Facebook’s business model is not about connecting people and promoting a social network. The social media behemoth’s core business relies on a straightforward tenet, selling advertisements.
For most of the 20th and early 21st century, advertisers leveraged the mass proliferation of the television to identify and sell products. Top-rated television shows, movie premieres, sports events and even breaking news attracted huge eyeballs and thus provided a perfect grazing ground to pick and showcase adverts to the public.
The Internet began changing that dynamic in small and measured movements. Technological limitations and costs prevented the Internet from becoming as pervasive as the humble television. However, this changed in the early 21st century, and nations all over the globe began gaining cheaper access to the worldwide web.
Then, came the smartphone which revolutionised access to the Internet and enabled people to stay connected on an almost 24/7 basis. This shift in consumer behaviour was not unnoticed by the advertising bigwigs. Realising the awesome power of a hyper-connected populous, they shifted their sights to the Internet with a commitment not seen before.
However, the massive reach of the Internet created unique issues that were not present in the television and radio era. With the nearly infinite amount of content available, targeting the right adverts to the right audience was like shooting an arrow in a dark room while being blindfolded. Barring a few prominent online destinations, there were increasingly fewer options to get the most bang for their advertising buck.
Facebook and its ilk changed that dynamic in a manner that few could have imagined. In the guise of a social platform that enabled people to stay connected with their friends, Facebook was able to increase its reach in an exponential manner reaching one billion active users in under a decade. The network effects of the growth compounded, resulting in even more people signing up on the social media site. Today, Facebook has over 2.4 billion active users or above 30% of the total human population on its website.
However, the impact of Facebook was not limited to merely the number of users on its platform. When signing up, users provided seemingly benign data to Facebook, which turned out to be more valuable than they could have possibly imagined. Combined with its machine learning algorithms, Facebook could perfect the science and art of segmenting the general population in a manner that allowed advertising parties to cherry-pick and target their adverts in a way that was not possible even in the television era. Not only could advertisers specify gender and age demographics when picking target audiences, with the aid of the data that Facebook was collecting, but advertisers could also even pick the race, religion, ethnicity, political inclination and sexual orientation of their target audiences.
The same data that enabled advertisers to get the maximum ROI on their advertising investments would also become fuel for a much more insidious fire in 2016. The data abuse by the firm Cambridge Analytica and the subsequent use by Russian bad actors would influence one of the most significant political events in recent history. An NYT article highlights the “deny, delay and deflect” attitude that the CEO and COO chose to adopt when made aware of the rigging of the system by the bad actors. This behaviour speaks to the institutional and structural failure of Facebook as an organisation to address a potentially hazardous political situation in the interest of their core business of ensuring people continued using their platform.
Its recent acquisitions of the popular messaging app, WhatsApp and the photo-based social media app, Instagram have further grown Facebook’s user base. In any other industry, such acquisitions would have triggered anti-trust conversations and the fear of a monopoly creation. However, given the current definition of anti-trust which is identified as harmful to the consumer on a price front, Facebook is not liable for anti-trust practices as there is no “dollar cost” to the consumer. Ask any economist, and they will give a multitude of reasons how monopolies erode economic welfare. While there may not be an immediate apparent monetary value associated with the social media monopoly that Facebook is creating, the user data monopoly it has created for itself with these acquisitions is undeniable. Users who may have chosen to abandon Facebook in light of the Cambridge Analytica issue find themselves trapped in an eco-system that refuses to let them leave without a social penalty of missing out their “connections”.
The social and moral impact of Facebook is equally controversial. Facebook does not view itself as a traditional media/publishing organisation since they do not publish the content and hence do not see themselves having to moderate it. Facebook believes it does not have editorial obligations. This distinction protects them from legal and regulatory actions that would have befallen a traditional media or publishing organisation and allows the rampant posting inflammatory content by Facebook users. Combined with the network effects and expanse of Facebook, this freedom to post un-corroborated content and enable the post to remain on the site has also led to the frequent spread of misinformation. While most of such misinformation posts end innocently, some of these pieces of fake news have triggered violent attacks and, in a few instances, even genocidal events.
In light of the misinformation issue and the severe public blowback, Facebook established teams of fact-checkers to moderate content posted by users. However, fact-checkers will not remove or delete content but will instead demote it newsfeed rankings. This model essentially means that misinformation and sometimes questionable content will continue to linger.
Interestingly, the emotional toll that this moderation job takes on the people doing it is the subject of another piece in the US-based technology and culture website, The Verge. The article is an interview with the people who are allured to the role of content moderation under false pretences and then are subjected to what amounts to inhuman working conditions while viewing several disturbing and horrifying content in order to ensure the moderation of the Facebook platform.
Conversely, existing regulations for publications cannot be extended to social media companies such as Facebook without due consideration and amendments. If anything, authorities and governments need to understand what new laws and regulations must be drafted in light of Facebook’s business model, the nature of an ever-connected population and the abilities bestowed by a platform of Facebook’s size.
Facebook and the internet economy are a significant shift in the history of human civilisation. Adapting existing means of governance to such a radical change in the status quo would result in negligible impact.
Consider the impact of the modern automobile in the early 19th century. The introduction of a radically new means of transport was not apparent at first. Considered as a motorised version of the erstwhile horse carriages, the automobile was afforded similar treatment. However, soon it became evident that this invention called for revisiting a multitude of aspects. Efficient usage of the car called for constructing particular roads. Towns and cities required special planning to accommodate such ways. A new licensing system was put in place to ensure only qualified personnel could handle the automobile.
To ensure human casualties were avoided, unique signalling systems were required, and separate pedestrian walkways were needed. Further technological and process advancements meant greater access to the automobile across the masses, thus compounding the considerations and concerns around the presence of automobiles of all sizes and shapes. The speed capabilities of the motors led to crash testing procedures by the manufacturers, introduction to safety features such as airbags and seatbelts alongside legislation that enforced the use of these measures.
The automobile industry was possibly hesitant to introduce barriers and more checks and balances to their processes and products. However, the regulatory and legislative authorities fuelled by the need for public safety and welfare ensured that the auto industry implemented these measures and followed the letter of the law to operate and exist.
Facebook and similar services are very much like the modern automobile. In isolation, their presence does not call for caution or concern. However, as we begin using them and their presence becomes increasingly common, additional considerations are required. Change for change’s sake is worse than no change at all. The recent changes at Facebook seem more like lip service and an exercise in PR management. New systems of governance and safety are the call of the hour. There is a need for a fundamental shift in the way these technology giants are governed and held accountable. Imposing fines and setting up committees and teams to clean up after the mess has already been made is not a sustainable model for the greater good of society. The change required will not an easy one, nor will it be the kind that needs to be implemented once to notice the difference.
Given the scale, scope and impact of Facebook and similar technology platforms, the change will need to be systemic, ongoing and fundamental. Perhaps it is time even to ask the most fundamental question of all; Should Facebook even exist?