A lot of the anxiety surrounding Facebook in recent months stems from the idea that the company is already too powerful, and that it will keep growing and growing. The monster has to be caged now or all of mankind will be at Mark Zuckerberg’s mercy. But is that really the case?
Facebook is indisputably a giant : At the end of March, it counted 2.2 billion monthly users, which is 29% of the entire world population. Many people seriously believe that Russian manipulation via Facebook and other social media skewed the outcome of America’s 2016 election. That’s unlikely but, given Facebook’s reach, it’s not entirely implausible.
The latest figures from the company, released on Wednesday, seem to confirm all those Facebook-as-Frankenstein fears. Despite the widespread disgust over the data-hijacking scandal by Cambridge Analytica, the best efforts of a #DeleteFacebook movement and celebrity deleters like Steve Wozniak and Elon Musk, in March the company's daily active users worldwide actually rose 13% in March from the year before, to 1.45 billion. Even in North America, the number rose by one million.
A survey by Raymond James & Associates, an investment bank, found that only 8% of the respondents vowed to stop using Facebook after the Cambridge Analytica affair. If they had really done it, it would have been a big blow for Mark Zuckerberg, but apparently it was just a lot of tough talk for the pollster before uploading some more pictures of your cat.
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Problems like Cambridge Analytica and Russian trolls aren’t going to bring down Facebook because these things tend to bother the world’s chattering classes more than they do ordinary people. The Raymond James poll found little desire by ordinary people to wean themselves off Facebook as a political protest and the Facebook first-quarter financial report confirmed that.
Regulators in Europe are already clamping down on Facebook through tougher privacy rules and others will follow, and that could depress the company’s growth. But just as media coverage over privacy won’t hurt the company in the long run, neither will rules.
But where anger and regulations can’t succeed, technology and consumer fickleness can.
There are two rules about the online economy that are worth noting.
One is that it’s the nature of the business that a single provider will tend to dominate a segment, for example Facebook in social media, Google in search and YouTube in video.
Two is that the market dominance is almost always transient. A lot of the most widely used online tools are popular because they are popular, but the infatuation isn’t permanent, and users eventually move on to another platform or opt to distribute their time in other ways. Even Mark Zuckerberg can’t devise a way to add more hours to the 24 hours in a day.
Canaries in the Facebook mine
How much do consumers really value the digital services they get for free? Since nearly everything is free in the digital, the usual role of prices in estimating the value of something plays no role.
A recently released study throws some interesting light on that problem. The study wasn’t designed to measure the value consumers place on social media, rather, it was to try and get a grip on how much the digital industry contributes to the economy.
When government’s calculate gross domestic product, unpaid goods and services, like Google searches or housework not done by a paid cleaner don’t count. This bothers mainly economists and governments wanting to assess the state of the nation. The problem is that the digital business clearly delivers critical services but are assigned no value. In other words, we are better off that the official statistics tell us.
So, getting back to Facebook, the researchers sought to put a value on various digital offerings by asking people how much money they would have to be paid in exchange for giving them up for a year.
Search engines topped the list at $17,500, followed by email ($8,410) and maps ($3,650). Instant messaging was at the bottom with $155, but social media wasn’t far away, at $312.
The study didn’t examine why consumers put such a wide range of values on the different services, but the authors speculate that one reason is that some digital services are more easily substituted than others. Social media apparently doesn’t count as something hard to replace.
There is already evidence that Facebook is fading -- not that it will be cut down to the ignominy of MySpace, Yahoo or AOL any time soon, but that its best days are over. Revenues are still growing, as are worldwide active users, but in North America daily active user growth has been flat for some time; and in the last quarter of 2017 it actually fell for the first time in the company’s history (even if growth resumed in the following quarter). People are spending less time on Facebook, too.
North America is Facebook’s oldest market, and the way the United States and Canada are going is quite likely the way the rest of the world will go to. Teenagers are another canary in the Facebook mine because they are also tiring of it and moving on to other platforms.
There’s, of course, lots more to say on this, but I have to upload some great cat pictures, so I’ll stop here.