Following a report by Facebook that its user numbers fell slightly, its share price fell by 27½%. I believe that the technical term for this is a blood bath.
The question, of course, is why the markets reacted so extremely to what is a
very small, .052%, drop in membership. (There is also the revenue loss
from Apple's privacy changes)
While markets are not particularly wise, I do think that on some level, they understand that Facebook's power comes from user lock in and network effects, and they remember what happened when Rupert Murdoch took over Myspace (OK, no one really remembers Myspace) and his corporate drones drove it into the ground.
Unfortunately, Facebook, and Mark Zuckerberg, are ineluctably evil, and the majority of its users understand it. It's just that it's the only game in town for staying in touch with as many people as possible.
Management at Facebook has always seen its evil as its secret sauce, but it's really an albatross around their neck. It is an unpleasant place designed to make people miserable, and then monetize their doom scrolling.
Their real strength is TINA (There Is No Alternative).
Unfortunately, as
Umair Haque observes, the shear evil of the social media has finally started to drive users away,
so there IS an alternative: (I think that his analysis is overwrought, but it is entertaining)
Finally, Facebook’s empire is beginning to crumble. By now you’ve heard that it lost users for the first time globally, which triggered a massive crash in the share price, which went on to crash the stock market in general. All of this, though, has been eminently predictable, if a long time coming. What’s really going on here?
It turns out that hate, because it is toxic for people, is not a great business model. I know that every second-rate venture capitalist and wannabe Zuck thinks hate is awesome. But that’s far from the truth. Let me try to explain.
The early web platforms, like Facebook, succeeded because of simple facts of what’s called “network economics.” To understand “network economics,” you only need to grasp three things. One, the network with the most users sees a kind of positive feedback effect, a kind of snowball effect. If I’m on the network, and you are, then our friends are more likely to be, too, because it’s the place to be — these are called “network effects.”
………
Lock-in is incredibly powerful. It is almost impossible to defeat a network once it’s scaled up, because the point of critical mass is too high — all your friends have to leave, not just one or two.
I say that because that is how badly Facebook has screwed up. It has done the impossible — defeated the laws of network economics, and ruined its own market dominance. LOL. Defeating network effects was said to be almost undoable. And yet somehow, Facebook made itself so toxic, so awful that even network effects and lock-in couldn’t keep people on the platform.
And what that means is that Facebook’s worst enemy turned out to be…itself.
………
But Facebook’s management didn’t care. In their estimation, hate was a wonderful business model. But they had fundamentally misunderstood the economics at work here. It wasn’t hate that was keeping people on the platform — it was network economics. All the hate, the vitriol, the disinformation? That was making people distrustful of Facebook. Weary with it. Tired of it. It was starting to chip away even at the immense power of network effects and lock in.
But Facebook’s management didn’t get this. They conflated these two things. They thought that hate and controversy and whatnot were the secret to their success. They never were. It was just network effects and lock in and first mover advantage. And the distrust and unease people felt at Facebook’s obvious indifference to by now terrible, terrible things — it helped a genocide here, it helped install a Trump there, it fuelled misogyny and racism here — was undoing the network effects and lock in at the heart of its success.
………
And they began to defect, in huge, huge numbers, to a place like TikTok.
What is TikTok really about? Why is it so successful? Ask a beancounter, a VC, a Silicon Valley type, and you’ll get some nerdy answer. About “snackable” aka bite sized “content” and so forth. TikTok succeeds for a reason that’s so obvious, it’s right in front of their noses, but they’re too obsessed with nonsense to ever really see it.
………
TikTok is a happy place. Americans hate that phrase. They think happiness is a bad thing. They are trapped in a cruel culture, and it’s made them cruel people. But don’t mistake me — I don’t mean it in a naive way. So let me explain. But first let me say it again, because it matters.
And here comes the best quote in the whole essay:
………
Now, Silicon Valley douchebags do not understand this. Because they are emotionally stunted people. They’ve never really danced. They’ve never really created art or music. They don’t even really have relationships, apart from with money. Maybe that’s a stereotype — but doesn’t it apply to Zuck? And his ilk, all those other bro-dude “founders”? How about the techbros of the world? They don’t get it. They don’t understand the aching, beautiful, sweet humanity of it.
I don't know if this is the beginning of the end for Facebook, but this is the most hopeful thing that I have read in weeks.
I felt better after reading this.
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