Facebook up and Facebook down

I was tempted to leave the text empty, because the whole chain of interpretations that are being given to the story of the brands that boycott F! it is so empty that it deserves only a post without content.

As you can guess, I resisted the temptation.

Personally I have my own reading key regarding Zuckerberg's behavior, that is that F! favored Trump because he fears the impacts of a green policy on energy prices, which he is fond of for his data centers.

But if this hypothesis seems uneconomic, let's go to a more economic one.

So, let's start from a hypothesis: if a social network lives on controversial content and posts that cause conflicts, because they increase engagement , that is, people feel involved in the ugliness of what they read, (for example, from the hatred that eaves) and they start to argue with the haters.

If this is the economic model of the platform, then Facebook has three possibilities to increase profits:

  • pay people to hate online. This implies that the vast majority of hate messages are artificial.
  • write about bots that fill the social network with hate. This implies that most hate messages are artificial.
  • support the most controversial characters and groups of politics, sport, religion, and every mass phenomenon.

We leave out the first two hypotheses, which are not hypotheses: that F! create your own bots to cause controversy (also through hate messages) it is known. It is definitely not a hypothesis. And he can stop simply by turning off the bots.

But the real problem is: what kind of relationship does F have! with reality? What parts of reality bring money to F !?

Obviously, a character like Joe Biden, a valid substitute for total anesthesia, does not suit him. When they are moderate, Joe Biden's supporters are not comfortable. He probably doesn't like Buddhist monks, while psychopathic cannibal Satanists (assuming such a group exists) make him much more comfortable, in the sense that they make him make more money.

So, even admitting that it was NOT Facebook that created and sent Trump to power, one thing is certain: being a controversial character, Facebook Trump and any extremist BRING MANY MONEY.

Regardless of whether Facebook financed and / or helped Trump win the election, Trump (and any known, controversial and extremist character) leads to F! lots of money.

This is the simple point: it doesn't matter if the egg made the hen or vice versa, what matters is that both egg and hen exist, or neither .

In the same way, it doesn't matter that Fabebook invests in online hatred or online hatred is a value for Facebook: the problem is that either they exist, or neither .

Now let's go to the boycott.

First, we need to understand what the real power of F !. Suppose that Coca Cola, instead of allocating $ 60 Million in brand advertising, decides to give a bonus to its employees (~ 60,000) to post, once a day, an advertisement for Coca Cola on their profile (in the form of a photo with a corporate shirt, a photograph under a Coca Cola sign, a photograph of a party with the table full of coca cola bottles, etc). He would have $ 1000 in bonuses per employee. Let's say it would be convincing for employees. If even the employees didn't want to do it, Coca Cola could pay 1000 dollars / year to have access to their accounts and post advertising messages together with the normal social activities of the users themselves.

In this case, the advertiser would have spent the same amount, without paying a penny to Facebook: he would have given the money to his employees. Probably increasing satisfaction.

Would work? And if it works, why not do it?

It wouldn't work for a simple reason: Facebook has a way of filtering every single appearance of a brand. If this were not the case, no company would have been stupid enough to pay Facebook for advertising, when it knows it can use its employees as an advertising force, and perhaps with less effort.

Having said that, we understand the problem: Facebook could easily filter any brand, including those related to hate groups, from its social network. But he does not, because precisely this hatred increases his engagement .

It is important to insist on these two topics because, even if we did not accept the idea that Facebook's strategy is to reward the candidate who keeps the cost of continuous fossil electricity low (which I believe), it makes it clear that the link between Facebook and online hatred is a two-way bond. Groups of haters know that they will find Facebook's space and visibility, while Facebook knows that it will make money by increasing its visibility and decreasing the visibility of less controversial characters.

So let's go to the boycott: will it work?

Yes, but not because it will weaken Facebook. Facebook is not the only online advertising vehicle. If it is true that as a social network it does not have a real competitor, in the field of advertising sales I see several.

  • Youtube
  • TikTok
  • Twitch
  • Amazon
  • Linkedin

(I put Linkedin on the list because, being a network of professionals and people who work – or dream of doing it -, it affects the same age group as Facebook).

But let's proceed in order: how much does it hurt? The estimates I have seen are optimistic. Because big companies have a very long queue.

Here we go to the problem of 'extra income from advertising'.

Suppose we are a Microsoft Systems System Integrator company, let's say a Microsoft Gold Partner. And suppose we have to advertise on a platform. If we know that Microsoft is not on that platform (say Facebook), but we know that it is on another platform (say Youtube), what we will do will be to take advantage of the extra income and follow the parent company of our product.

If we sell Adidas and Puma and we have a shop, but we know that Adidas and Puma are no longer on Facebook (while they are abundant on TikTok), what we will do will be to take advantage of the parent company's advertising revenue and we will advertise our shop on TikTok.

But not only that: large companies can send a simple message to their authorized dealers, partners, franchises or whatever: you are not authorized to use our brand in your advertising when you are on Facebook (because we don't want our brand is associated with F!) . This does not force them to stop advertising themselves, but advertising themselves without mentioning their product is not, you will admit, the best.

I therefore find all estimates of economic losses made in this regard very naive. A real estimate can only be made in retrospect, although I find it difficult that Facebook will ever admit the real losses

That said, there is still one point: competition and innovation.

Facebook has not innovated its product for AT LEAST ten years. Not even Google (excluding Android), Twitter & co. they do it. This obviously exposes them to competition from new products. And IT is a VERY innovative market.

But so far they have reacted by suffocating competitors or buying them.

Until TikTok arrived. They couldn't stifle him because he grew up in China, and they couldn't buy him because the shareholder was not American.

This is the key point of the problem. The first competitors exist, the competitors are out of the American financial artillery shoot, the competitors have a protected market of a billion users before exposing themselves to the world market, and now there is a lot of money that could go to them .

To understand how terrifying this is, we can think of TikTok. Youtube had a de facto monopoly on the concept of social networks made up of videos. He believed himself untouchable: nobody in the world had his firepower. Videos consume a lot of bandwidth and a lot of storage, and no other competitor had the slightest chance of having so many resources, because they cost. At best they would have fattened Amazon's cloud, keeping all the money in the family .

Then comes TikTok. The nightmare. If it had been American they would have bought it. If he hadn't had another target market, they could strangle him by offering similar services. But it was Chinese.

The reality is that the world of IT services in the USA, which felt invincible to the point of no longer innovating the product in the last 10 years , has found itself with an increasing number of nightmares.

  1. first the European legislator started to produce legal standards, such as the GDPR.
  2. then the first Chinese competitors arrive, Huawei, TikTok, etc.
  3. Now there is a lot of money that could go to competitors.

Step 3. completes a nice basket of nightmares weighing on the American IT industry. They will do everything to defend themselves. Trump has fought against Huawei by any means, and now they are trying to stop TikTok with the history of stolen data, but the problem is that the Chinese have innovated a lot in the last 10 years, while the Americans have not: not at all in 5G the competitors of the Chinese are European, there are no Americans running. They stood still 10 years ago.

It is as if we are approaching nitro and glycerin. The lack of American innovation, along with the availability of money.

The question then is not whether this shift of advertisers can kill Facebook. The question is whether it could make Facebook's competitors grow. Which then could kill Facebook.

Coca Cola is not going to kill YouTube. But it could be TikTok if he got the money from the big advertisers .

This is what you don't want to say in the newspapers: IT big Americans have not innovated in the past 10 years. They are vulnerable to any partner born in an out-of-target market (financial or otherwise), and the shift in advertising investments worries them.

Not so much because it can kill Facebook, but because Facebook needs to wonder what would happen if the Chinese decided to bring their social networks, which are 10 years ahead in terms of functionality, for example by opening data centers in Europe.

If we try to imagine it, it would not be as simple to stop it as we did with Huawei: Europeans were fine with stopping Huawei, because the biggest competitors in the field of 5G are not American but they are European. ([Otherwise this would not have happened] ( https://www.ericsson.com/en/news/2020/6/bell-canada-chooses-ericsson-5g-ran )), But in the EU there are no social networks to save, excluding Xing.

To stop the investment, the Americans should block large investments in Europe, which tempt local governments like never before. It worked (but not too well) with Huawei, because there were two competitors in Europe, Nokia and Ericsson. But if it were a social network, I really don't think Xing would oppose a social network similar to Facebook that was born, that I know, in France or Spain, Portugal, Czech Republic, etc.

We are talking about an investment of 2-3 billion of data centers, thousands of employees (and in IT they are well-paid employees), plus the related industries. Which European country would stop such an investment today?

This is obviously a fanciful hypothesis, but it clearly expresses the problem: this is not a Facebook vs Advertisers issue. It is a Facebook problem against market versus competitors . And after 10 years of not innovating the product, the problem "competitors" in IT is catastrophic.

And for this, everything I read in the newspapers about it, seems to me desperately empty of content.

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