Earlier this year, Facebook began running a commercial that amounted to an apology for all its recent misdeeds, which span everything from allowing fake news and conspiracy theories to proliferate to permitting the misuse of data. The ad promised that the company would get back to its roots of creating communities and making it easier for people to make connections.
Whether Facebook actually does this is an open question. Make no mistake, it will continue to share data. The notable shift is that users, in the wake of the Cambridge Analytica fiasco, are more aware of how the company has violated their privacy and now have more explicit options to protect it. Moreover, the challenges surrounding cleaning up its platform came into full view recently, when executives testifying in front of Congress were unable to outline specific internal company policies for taking down fake information or posts that include hate speech.
Twitter, in a different way, has also promised to clean up its act. Earlier this month, it culled millions of accounts that violated its anti-spam policies by disseminating questionable material, a move that contributed to a decline in monthly users in the second quarter. Twitter’s platform, even more than Facebook’s, is especially noxious, ripe with abuse, hate speech and false information. Cleaning up its problems will take more than slashing its most conspicuous bad actors.
But for a moment, let’s take these companies at their word and assume they want to create a better user experience and boost privacy protections. It’s a great message, one that makes for a good, heart-warming commercial, but it runs counter to their business models, which are heavily dependent on selling personal data to advertisers. That’s especially the case of for Facebook.
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Indeed, dog pictures, funny memes and birthday wishes might make people happy, but they don’t produce much revenue. Facebook knows this better than anyone, especially after its most recent earnings report, which sent the stock tumbling and reflected the extent to which the company is reliant on shopping out user data. Going forward, therefore, the company is left with two options, each of which has perils.
The first would be to do nothing: Continue to take a mostly hands-off approach, putting few limitations on what kind of information appears on the site, and to glean as much data as possible, all while maintaining publicly that respecting others and privacy is important. This approach is a proven money maker. At the same time, it not only exposes the Facebook to significant headline and regulatory risk but it also increases the likelihood that some will eventually reach a breaking point and abandon the platform entirely.
The second is to double down on video, building a platform featuring original and user-generated content that runs pre- and mid-roll television-style ads. If that sounds familiar, it should: Google already does this, and trying to out-Google Google is hardly a recipe for success, even for a company with the resources of Facebook.
With 1.5 billion daily users, YouTube is the digital video platform. Just as Google in many instances has become a verb so has YouTube. Meanwhile, Alphabet has a series of other business that produce billions, including ad-search, cloud computing, investments in startups, including Uber, and the emerging line of hardware products that support Google Home. Facebook battles Google in the digital ad market but is scarcely competitive in any of these other areas.
Bottom line: If Facebook and Twitter are committed to making social media a better place, they will pay the price. The sad fact is that neither can improve the user experience, protect data and keep their ad models intact. Whatever path these companies choose to take, Google will benefit because it doesn’t have a strong social media presence to sully its reputation, nor could either match what it does in the other parts of its business.
And the irony is that Google’s attempt to build a social media platform (Google+) has been unsuccessful and, frankly, a source of ridicule for a company over the years. Now, as we reach peak social, it’s turning out to be a distinct advantage.
Date: August 1, 2018
Source: Forbes