(Washington Post Illustration)
Since the first tiny packets of information were transmitted on the original Internet, the dreamers have imagined what miracles might be possible once everyone is connected to everyone else. Mark Zuckerberg has made this his mission on Facebook. Connectivity, Zuckerberg has said, is a basic human right.
And yet his quest to connect everyone to everyone else has gone seriously wrong. Not necessarily for Facebook, which remains very profitable – though shareholders must be nervous about the interests that legislators are making in the 2016 election with the misuse of user data. But for the rest of us, shyly look for ex-flames, add hateful fake messages to family members' schedules, and share all sorts of personal information with those who know where they can be used, who knows what. Every radically new medium will lead to social chaos. But the dominance of Facebook has made a delicate situation far worse than necessary. His concerns should raise a broader question: To what extent should the world's connection be the domain of for-profit companies?
The case of placing social networks in the hands of corporate giants is clear enough. They – Facebook, Twitter and others – have found profitable ways to offer people something valuable and to build products to fill those niches. One can only imagine what might have emerged from a convention committee building a publicly founded and operated social network. It probably would not have been the case to lure teens away from MySpace and LiveJournal.
More importantly, we trust for-profit companies operating within a market to make the most of scarce resources. A company that does not maximize the potential of its employees or equipment would be outbid on a competitive market for these workers or equipment. Or these resources would be freed, so to speak, if the unfit company was displaced by competitors. The reason Facebook is supposed to be big, hungry and profitable is the desire to leverage opportunities to bring together talent and other resources to create a valuable product: a market capitalization of nearly $ 500 billion before the recent stock price  The problem is that in the case of Facebook – and perhaps other digital giants – none of the above dynamics work, as the idealized marketplace of economic theory suggests. Facebook enjoys an excellent competitive position. This is partly because of the network effects that are naturally occurring in many online platforms: people want to be where everyone else is already, and so first movers in every business have a big advantage over potential competitors. Network effects do not automatically create a monopoly. We are all on Facebook and not on Friendster. But the presence of network effects means that an initial benefit, however it may be, can blow up a business.
Facebook CEO Mark Zuckerberg has said that connectivity is a basic human right. (Stephen Lam / Reuters)
Facebook owes its position to both good luck and good business. It just became cool the moment that online communication became the norm in many rich countries, not just college kids and other nerds. The dominant social network in the advanced economies, of course, was well positioned to attract users in emerging markets when they went online.
Having positioned itself in the world, it could defend itself against the kind of accountability that the market should impose. To challenge Facebook, it is not enough for a competitor to have a product that is better. It has to be so much better that it can lure people away from the place where everyone else is already; The only member of a social network is not fun, but snazzy the platform. It needs to be so much better that it can succeed, even if Facebook inevitably copies its best products and strategies – and sharpens them by using the huge amount of user data that Facebook has, but the would-be competitor does not. And it has to withstand the billions of dollars that Facebook can offer as a particularly stubborn competitor as a purchase price: Who takes the risk, if they refuse, that Facebook will eventually destroy them. These are huge hurdles that any challenger can overcome.
It is possible that there is a solution to this problem in the area of better regulation and competition policy. It might be enough for regulators to take privacy issues seriously and work to bring the social media competition back on the market: trying to get the market to create a viable alternative to the One Social Network to govern them all User breach risk has forced Facebook to make user experience less soul-draining and less socially corrosive. For example, Facebook may spit out previous acquisitions such as WhatsApp and Instagram, and may also outsource its advertising business, as the Open Markets Institute, a competitive bank, recently recommended.
But maybe that alone is not the trick. It is possible that the existence of a single, almost universal network like Facebook, even within a more competitive market, is inevitable. Social forces can invariably pass on one or the other network as the digital record directory. Facebook is playing this role very much now. It helps to determine who a person is in society, and accordingly, who is not. Before a recent class reunion for example, a friend and I trolled Facebook to see what our former classmates were doing. We were wondering if those without a profile could have died. However much one leaves the net after the recent revelations, it does involve real social costs.
However, such a network is a true public domain whose value is almost entirely attributable to the users themselves: the fact that they are there, the interactions they have, and the data they generate. Very little of Facebook's value as a business is related to its workforce or physical assets under its control (the value of the latter is only $ 14 billion). What gives Facebook its value is important to us all. It is primarily perverted that the monetary value generated by these commons should be overwhelming for a small group of Facebook employees and shareholders. This is particularly the case as Facebook programmers and executives plausibly reduce their value to society in their efforts to exploit their network.
Of the scarce resources that Facebook controls, our attention is most focused on: the incalculable hours and mental energy assigned to the network by the approximately 30% of humanity now using the service. Facebook's interests in attracting and directing this attention are not aligned with those of society as a whole. It does not want us to stop by for a moment to check information or send a message, then we set off. His financial health depends on us standing around, scrolling and sharing, posting and liking. It therefore structures our experience with these incredible global similarities to stay there. To do that, it sends us content designed to push our emotional buttons, annoy us enough to share us. The connection, the truth or the well-timed times have almost nothing to do with it.
Of course, capturing and holding our attention is the prime objective of virtually every digital organization, including the Washington Post. Facebook is different because it operates a basic social infrastructure that draws its unique value from being the only place where literally almost any other person can be found. Their efforts to derive the greatest possible private benefit from essentially public space causes inconvenience.
Facebook should be a framework for social interaction: the basic infrastructure. And it does not need a high-tech tech giant. In fact, it may be a different kind of organization with the incentives to provide a totally different experience from what Facebook currently offers. Of course, it is very likely that people would spend much less time using Facebook under a different management. But that's exactly what it's about.
How to move into such a world is a difficult question. The future of Facebook may reflect many of the natural monopolies of the industrial era: perhaps the reckless and abusive profit opportunities of the network will be removed, making it look more like a bottom line or need public support.
Perhaps a team of innovators with a conscience will build a cooperative alternative that finds a path to success amid the Facebook backlash.
The government might be able to adjust the rules for two-class shares, which give Zuckerberg control of the companies despite less than 1 percent of that. This would allow other stakeholders, perhaps even the government itself, to have more say in the work of the company.
Maybe Facebook will find a way to save itself before it becomes necessary. Whether this is the case or not, we should be aware of the extent to which technology giants have achieved extraordinary ratings by monetizing essentially digital public spaces. And we should understand that the accountability that we expect markets to have from these giants working in the best interests of society decreases as their power and dominance grows.
We should try to restore competition in such markets. But tech giants are increasingly able to provide basic, service-like services. Their ownership and management, the regulation they face, and the profits and valuations they enjoy should reflect this.
Avent is the economic columnist for The Economist and author of The Wealth of Humans.