I’m no fan of Facebook, but I don’t agree with the premise of the article. The power of Facebook lies in its network effect: something on the order of 2 billion have active Facebook accounts. Whether or not people are spending more or less time on the platform doesn’t matter as much as people seem to think it does. What matters is the fact that they can associate web browsing actions (pages visited etc) with your Facebook account. Just having a Facebook account that you “don’t use” allows a massive amount of value (from an advertisers perspective) to be unlocked.
In my opinion no other network is going to be able to compete with the number of users on facebooks platform, and any that do, Facebook will buy or copy (Instagram and Snapchat respectively). Even if you don’t actively look at anything on Facebook, or even log in, the fact that you have a Facebook account allows advertisers to track and target you with ads on all sorts of platforms and websites that are available to Facebook advertisers through the audience network (ad placements on millions of websites and mobile apps). The crucial moat that Facebook has is simply the massive nimber of registered users (that correspond to people’s real identity) on the platform combined with sophisticated tools to reach those users both on and off Facebook.
I’d love to hear an opposing argument, but the way I see it Facebook is here to stay and will only get bigger and more profitable in the foreseeable future.
> the fact that you have a Facebook account allows advertisers to track and target you
I use a separate browser profile just for Facebook; I never log in from my main profile. Do they link the separate browsers? There'd be a bunch of clues like the IP address, window size, browser version and OS, related but not identical time of activity, etc.
So how hard do they work at linking up data from people who expressly don't want them to? I despise Facebook and expect this is the sort of thing they'd do, but does anyone know more?
'So how hard do they work at linking up data from people who expressly don't want them to?'
I stopped using Facebook several years ago; I wasn't much a user anyway so never worried about it.
Then, last year, I installed whatsapp. Then I started getting emails about an old colleague's activity on facebook. I don't have any contact details for this person anywhere, especially on my phone. I'd forgotten he even existed.
OK, you can connect the dots since my email hasn't changed and that connects me to facebook, and so on.
Nonetheless, it just made me realise how hard you have to work to protect your privacy these days.
When I deleted my facebook account I couldn't know that one day I'd use another service and facebook would not only acquire that service but then start using it to hook me back in?
So how hard do they work at linking up data from people who expressly don't want them to?
It actually doesn’t matter how much effort they put in or how effective their techniques are. Doing that at all for people who have expressed a wish not to be is stepping over the line. That is why GDPR is going to hammer them.
And the funny thing is, with both Facebook and Google, this is completely obvious to anyone outside the very narrow demographic they hire from. So much for (their fake) diversity.
You are quite the exception. Most people don’t even have a computer and get along with an old Android phone for everything (as admittedly, it’s quite enough)
Yeah, it's unfortunately rare, but it is easy: on mobile you could install some separate browser app. In Chrome on a desktop it's two clicks to switch profiles, and about three to create a new one. I used to open an incognito window for Facebook, but you'd have to log in anew each time.
Of course I wish people would leave Facebook instead. I'm doing my part by not posting there.
Has anyone actually done a sample of Facebook users (or humans) to check those stats? I do not believe them, based on my personal experience and the very large number of businesses and bots on facebook.
Given the massive incentive for Facebook to lie, we’d be naive to take their numbers for granted.
If they provided really fine-grained data, we could easily verify their claims. We pick cities, they give numbers, we survey to confirm, then extrapolate.
Even if the MAUs are half of what they claim (they claim over 2 billion monthly active) they still have a moat the size of a freakin ocean. I think it’s safe to say they have users “in the billions”.
I believe half is even optimistic. I'd venture a gamble that at most 25% are unique and original people.
Even my non technical friends often have 2-4 accounts. For work, for friends, for forgotten passwords, etc...
And then of course bots and bots and bots.
Of course it depends on how they define a user and an account. If I logon only 1 of my accounts in a given month or 10. Do they count as 1 or 10 in either case?
It can be true, I think we get used to the idea that most people are connected but if you have friends over the age of, say, 60 it's fairly common for them not have internet access. In the UK, at least?
Why not? In my friend circle only one guy has a facebook account, he created it to talk to a girl he met and i don't think he uses it anymore or even deleted it.
The biggest misconception is that adverisers track or even know anything about you. They simply ask fb to show this ad to such and such people and they pay fb to do so. This is the greatest asset of both fb and google, they know who and what you like, the moment they give this info away to 3rd parties, they become obsolete.
> What matters is the fact that they can associate web browsing actions (pages visited etc) with your Facebook account.
And what will kill them is the increasing regulatory pressure (GDPR especially) that will end this soon, for a significant percentage of their most valuable users.
Once GDPR lands Facebook will need every user to explicitly opt-in to tracking their non-FB browsing actions, plus separate opt-in for tracking various elements of their Facebook data itself, and will face very tight constraints of how this can be shared with advertisers even once they have that consent. Sharing WhatsApp/Instagram's data with Facebook would be another separate opt-in there, etc etc. Access to these sites cannot be contingent on you agreeing to give them your data (that's not considered legitimate consent). Effectively the EU is going to forcibly stop them tracking EU users, or using any of their data for advertising, for anybody doesn't explicitly ask them to.
This is going to hurt. They're going to have to persuade every EU Facebook user that they _want_ to have their data tracked for advertising. Right now I can't see them making a convincing case for any significant percentage of their EU user base (though I'm sure they've put a lot of thought into this, so there may well be developments here in the coming months).
The EU is nearly 20% of Facebook's user base (~50% larger than the US), and as a relatively affluent part of the world, it's a particularly valuable segment for advertisers. Before the end of this year they're going to lose their unique advertising advantage for a very large proportion of that group, and I'd expect over the next decade other countries and regions to follow suit.
The model of advertising on the Internet is going to change pretty drastically over the next few years, and Facebook's success fundamentally depends on the current model. The 'crucial moat' you point out is about to disappear overnight, and they're not in a good place to deal with it.
Are there ways to use Facebook data to serve advertisements outside the Facebook platform? I was under the impression that FB customers (advertisers) can only serve ads on Facebook i.e. Facebook does not display ads on other websites (unlike Google), and it does not pass on user data which advertisers can use to serve ads on other platforms/websites.
It's correct and incorrect at the same time. Social networks like cars, they give value when it's being used. To sell ads social networks must be sure that someone scrolling feeds. No usage - no gains.
Even with huge amount of users data nothing guaranteed. You can't sell same stuff periodically, big data has value only when they are actual.
If, as seems to be the case, Instagram is the popular destination to migrate to will Facebook be too bothered by a drop in Facebook numbers? Sure some will go elsewhere, and block enough FB tracking to disappear entirely.
Instagram, of course, will allow Facebook to keep tracking and advertising to people just fine. No doubt they've already linked Instagram and FB identities wherever possible.
So all that remains is to see if ads work as profitably on that platform. If they don't there will no doubt be an Instagram redesign for that.
That’s the point though-they don’t need you to scroll to make money off you. You only need a registered account, and they can track a massive amount about what you do online and then serve you ads across millions of sites and mobile apps. All of this happens off of Facebook owned properties.
Companies like Google or even Mozilla can easily ruin or at least make it harder for social networks to track you and your interests with their browsers. You already have "block thirdparties" checkbox and similar restrictions, soon you will be provided with builtin ad-blocking. Sounds bad for all social networks and tracking services.
So Google has everything in his pocket, but if FB really has something to put against?
You can have account, but if you don't use it, which means you don't share your user experience, social network can't feed you and your friends with fresh and actual stuff.
Facebook has no solution for China, which will never allow a foreign company to capture all the wealth of that network. The totalatarianism of China also allows them to create the type of invasive dystopian social network that is probably Facebook's ultimate, yet inaccessible, business model.
Facebook doesn't need China. They'd like to be in China, it could be worth several billion dollars in annual profit, but they do not need it.
Facebook nearly generated as much profit in 2017 as Tencent and Alibaba combined, to put it into perspective.
The flip side of China's behavior, is that their domestic tech giants have been unable to go global like Facebook, Google, Microsoft, Apple and Netflix have (Amazon is still trying to push its model fully global with mixed results). Baidu was supposed to challenge Google globally, it has completely failed at that. The US is the world's most lucrative advertising market, Alibaba and Tencent can't access it because they're wildly incompetent at operating outside of their protected kingdom (as witnessed by Alibaba's embarrassing failure with 11 Main). China is an extremely unique market, the approaches and protections that have given Tencent and Alibaba their dominance there, will not translate well to most of the rest of the world.
This is a fairly USA centric view of the world. USA GDP per capita is ~$57k, China's is ~$8k. As the GDP per capita continues to rise in China, lack of access to this market will be an increasing problem for an advertising company. The fact that Tencent's profit is half of Facebook's doesn't mean much when you compare the relative wealth of the markets.
Your argument is reasonable, until a better way to market to individuals comes along. It's not about the size of Facebook's user base or their reach on the web, it's how cheaply and effectively brands can sell their product by paying Facebook to help them do that. Once someone else can do it better, that's when it's game over for Facebook.
> The crucial moat that Facebook has is simply the massive nimber of registered users
How well does that moat work in practice? What was the rate of decline in other networks (such as Friendster and MySpace)? I've always gotten the impression that these shifts happen quite quickly.
>I’m no fan of Facebook, but I don’t agree with the premise of the article. The power of Facebook lies in its network effect: something on the order of 2 billion have active Facebook accounts. Whether or not people are spending more or less time on the platform doesn’t matter as much as people seem to think it does.
It matters if those "2 billion people" can abandon it in a hearbeat for some other platform.
In my opinion no other network is going to be able to compete with the number of users on facebooks platform, and any that do, Facebook will buy or copy (Instagram and Snapchat respectively). Even if you don’t actively look at anything on Facebook, or even log in, the fact that you have a Facebook account allows advertisers to track and target you with ads on all sorts of platforms and websites that are available to Facebook advertisers through the audience network (ad placements on millions of websites and mobile apps). The crucial moat that Facebook has is simply the massive nimber of registered users (that correspond to people’s real identity) on the platform combined with sophisticated tools to reach those users both on and off Facebook.
I’d love to hear an opposing argument, but the way I see it Facebook is here to stay and will only get bigger and more profitable in the foreseeable future.