On March 7 Facebook founder, CEO, and majority shareholder (for voting purposes) Mark Zuckerberg announced “A Privacy-Focused Vision for Social Networking.” You might want to read it, if only to see that what he does NOT say is blindingly obvious.
There have been many commentaries on this missive, but I want instead to discuss a post from last April by Andreessen Horowitz’s Benedict Evans, called “The Death of the Newsfeed.”
There are many dots to connect here, with rather staggering implications. Let us begin.
1) Zuckerberg states that people value privacy, so Facebook will build on its WhatsApp franchise and offer end-to-end encrypted 1:1 chat: “I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won't stick around forever. This is the future I hope we will help bring about.“
But wait: bad people can discuss and plan bad things in private, so Facebook has
“a responsibility to work with law enforcement and to help prevent these wherever we can. We are working to improve our ability to identify and stop bad actors across our apps by detecting patterns of activity or through other means, even when we can't see the content of the messages, and we will continue to invest in this work. But we face an inherent tradeoff because we will never find all of the potential harm we do today when our security systems can see the messages themselves.”
Whoa. Either communications is private or it is not.
2) Facebook stopped many copies of the New Zealand massacre video from being reposted, it is true, but there were still hundreds of thousands of copies that were circulated and of course recirculated. Facebook should not be congratulating itself on how much evil it has prevented any time soon. Recall that AT&T shared its bulk network traffic with US legal/intelligence sources via the infamous “Room 641A” in San Francisco. How will Facebook provide similar courtesy/compliance? Will Indian, or Iranian, or Russian governments get the same access? Whatever Facebook says about privacy, how much will educated observers believe? To whom is Facebook held accountable?
3) Even though Mr. Zuckerberg is the only Facebook shareholder whose vote counts, he has a fiduciary duty to the other investors. Not once does he mention what happens to ad revenue in these encrypted channels. If it goes away, does Facebook attempt to become the AT&T of the 21st century? If Facebook users stop being the product sold to advertisers, they likely become customers of a very different kind of service, one for which I predict there is limited paying appetite.
4) Why is Facebook re-examining privacy given its steadfast dismissal of same? The Benedict Evans post from last year provided a useful prediction, in nearly Haiku form:
"All social apps grow until you need a newsfeed
All newsfeeds grow until you need an algorithmic feed
All algorithmic feeds grow until you get fed up of not seeing stuff/seeing the wrong stuff & leave for new apps with less overload
All those new apps grow until..."
The massive scale of Facebook means the average user (a dubious notion, but I’m merely quoting their figure) is eligible to see at least 1,500 posts per day. If published figures are true — I’ve seen extrapolations of 35 minutes, 27 minutes, 41 minutes — that means a user would have to click once per second for 30 solid minutes merely to stay current with the newsfeed (30 minutes x 50 clicks/minute).
Enter the machine learning solution: we can algorithmically determine what people want to see out of that impossible pool of 1500 eligible items. Alas, algorithms can be gamed, or stuffed (with echoes of the SEO arms race), or lag user sentiment, which can be expected to evolve over time. Hence the “pivot toward privacy” can be read at one level as an admission of defeat: machine learning cannot curate the newsfeed model indefinitely (or even temporarily).
5) This is an important moment. As industries from CPG to defense to pharma to transportation seek out consultancies and new hires to help embrace “big data” and “AI” (whatever that is in operational terms), an acknowledged leader pivots away from its core AI-driven product. The fact that Facebook is seeing an exaggerated departure of top executives of late underscores how much this matters: having made their first (or at least most recent) x million dollars inside Facebook, these people who are in a position to know are betting they can make their next x million _outside_ the social network leader.
6) Building on messaging is not Zuckerberg's idea. Chinese services such as WeChat, Viber (popular in former Soviet satellite states), and LINE (Japan/Taiwan) can include payments, gaming, GPS, and, yes, encryption. Consultants including Forrester have been predicting the rise of messaging for about five years. One must give Facebook credit for its acquisitions: Instagram and WhatsApp have proven to be brilliant buys. But can/will they cannibalize the original product?
The larger question involves revisiting Clayton Christensen's Innovator's Dilemma from 20 years ago: can Facebook shift its reliance from the revenue-rich but overbloated and mistrusted newsfeed toward lighter-weight and potentially ad-resistent messaging tools? If so, how will Wall Street value the company? Can Facebook leadership persuade investors, regulators, and users (both advertisers and consumers of the service) of the wisdom of moving with the platforms to new definitions of relevance, convenience, and trust? What happens to the future of news media, given Facebook's role in the current crisis of an informed body politic? Whatever happens next, this feels like the beginning of the end of an era.
Posts
