As a platform, it is key to understand how to attract and maintain your users. For a long time, Facebook managed to do this very effectively: it became a huge network very fast. Meanwhile, the company acquired WhatsApp and Instagram and built Facebook Messenger.
However, since the start of 2018, Facebook has received a lot of bad press, because multiple events showed that the company is struggling to protect the privacy of its users (TechTarget, 2019). Since people seem to become increasingly aware of the importance of their privacy, Facebook has to make a big move in order to maintain its userbase.
A few months ago, Facebook founder Mark Zuckerberg published a blogpost (Facebook, 2019) in which he describes the future the company. The blogpost included the following statement:
“I believe the future of communication will increasingly shift to private, encrypted services where people can be confident what they say to each other stays secure and their messages and content won’t stick around forever. This is the future I hope we will help bring about.”
In an interview with WIRED (2019), Zuckerberg adds to this that he sees a demand for two types of platforms in the future: town squares and living rooms. Town squares are platforms like Facebook and Instagram where people interact publicly and living rooms are platforms like WhatsApp and Facebook Messenger where people interact privately. Zuckerberg goes on by stating that his company has been very busy in the past 15 years with building services and products around the town square, while there is an increasing demand for the development of living room facilities. Therefore, the latter will be the main focus of Facebook in the coming years.
Interesting thoughts, right? It is clear that Zuckerberg wants to restore the reputation of Facebook and turn it into a brand that takes privacy seriously. At the same time, the new road has its own challenges:
First, Facebook earns money by selling targeted ads. How can they continue doing this when a significantly increasing part of their user data will become end-to-end encrypted? Zuckerberg himself admits that it will take some time before they exactly know what the impact on their business model will be.
Second, end-to-end encryption also means that it will be harder to prevent the spread of fake news. Furthermore, it facilitates private conversations between criminals. How can we then make sure Facebook has a positive impact on society?
Do you think Facebook can handle a transformation like this? And is Zuckerberg just working on the company’s reputation or does he really want to build a product that everyone loves?
SOURCES:
Dear Jasper Nip,
Thank you very much for this article. Although I was aware that Facebook was enduring heavy weather, I hadn’t thought of what steps it would need to take in order make it through the storm. I myself feel that I really do use Facebook less than I used to before, but I haven’t deleted my account yet. This, due to the fact that there are still events posted, messages from people abroad and other moments that I don’t want to miss. Don’t you think that as long as Facebook is relevant, it will just pay the fines and still make a net profit at the end of the fiscal year?
Also, do you think that if we cease to be the product (pay with our data) that facebook will no longer be free?
Love to hear your thoughts on this.
Kind Regards,
Willem Prisse
Thanks for your comment. First, I think that Facebook has to obtain a reputation as a company that takes privacy seriously, if it wants to stay relevant. If many users leave the platform, it will lose its relevance (events will no longer be posted for example). Second, I don’t know if letting users pay for the platform will be a good idea. It might be. Don’t you think a free alternative will pop-up in no-time? However, I do think that new business models are possible for Facebook, but it is a huge company and shifting the focus of such a huge company takes time and costs a lot. In other words: only time will tell.
Hi Jasper Nip,
Thank you for your contribution. I see Facebook both as a ‘living room’ as a ‘town square’, as it contains characteristics of both. In either of the platform types, it does not excel in comparison to their competitors. Personally, I experience the trend of people using one full ‘living room’ platform (e.g. WhatsApp) ànd one full ‘town square’ (e.g. Instagram). I agree with Willem that it is still useful to keep a Facebook due to the FOMO, but as more people are changing platforms, the FOMO effect decreases.
The question then arises if Facebook is able to make a transformation to keep up with the competitors. To be honest: I do not think that Facebook can make such a transformation. To make such a transformation, it must give up a huge part of their business model, in which they are heavily invested. But if they keep using their same business strategy, they will lose to their competitors. I am eager to hear your thoughts about this.
Kind regards,
Allard de Witt Wijnen
Dear Jasper,
Thanks for your interesting article about Facebook. I really like how Zuckerberg describes his vision about social networks, making the distinction between town squares and living rooms. I myself feel like messenger services will become increasingly private indeed, based on end-to-end encryption like Telegram has. You mention the fact that this could facilitate the communication between criminals; I don’t think we should see that as a disadvantage because that’s something that will happen anyway, especially when all such technology is open-source.
Further, it’s very interesting to see what FB will become in the future, as I really believe that the unvaluable usage of social media will decrease and, on top of that, it will become more private. Therefore, it becomes less attractive for advertisers to advertise on the platform. The bottom-line of companies within the digital-attention economy depends on the eyeball minutes on their service, so when this will decrease, their revenue will as well. It is reported that mobile ad revenue was 88% of Facebook’s earnings in 2017; imagine how dependent they are on you spending time on their service;)
If you have any comments on this, please let me know! I’m happy to discuss about it:)
Kind regards,
Joey
Interesting points Jasper! The topic is especially fascinating in the light of the recent leaks from the internal Facebook meeting in which Zuckerberg discusses the future of the firm.
https://www.theverge.com/2019/10/1/20756701/mark-zuckerberg-facebook-leak-audio-ftc-antitrust-elizabeth-warren-tiktok-comments
Regarding your first point – the new business model, an interesing analogy is that Facebook didn’t have a clear business model in its early days as Zuckerberg refused to include advertising on the platform until late 2008. A quote from him from 2008: “I don’t think social networks can be monetized in the same way that search did … In three years from now we have to figure out what the optimum model is. But that is not our primary focus today.”
The question I think is, however, can Facebook absorb significant losses on the way to find its new business model while it’s already a publicly traded company? It was something early investors were okay with – but current shareholders are much less open for such uncertainty and require a clear vision on profitability. A different question is to what extend does Zuckerberg care about these shareholders, as he still holds a controlling stake in the company thanks to the priority, class B shares which give him 10 times voting power over ordinary shares.
https://interestingengineering.com/68-of-facebook-shareholders-vote-to-remove-zuckerberg-as-facebook-chairman
Hey Jasper,
Very interesting article! I completely agree with what you said. Facebook’s reputation is lost because of privacy issues. But that is not the only reason in my opinion. While ‘living room’ apps such as WhatsApp and Messenger have relatively clean and user-friendly interfaces, Facebook became a mess of information, advertisements and features, which for me became a major reason to avoid the platform. One may say this is part of the ‘town square’ concept as it is simply more exhaustive. Yet, Instagram managed to do very well. Why? Because they have a clear focus. So the question is not only how can the company move towards ‘living room’ apps, but how can they reinvent Facebook? Because there is and will be still a need to ‘town square’ apps, but for ones with a clear and user-centric focus.
I would love to hear your thoughts.
Best regards,
Kim
This is really interesting, and mainly because i think that Facebook as a platform is starting to function more and more like a government – it’s wings just cover so much. With about 1.6 billion daily logins, the impact is just so huge and the market so wide, that I think Zuckerburg really has to fight his ethics and business. I think for now, privacy and marketing regulations are just so unclear. What is really happening with it? Is it really encrypted – these are truly big questions. I tihnk that as long as Facebook’s user base is this huge, it’s all about keeping users engaged and at least to some extent trust the platform – or else move to instagram…which FB also owns. So yeah, I am not sure if the company can break our privacy violations enough for us to completely abandon them.
Hello Jasper,
First of all: interesting blog! As a Facebook-user, the information you just provided actually does not suprise me very much. As a person who does not use Facebook often, also because of these privacy issues, I think that Zuckerberg mainly says what he thinks the public will accept. In this modern world, in which technology already knowd more of us than we do ourselves, I think that the major part of all people are unaware of all dangers, and use Facebook anyway. I believe that Zuckerberg aims for more privacy and social security, but I do not think that he is willing to do everything it takes in order to achieve this. But to be honest, I do not think that the problem lies with Facebook: it comes with its unaware users. Even though some part of the platform’s users know which dangers come with using the digital application, most of the people do not know what could be the consequences of their online actions.Thus, even if Facebook would do everything it can, the problems of security will remain in the future.