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Facebook Political Problems


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Facebook Political Problems

Courtesy of Ben Thompson, Stratechery

Stratechery provides analysis of the strategy and business side of technology and media, and the impact of technology on society.

So begins my about page, and there is no company that expands to fill the space afforded by that description quite like Facebook. This does, on one hand, provide for endless amounts of content, much of which, frankly, I would like to move on from; it also means that writing about one aspect of Facebook is fraught with risk: just because you defend one aspect, or attack another, does not mean one is making a comment on the entirety of the corporate beast. Word limits, though, are a thing — yes, even on the web — which means that one can never cover all of one’s bases in any one individual article.

So consider this piece self-service, of sorts: this Article will be what I link to in future posts with the caveat, “I’m not talking about Facebook political issues today; if you want my big-picture take follow this link.”

Which will take you here.

A quick aside about timing: this post is being written the day after Frances Haugen appeared before Congress; I’m not writing about her testimony specifically, as I felt it covered very little new ground. Saying as such, though, did seem to prompt a lot of misunderstanding and, frustratingly, allegations of bad faith, which, optimistically, might have been alleviated by a link to an article like this one.

What I did want to do is — word limit be damned — write a post about Facebook’s political problems, as I perceive them, in their entirety. I do think the media gets a lot of things wrong about Facebook, not because there aren’t problems, but because the problems are more profound than the issue of the day. So here’s my best shot.

Facebook’s Benefit

This is perhaps an odd place to start, but it cuts to the core of why I do see real benefits to Facebook’s existence in the world, and is an important part of the trade-off calculations I make in the sections that follow.

I believe that the economy of the future will, if we don’t stifle it along the way, look considerably different than the post World War II order dominated by large multinational corporations whose differentiation is predicated on distribution. Instead the future looks more like a rain-forest, with platforms that span the globe and millions of niche businesses that sit on top.

I am, given my career, biased in this regard, but the rise of platforms like Shopify, Etsy, Substack, and the App Store are evidence that new careers can be built and untold niches filled when the entire world is your addressable market. The challenge in a worldwide market, though, is finding the customers who are interesting in the niche being filled; this is where Facebook’s ad offering is very much a platform in its own right.

Facebook, via its integration with a host of third party sites and apps, makes it possible for those sites and apps to collectively understand and target prospective customers with the same sort of proficiency that first-data powerhouses like Google and Amazon do, and they don’t need to hold or understand any third-party data to do so. It is difficult to overstate what a big deal this is: suddenly a Shopify merchant can compete with Amazon, a D2C startup with Unilever, or a blog with the New York Times.

Moreover, Facebook’s platform, unlike many of its competitors, is entirely automated and auction-driven; that means that small businesses have the same shot at customers as their far larger competitors do. Facebook is also very adept at simplifying the process (in exchange for more margin, of course): simply specify how much a customer is worth to you, and Facebook will deliver that customer. It’s an advertising platform that truly levels the playing field, and I think it is a very good thing for the world.

Perceived Problem One: Privacy

The flipside of Facebook’s advertising platform is the reality that the company absolutely does ingest huge amounts of data. It is worth noting, though, that a big chunk of the most private human readable data is content that users give Facebook themselves when they use the site; Facebook combines that with all of the data it collects in all of those connected apps and sites — which are primarily about measuring conversions — in its Data Factory to create machine-learning driven profiles that undergird its advertising. What Facebook does not do is sell user data, not only because data undergirds its advertising business, but also because nearly all of that data would be unintelligible and worthless to any entity other than Facebook.

As I noted in Privacy Fundamentalism, it is tempting to imagine this data as being something akin to a file of your life just laying around for anyone to peruse; Apple has implied precisely this with some of its recent ads. The reality, though, is far more mundane: the nature of computers and the Internet is the spewing of data everywhere, and it is only in aggregate, in a data factory, than any insight from this collection of vectors can be derived, and only then in the context of a larger application like targeted advertising conducted at massive scale. It is exceedingly unlikely that Facebook could even make the data about any one individual readable by a human, and there is no incentive to do so; not only do third party apps and sites have no need nor desire for individual level data, neither do advertisers — Facebook’s entire value to both is as a matchmaker at scale.

To my mind, the reality of data on Facebook is well worth the trade-off for the value Facebook’s advertising delivers to niche-focused businesses. Moreover, I feel much better about Facebook as a data mediator than about modular advertising stacks where data really is bought and sold. I do understand that lots of folks disagree with me on this point, but again, everything is a trade-off, and I think this one is worth it.

Perceived Problem Two: Competition

The core of my Framework for Regulating Competition on the Internet is distinguishing between platforms and Aggregators; platforms are extremely valuable, because of the opportunities they enable, but are also more subject to abuse, because companies taking advantages of those opportunities are beholden to the platform. Aggregators, on the other hand, dominate their markets by controlling demand; suppliers are not locked in, but are rather seeking end users, who themselves can visit another website or open another app at any time. The societal value of Aggregators is lower than Platforms, but the extent to which they can inflict harm is more limited as well — competition really is just a click away.

To that end, the only extent to which Facebook is a potential antitrust concern is in terms of advertising, thanks to its massive amount of proprietary data and highly advanced data factory. At the same time, Facebook’s auction driven format ensures that Facebook is not gouging advertisers, and the effectively infinite potential inventory in digital means that competitors are not locked out from building competing products; the only scarcity is audience attention. Moreover, tradeoffs matter here as well: Facebook having extremely effective data is good for businesses on its platform, and there are privacy concerns with forcing Facebook to share.

On the consumer side, I simply don’t see any anticompetitive concerns at all. Consumers are not locked into a single communications app, but can and do multi-home, and can switch between competing services with a swipe. Facebook’s challenge is in continuing to keep users opening and using its apps, and there is plenty of evidence the company is struggling to do just that.

A decade ago Facebook responded to this challenge by savvily buying upcoming communications apps like Instagram and WhatsApp; I do think that this reduced competition in the sector, particularly from an advertising perspective, and I do think there is a case for regulators to look much more critically at Aggregators buying other would-be Aggregators. That noted, in 2021 Facebook — even with Instagram and WhatsApp — faces more competition than ever before; the market worked, and regulators are very much on guard for similar purchases. Facebook is going to have to keep users with what it has, or builds.

Political Problem One: Facebook’s Competence

These first three points, taken together, paint a picture of an exceptionally well-run company and a very attractive business; there is a reason why Facebook is worth around a trillion dollars. At the same time, it is that exceptional competence that starts to explain Facebook’s current political predicament.

Andrew Bosworth, Facebook’s New CTO, wrote an internal memo in 2016 about Facebook’s commitment to growth that later leaked to BuzzFeed; it is essential to understanding Facebook:

We talk about the good and the bad of our work often. I want to talk about the ugly.

We connect people.

That can be good if they make it positive. Maybe someone finds love. Maybe it even saves the life of someone on the brink of suicide.

So we connect more people

That can be bad if they make it negative. Maybe it costs a life by exposing someone to bullies. Maybe someone dies in a terrorist attack coordinated on our tools.

And still we connect people.

The ugly truth is that we believe in connecting people so deeply that anything that allows us to connect more people more often is *de facto* good. It is perhaps the only area where the metrics do tell the true story as far as we are concerned.

That isn’t something we are doing for ourselves. Or for our stock price (ha!). It is literally just what we do. We connect people. Period.

That’s why all the work we do in growth is justified. All the questionable contact importing practices. All the subtle language that helps people stay searchable by friends. All of the work we do to bring more communication in. The work we will likely have to do in China some day. All of it.

The natural state of the world is not connected. It is not unified. It is fragmented by borders, languages, and increasingly by different products. The best products don’t win. The ones everyone use win.

I know a lot of people don’t want to hear this. Most of us have the luxury of working in the warm glow of building products consumers love. But make no mistake, growth tactics are how we got here. If you joined the company because it is doing great work, that’s why we get to do that great work. We do have great products but we still wouldn’t be half our size without pushing the envelope on growth. Nothing makes Facebook as valuable as having your friends on it, and no product decisions have gotten as many friends on as the ones made in growth. Not photo tagging. Not news feed. Not messenger. Nothing.

In almost all of our work, we have to answer hard questions about what we believe. We have to justify the metrics and make sure they aren’t losing out on a bigger picture. But connecting people. That’s our imperative. Because that’s what we do. We connect people.

In the seventeen years since Facebook was founded the number of people using the Internet has grown from around a billion people to around 4.5 billion people; in developed countries the Internet is close to being universal, but developing countries are steadily catching up:

Worldwide Internet users over time

Of those 4.5 billion people, 3.5 billion use at at least one Facebook service on a monthly basis; 2.8 billion use at least one on a daily basis. That is exactly the sort of competence I was referring to above. As Bosworth notes, though, Facebook’s growth isn’t just about competence, but about a single-minded determination to do everything possible to make Facebook synonymous with the Internet.

Here is the problem, though: it is not at all certain that the Internet is good for society. I believe it is — I just articulated a positive vision for the democratization enabled by Facebook advertising, to take but one small example — but there are obviously massive downsides as well. Moreover, many of those downsides seem to spring directly from the fact that people are connected: it’s not simply that it is trivial to find people who think the same as you, no matter how mistaken or depraved you might be, but it’s also trivial to find, observe, and fight with those who simply have a different set of values or circumstances. The end result feels like an acceleration of tribalism and polarization; it’s not only easy to see and like your friends, but even easier to see and hate your enemies with your friends.

This is, as I noted, an Internet problem — as Facebook is happy to tell you — but the truth is that Facebook, thanks to its uber-competent focus and execution on growth, effectively made the Internet problem a Facebook problem. Sure, you can make the case that had Facebook not pursued growth at all costs there would be another social network in its place — and frankly, I believe that Twitter gets off far too easy in discussions about deleterious impacts on society — but the reality is that Facebook did win, and just because some of its spoils are rotten doesn’t absolve the company of responsibility. If you are going to onboard all of humanity, you are going to get all of humanity’s problems.

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