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A Zucker-Wolf in Privacy-Sheep’s Clothing

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It seems clear when one reads between the lines of Zuckerberg’s recently-announced and much trumpeted “Privacy-Focused Vision” that Facebook is trying to “have its cake and eat it too.” It is trying to make PR hay with a plan to “…entrench Facebook’s interests while sidestepping all the important issues.”

Many have split between a) wondering if this is just another empty gesture, or b) reading it literally as a public-spirited “pivot” to an unproven business model.  But astute observers see through Zuckerberg’s sleight of hand.

Facebook is doing a “head fake,” embracing privacy in the more private “living rooms” of our lives, as opposed to the town square where it has mostly lived up until now. He seems to see this as a sector where there is no impediment to capturing new territory. Meanwhile, the company is conveniently doing nothing to change the extractive, manipulative, and socially catastrophic business model of its current cash cow, its namesake social media service. We must mandate a fix to the old business, not be distracted by this clever land-grab for new business.

Zeynep Tufekci  presents a strong, concise indictment in her New York Times op-ed: “…Zuckerberg…is happy to bolster privacy when doing so would decrease Facebook’s responsibilities, but not when doing so would decrease its advertising revenue… The plan, in effect, is to entrench Facebook’s interests while sidestepping all the important issues.”

Techonomy’s David Kirkpatrick makes a similar point, calling this “an enormous head fake… The place users most urgently need new privacy and encryption assistance is … in their browsing behavior and history…and using that information to target advertising to people in intrusive ways… But Zuckerberg says nothing about any of that.”

Ben Thompson of Stratechery, explains how many have missed the strategic significance of this: “In fact, what Zuckerberg announced is quite believable, precisely because it makes perfect sense for Facebook: this is a privacy cake that Facebook can have — and eat it too.”

The real news here is that Facebook sees not only that its flagship “town square” business is threatened by the endless attacks it faces over privacy, but also that the market is shifting to messaging services.  That is the real pivot, and business models other than advertising have proven such businesses profitable (most notably in China’s WeChat service’s transaction and gaming revenues, which are massive).  Zuckerberg seeks to pivot there, where he can develop new revenue streams that privacy will not impede, while doing as little as possible to disturb the current business that thrives obscenely on the “surveillance capitalism” of data-based microtargeting for advertising.

Thompson provides a rich analysis of the important differences between the town square of Facebook and the living room of Instagram and WhatsApp. He offers as explanations a “Social/Communications Map” that charts the various systems –one-to-many versus one-to-one, permanent versus ephemeral, and public versus private.

He ends with these broad takeaways:   “Stop expecting companies to act against their interests….Facebook is doing what its fiercest critics supposedly want, and enhancing its competitive position as a result.”

That leads me to the thesis I advocated in a previous Techonomy article, “To Regulate Facebook and Google, Turn Users Into Customers.” There I suggest a surprisingly simple, proven, market-driven regulatory strategy: “Requiring a growing percentage of revenue from users…is the simplest way to drive a fundamental shift toward better corporate behavior.”  Today the advertiser is the customer of Facebook, and users are the badly manipulated product — as long as that remains the case, abuse will persist.

While Facebook’s move into private messaging might duplicate the WeChat model of revenue from transactions, for Facebook’s legacy town square business, user revenue is the only healthy solution. I address some promising approaches to generating more of that user revenue in another Techonomy article, “Information Wants to be Free; Consumers May Want to Pay,” and on my blog.

It seems increasingly clear that Zuckerberg will not voluntarily go where he must, so we must quickly force him to make needed changes, one way or another.

Richard Reisman is the President and founder of Teleshuttle Corporation. His book, FairPay: Adaptively Win–Win Customer Relationships, introduces new value-centered revenue strategies.

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