The last few days were filled with blog posts about Facebook going rogue. Many pundits are upset that Facebook treats users’ privacy with complete disdain. There are a few who feel that Facebook has done nothing wrong and those who don’t like their new policies should leave it and go elsewhere. After all we live in a world dominated by free markets and there is nothing that is stopping us from making a move elsewhere. This post is not about Facebook’s privacy issues but about the point of view that users who don’t like Facebook’s privacy policies should go elsewhere. I am going to argue that this argument doesn’t apply in the case of Facebook and offer two compelling reasons to highlight why it is not the case.To begin with, let us take a moment and understand the philosophy that drives the arguments of these folks. Their argument is not complete nonsense. It is the core of how we do business in a free market system. In a free market system, a product vendor or service provider offers value to the users in the form of a product (say, traditional shrink wrapped software) or a service (say, SaaS or other cloud services). The users pay for these products/services either with their money or with eyeballs (in the case of advertisement supported products and services). In short, the vendor/provider creates the full value for the users in exchange for their money/attention. If a user doesn’t like the product or service, they are free to leave and use another product/service that fits their needs. The only requirement from the user side is that the vendor/provider support data portability standards that helps them take their data with them to another product/service. This model fits very well with the argument that if someone doesn’t like a service, they are free to move elsewhere just because the value is entirely created by the vendor/provider and the user is just a user. The user doesn’t add any value to the vendor’s platform or product except, maybe, some word of mouth marketing.
In the case of Facebook, it is my opinion that the above kind of arguments will not apply. I strongly feel that Facebook has gone rogue and I offer the following two arguments to counter those who support Facebook’s rights to change the terms the way they like.
- Unlike the other products and services we use in the real world where the vendor is solely responsible for the value creation, social networks belong to a completely different category. Even though the company behind the social networks are solely responsible for the creation of the underlying platform, the value to the social networking platform is added by what is known as network effect. Without the users, the platform is of no value even if the platform is technologically very sophisticated and innovative. In the case of Facebook platform, there is absolutely no value to the platform unless large number of users join the service. This very fact forces almost every user to do their part in bringing in their friends and family into the service. An user with no friends on the Facebook platform sees no value in the platform. Therefore, the value in the Facebook platform (for that matter, any social networking platform) is added by the users who join the service. At this point, I am pretty sure many people would want to counter me with the argument that the value add by the users is similar to the licensing fees or subscription or attention given by users in other services. Nope. They are not one and the same. Facebook monetizes the platform with ads. Not only users offer their attention for this monetization process, they are bringing in more eyeballs to monetize. There is no equivalent to network effect in the traditional product/service category. No, the word of mouth marketing by the users of those products/services is not equal to the network effect in the social networking platforms. The word of mouth marketing only helps the vendors/providers of the product/service whereas network effect in the social networking platforms helps users add more value to the platform even as it brings more eyeballs to the vendor’s monetization strategy. This is clearly unique to social networking kind of services. This is exactly the reason why we cannot apply the argument “if you don’t like the service of a provider, you are free to go to another one” to social networking services. If we go out of the way to rationalize this argument, criticisms that Facebook is exploiting their users also holds true. In short, I have added quite a bit of value to the Facebook platform from my participation alone and asking me to leave if I don’t like their newly introduced terms is not reasonable.
- All of us here at Cloudave advise the potential SaaS/other cloud services users to check if the service provider offers data portability options for their service. Otherwise, we warn them to look for another service that supports data portability. It is our belief that the complete ownership of users’ data is with the user and they should be able to take it out of a service if they intend to leave the service anytime. It is the same case with Facebook platform too. Any data I create, whether it is a photo I post or a wall message I leave on my friend’s wall or a personal message I send to my friend, it is my own property. This also includes the information my friends willingly share with me. If I have to leave the service for any reason, I should be able to take these data in one of the open formats. Unfortunately, data portability is not fully supported by Facebook. There is no way for my friends to let me know if I can take their information with me when I leave the service and even if they are willing to let me take their information with me, there is no way for me to take it with me. They are my friends and I should be able to take them with me when I leave. I could give a real world example to highlight this point. In the real world, I could take my friends to a bar for regular chats and if I don’t want to go to that bar anymore and, instead, want to go to a coffee shop, I should be able to take my friends and the information we shared along with me. If the bar owner tells me that I cannot take my friends or the information we shared to the coffee shop, it will be considered ridiculous. It is the same case with online social networks too. They have no reason not to support data portability in full. In fact, Facebook doesn’t support complete data portability. Under such a scenario, asking me to leave the service now is not valid. I have spent my valuable time storing data and forming relationships in that platform. In exchange for offering me a platform to socialize, Facebook has monetized with my eyeballs as well as my friends’ eyeballs. Asking me to leave my data behind and go elsewhere now is no different from someone who puts a gun on my head and asks me to leave my wallet with him/her. The data is my property and the platform cannot refuse to allow me to take it with me when I leave. In the absence of any such option for complete data portability, the argument that one should leave the service if they cannot agree to the newly introduced terms is not a reasonable argument.
I am sure there are many who will disagree with me. I would like to hear from you about your stance on the issue and whether or not you agree with me.
Update: Inside Facebook has a detailed analysis on Facebook’s privacy issues for anyone who is interested to dig in mor
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I agree entirely with what you say! I don’t really use Facebook any more, but I still use Smart Twitter to post my tweets onto Facebook because so many friends only live on Facebook – to them that’s the internet!!!
But I want to add that the “network effect” you speak of is observed elsewhere: why are so many tech companies in Silicon Valley? Or car companies in Detroit? In those two examples the logic is a little more concrete but the basic idea is the same – it’s a proximity effect. Sure Google could move to the middle of the desert and save a ton of money on rent and make their solar panels much more effective, but they loose much more from being out of the tech community!
Also, the free market has pre-requisites (and they’re not to be confused with effects). One of those is information – consumers need to have and be able to understand the information pertaining the product/service they’re buying. That’s why there’s standardized nutrition information on food, and labels on clothing, and oversight on pharmaceuticals that are beyond the average consumer’s comprehension, so we can make informed choices. That kind of thing is missing from all social networks – not just Facebook – and some (like Facebook) take advantage of that. It’s not really a free-market if it’s inefficient, and it might sound counter-intuitive but a little regulation could go a long way to make the market freer by helping consumers understand their choices and make informed comparisons.
[..] Why I think Facebook Has Gone Rogue [..]
Anyone who puts information on Facebook, or any other online source that is equivalent to what they have in their wallet is an idiot, and always will be an idiot!
It’s “a user” not “an user” …