Facebook beware – social media on blockchain could eat your platform
Facebook has a big problem. Judging by the 6.7% drop in the share price yesterday, the stock market has just woken up to this salient observation, and so have the regulators. The Massachusetts Attorney General has opened an investigation, so too has the European Union. Lawmakers are calling back Facebook execs to explain themselves.
To add to Facebook’s worries, US law firm Levi & Korsinsky clearly smells blood (and money) because yesterday it announced it is investigating Facebook “concerning possible violations of federal securities laws”.
All this follows the revelations in the New York Times and the The Observer newspapers that Facebook had allowed data analysis company Cambridge Analytica to harvest the information pertaining to 50 million accounts without the users’ permission.
Facebook’s problem is centralisation and its travails are the clearest sign yet that the days of the centralised platform are numbered.
It is worth stepping back a moment to note that every problem has its opposite – a solution or one that eventually emerges. This unity of opposites might seem obvious but until the solution comes into view and is implemented, that obviousness is not always immediately apparent. The question for Facebook, however, is not so much is there a solution but whether that solution comes from within or without.
As it happens, chief executive Mark Zuckerberg has already identified what it is that could potentially “fix Facebook”. He nailed it himself in his New Year mission statement: encryption and blockchain. If you missed his pearls of wisdom, here’s a reminder:
“There are important counter-trends to this — encryption and cryptocurrency — that take power from centralised systems and put it back into people’s hands. But they come with the risk of being harder to control. I’m interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
Facebook’s problems, then, stem from the fact that it is a centralised platform – and the related matter, that it is dependent on selling advertising to this voluntarily captive (because of the network effect) audience. As the social network inexorably expanded its user base it gobbled up the budgets of ad agencies along the way. In a measure of the success of this business model Facebook’s share price rocketed 90% over the past 12 months alone, with investors piling in as the gravy train rolled on. What could possibly go wrong? Well, the train has just derailed.
The trouble with centralised social media platforms, as many a whitepaper of a fledgling tokenised economy will point out, is that the user becomes the product. Your data is for sale, at one level or another, to the highest bidder, regardless of privacy settings (if you can find them). And, leaving aside the ethical minefield of a platform that seems to rate controversy and division over consensus and unity, lies over truth and so on, it is also a one-way street as far as monetisation goes – you the user don’t get paid for posting popular content that other users want to interact with but the centralised platform gets the dollars from your content and curative work.
Facebook’s Cambridge Analytica nightmare has merely broadcast more loudly and sharply what most users of Facebook already suspected – that by sharing and liking they were in fact revealing to the world, or to Facebook and in turn its third-party commercial clients, how they think and what they do.
Centralised robber barons
So Facebook’s core problem stems from being centralised. It also has a related and in some ways has another more fundamental problem, which is that it is a very large corporation that dominates its sector. Success breeds arrogance, quasi-monopoly dominance instills inertia.
Large corporations respond to attack by neutralising the enemy, which usually comes down to out-competing or buying the corporate challenger. Of necessity perhaps, it breeds an adversarial mindset and reflex. The competitive drive will tend to favour the impulse to destroy or subsume the opposition.
Facebook, in the same way as the JPMorgan and Standard Oil robber barons of old, either erects insurmountable barriers to entry or attempts to neutralise the competitive edge of the upstart. In that regards, it managed to buy Instagram although its acquisition overtures to Snapchat were rebuffed, leading it to steal, quite successfully, some of Snapchat’s ideas instead.
But the impulse to destroy goes beyond war against direct competitors and expands to civil society, so to speak.
So Facebook, which has been sitting on Cambridge Analytica’s alleged data abuse for at least two years, sends its minions along to public enquiries into how it conducts its business and time and again it shows its corporate self to be exceedingly economical with the truth. It invokes legal injunction instead of engaging in open and transparent conversation. In short, it acts more and more as if it were a law unto itself. Its attitude is if you sign up to use its platform you must expect to have your life mined because you are to it just another big data neural node. The user is a data event.
When companies start to get a bad reputation it can be hard to lose.
Every day of silence from the “leadership team” at Facebook – Mark Zuckerberg and chief operating officer Sheryl Sandberg – makes the reputation hazard greater and the opportunity for blockchain start-ups that much more enticing. There is a chink in the Facebook armour and even if it does have a clue about how to fix its defences, it is incredibly inept at the execution, which is strange for a company that once spoke of moving fast and breaking things.
Taking back control
The truth is, quite a few of us don’t mind sharing our data but as our lives evolve online we become increasingly aware just how much is out there as the advertising becomes ever more cannily accurate in its targeting as Facebook learns ever more about us. More of us have come to learn, or are now learning, that guarding personal data is not just about bank account details but also about what we like and do online.
We need to be in control of who sees what and the way to achieve that is through social media on blockchain, combined with self-sovereign identity where individuals have total control at a local level (in other words on a secured smartphone enclave as opposed to a cloud repository) of all of our personal data.
So Facebook’s problem is an opportunity for others.
Step forward Civic, the digital ID management platform and its European competitor ValiD, which is well-positioned to benefit from the introduction of the General Data Protection Regulation that comes into force in the European Union this May.
And of course in the social media space there is the well-advanced project from Steem where you get paid for posting, sharing, upvoting and all the rest and is one of the busiest blockchains in existence and the blockchain project from Canadian-owned social messaging platform Kik and its KIN token.
Maybe Facebook will do something really smart like announce it is building a second-generation Facebook on blockchain that truly empowers the individual user, or perhaps it will wait and see how things develop with some of the more interesting projects and buy a few of them with some of its loose change. Who knows? One thing is for sure though – we have reached peak Facebook and the decentralised ledger alternatives are very much alive to the opportunities that presents.