transactions are being used as the basis for an advertising business and a concern about the concentration of power in these tech giants. That’s fertile ground for building an alternative, argues Caldwell, who says it is becoming clear that large-scale consumer web businesses supported by advertising are largely “a mirage”.
“When a company is aggressively focused on growth and revenue targets, they start to do things that aren’t favourable to users,” he said. “Facebook and Twitter are both backing off from their ‘brand new forms of advertising’ line and are instead turning into standard advertising businesses selling IAB units. For Facebook that’s a large departure from their pre-IPO strategy.”
Launched in August 2012, Caldwell’s new project App.net is a subscription-based, advertising-free social network. Far from a utopian ideal, he says the principle of a personal cloud of data which can be shared between trusted apps in an ad-free space is an idea that will catch on. It’s a different league to Facebook at 100,000 users – many of those brought in through a limited free tier introduced two months ago – but the site is proof that there is appetite for a new, more user-centric model. Facebook’s real customer, after all, is the advertiser – not the user.
At the modest scale of App.net, interacting with users is far more manageable, but Caldwell points out that much of the social impact of Facebook won’t be understood for many years. “The second and third order of these sites is changing the human experience,” he said. “The inventors of television didn’t think through what would happen 30 years after they put those tubes together – they were engineers.”