Facebook, a colossus with feet of clay?

Le Regard Libre N° 46 - Nicolas Jutzet

With more than two billion active users around the world, a valuation in the billions and a young prodigy at the helm, Facebook has all the makings of a veritable success story. It is the embodiment of the American 2.0 dream, the Silicon Valley dream. And yet, after many years of continuous growth, a doubt has arisen. What if the colossus rested on shaky foundations? Spotlight on the number-one social network, Facebook.

Weak links in data use and crisis management

The idea was born at Harvard. Mark, the little coding genius, led his companions on an adventure that would eventually make him a billionaire in demand the world over, in such a short space of time that even historians struggle to find comparisons. Begun in 2004, the Facebook adventure is a resplendent success. A model of growth. In little more than a decade, with the complicit help of smartphones, our lives have changed dramatically. However, the recent controversies surrounding the questionable use of our data, which is the company's main source of revenue, should make us aware that the edifice is fragile. The all-too-often overlooked maxim «when it's free, you're the product» may have led us to forget that, as Milton Friedman, winner of the Bank of Sweden's prize for economics in memory of Alfred Nobel, put it, "when it's free, you're the product": «There ain't no such thing as a free lunch». Access to the multinational's products is coupled with the sale of our data to advertisers in search of new customers. It's a trade-off: free for advertising. 

The Social Network, David Fincher's film, which is supposed to retrace the path and ups and downs of this behemoth's creation, has definitively made Mark Zuckerberg a public figure with a worldwide aura. However, the price of fame is that the portrait painted in the biopic is biased and outrageously negative. Presenting the little computer genius as a kind of authoritarian young pervert, it fails to convey the reality and complexity of the adventure. In his biography Mark Zuckerberg - Biography, Daniel Ichbiah, known for his previous book The 4 lives of Steve Jobs, provides a much fuller portrait of the author and his pioneering friends of the time. We discover an ambitious young man who simply wants to change the world. He'd like to facilitate contact between people. And, above all, he refuses to give up his jewel. To the dismay of some of his employees and associates, he repeatedly rebuffs the ever more lavish takeover offers. A risky choice, but one that pays off in the end.

Read also: Amazon, chronicle of a success story

However, as is the case with many other start-up, Facebook is going through a growth crisis. Not surprisingly, a young man, no matter how talented he may be in IT, can't become CEO of a multinational corporation without a hitch. To make up for these shortcomings, Facebook called on a former Google figure, Sheryl Sandberg. Appointed COO, she acts as his right-hand woman. Despite her undeniable qualities, she won't be able to hide the intrinsic flaw in Facebook's model - that of exploiting people's private data, without paying particular attention to its sensitive nature. In the wake of the Cambridge Analytica data leak, the company has found itself caught up in yet another controversy that has crippled its brand image. One too many?

Instagram and WhatsApp, Zuckerberg's eagle eye

Mark Zuckerberg may refuse any takeover attempts, but he seems to have a keen business sense when it comes to buying the next nugget. In buying two rising stars in quick succession, Instagram and WhatsApp, he's done just that. Even if these two offerings cannibalize Facebook's success, as they offer a competing service, they ensure the entity's long-term success, whatever users' preferences. By mastering a broad spectrum of offerings, Facebook minimizes the risk of being overtaken and disappearing, or at least being dumped, as Nokia, Yahoo and Myspace have been in the recent past.

Nevertheless, the culture of these companies, which have been brought back into the Facebook fold, doesn't really correspond to the one Zuckerberg holds dear. There's no room for excessive advertising at WhatsApp, for example, which prefers to monetize its offering via direct payments, without further exploitation of user data. Internal dissension is rife, and is finally coming to the fore. Both WhatsApp and Instagram founders will jump ship.

What does the future hold for the social network?

Given the great diversity of the company's portfolio, it could survive a fall of its historical channel. Facebook suffers from its image as an outdated social network aimed primarily at an aging public, full of infox and other conspiracy groups. Add to this an unscrupulous use of its users' data, a subject that is set to become increasingly sensitive in the light of repeated scandals, and you have an overview of the elements fuelling the fears of certain investors and other industry experts about the medium- or long-term viability of the social network. By wisely acquiring Instagram and WhatsApp, Mark Zuckerberg has allowed himself the luxury of making a mistake with his crown jewel. What a visionary!

Write to the author: nicolas.jutzet@leregardlibre.com