How badly do you have to f*ck up to find yourself as a star witness for a 10-hour Senate hearing that‘s being hyped like a Silicon Valley Super Bowl by the mainstream media? That’s the position Mark Zuckerberg and Facebook find themselves in right now. Unless you’ve been willfully ignoring the news, Facebook is undergoing major shifts after the ignorant handling of user data with third-party developers, namely Cambridge Analytica. The British consulting firm was found to have had accessed the sensitive information of 87 million people. While there has been rumblings for some time now about Facebook’s involvement in Brexit and the 2016 Presidential Election, we’ve reached the proverbial tipping point where politicians are getting involved.
Facebook is as free a service as a free iPhone on contract. That is to say, it isn’t free at all. You have access to a set of services in exchange for your personal information, which is then categorized and packaged for advertisers. The goal is to create an extremely attractive platform that people love to spend time in and leverage that attention for ad sales. Many people were sceptical of this model, citing Google’s dominance in the market, but they’ve been all but squashed since the company went public. Facebook has grown and grown, swallowing up other large companies in the process. So with the Cambridge Analytica scandal, are we going to see this tech giant spiral down into a much smaller version of itself? Hell no.
The juggernaut will weather the storm whilst accepting their future in a regulated market
While the Cambridge Analytica scandal may have put Facebook under intense scrutiny as of late, the juggernaut will weather the storm whilst accepting their future in a regulated market. We will see Zuckerberg and team leverage their monopolies and the mind-blowing amount of consumer data they have, along with the goal to connect all the humans on the planet, to cement themselves as a destination on the web for years to come.
Facebook will do everything in their power to prevent themselves from being broken into smaller companies
One of the primary reasons Facebook will survive this whirlwind is because how massive they’ve become. Like a Kraken out of California, their tentacles are far-reaching and touch varying aspects of human communication. Over the last decade, they’ve been acquiring talent and technologies which has given them an extremely unique position that is, truthfully, only rivalled by Google.
Whether it’s Instagram, WhatsApp, or Oculus, the social media king owns several foundational experiences that pull huge audiences on top of the nearly two billion users on Facebook proper. Many people are still unaware that these brands are owned by Facebook, which adds even more reason why they’ll maintain their dominance even after this scandal. Zuckerberg and team are focused on creating enjoyable (see also: addictive) experiences in various forms that keep people coming back. This will be leveraged to keep them moving forward and growing. Further, Facebook will do everything in their power to prevent themselves from being broken into smaller companies, even if that means allowing governmental regulation.
Regulation will only make Facebook stronger
Zuckerberg has already come out and said that he’s open to regulation. He doesn’t have much of a choice in the EU, but he is sounding rather cooperative in the US. Is this part of his commitment to fixing Facebook and listening to user concerns? Maybe. Or maybe it has more to do with stifling competition. We’ve established how large this company is, but it becomes nearly incomprehensible when we think about the amount of data that’s being collected on a regular basis. This aggregation of data is what makes them an incredibly attractive partner for advertisers. The idea of regulating this might seem scary, until you think about how far they’ve come.
Facebook sits on a large amount of user data. Should they cooperate with politicians and allow for some sort of regulation in this space, the company will be able to pivot and maximize alternative means of collecting information. However, competitors will be facing nearly insurmountable odds to collect the same sort of user data Facebook already has. Startups especially will need to be more creative in how they derive their revenue from advertisers. Experts are already attesting to this potential reality, which is why I believe that regulation will only make Facebook stronger. Again, Facebook has a huge amount of data and regulation will make that data even more valuable for investors.
Let’s cut the romanticism from the company vision
The main goal for Facebook is to connect all the humans on the planet. You know, easy stuff. Zuckerberg has referenced this goal in defending their business model. He responded to critics by asserting that in an effort to achieve their company goal, a free model is necessary. But let’s cut the romanticism from this company goal. What this really says is that Facebook’s potential market includes every human on the planet. Naturally, a company will strive for as much marketshare a possible. So, Facebook is just reminding everyone that they’ll do everything in their power to reach every person possible to maximize their earning potential.
When that’s your vision, it’s no surprise that scandals like Cambridge Analytica arise and we may even see something bigger than this in the future. Why? Because any rent-seeking company will do what they can within the confines of the law to maximize their profitability. In this case, it involved exchanging information with firms in a very secretive and liberal manner. If Facebook was trying to reach only people from one nation or one religion, they may not have to operate at the scale that they do. But they’ve told us that they wish to reach everybody. And to do so, they need to work in uncharted territory and push boundaries, whether we agree with them or not. I mean, let’s not ignore the fact that Zuckerberg has been apologizing for over a decade.
Facebook can’t even name a single competitor!
According to Zuckerberg, Facebook hasn’t seen any significant business impact from the Cambridge Analytica scandal. Sure, the company has lost quite a bit of market value in the short-term, but given their position in the market, the amount of data they house, and the lofty vision they’ve set for themselves, Facebook will see itself remain a staple in people’s browsing habits. The company can’t even identify a single competitor! Not only do they dominate one aspect of the market, with Instagram and WhatsApp, they‘ve established their dominance in other sub-markets as well.
After the first day of hearings, Facebook shares bumped back up 4.5%, furthering the narrative that the giant will come out of this fiasco nearly unscathed. I want to be clear, I don’t support the methods and tactics used by Facebook to collect information. This piece isn’t about proclaiming their innocence. It’s a reminder that despite all the headlines, this company will not only survive, but thrive over the next few years. I truly believe that very little will be done to slow down their growth and even though many don’t wish to admit it, the utility provided by Facebook and their other services is irreplaceable at the moment. Anyone that is telling you otherwise is either lying or doesn’t understand the market.