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< | VALUING FACEBOOK? | >
> | [DE]VALUING FACEBOOK?: How to Change People's Perspective and Preferences [REVISION] | | | | |
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< | -- By DavidKorvin - 15 Oct 2012 | >
> | -- By DavidKorvin - 21 Dec 2012 | | |
Introduction | |
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< | I am currently taking a class at Columbia Law School titled “Investment Banking.” For our first major group assignment we had the task of attempting to value what Facebook would be worth in an initial public offering (IPO). While researching the company we learned that Facebook generates revenue from two sources: [1] advertisements, and [2] payments (fees associated with the purchase of virtual goods on a developer’s application). | >
> | In my first draft, I argued that though I did not particularly like Facebook nor did I feel comfortable using it as a means of communication, I still felt compelled to use it on a daily basis because all of my friends use it. However, as we progressed in our discussions this semester, and spoke of the ways in which Facebook services to manipulate and restrict personal liberty, it became increasingly clear to me that I no longer felt comfortable using my Facebook account as a means of socializing on the internet. The easy party was deactivating my personal Facebook account and joining Diaspora*, which emphasizes that “you shouldn’t have to trade away your personal information” to connect socially. Though am I am very new to the program (and not particularly gifted with technology), I have thus far enjoyed my experience because it allows for a more creative, personalized profile. (One application I have particularly enjoyed using is cubbe.is, which is a way to collect photos on-line.) Additionally, because Diaspora* is open source, I no longer feel pressured to put my data on Facebook’s pre-determined server. | | | | |
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< | One of my primary obligations during this assignment was to describe Facebook’s business model in detail, which required me to spend a lot of time reading Facebook’s prospectus and registration statement (S-1), while also closely examining its financial statements. Furthermore, Facebook constantly claims that its mission statement is “to make the world a more open and connected.” | >
> | The easy part was individually choosing to join Diaspora* and become more involved in the open source movement; the more difficult part will be to convince my friends to do the same. The rest of this essay will focus on how individuals, such as myself, can convince friends that are currently deeply entrenched in Facebook’s platform that there are better options out there on the internet, such as Diaspora*. | | | | |
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< | While writing this report, neither I nor any of my group members ever mentioned Facebook’s relation with the United States government; however, in “Law in the Internet Society” we have spent a lot of time discussing how Facebook acts a surveillance mechanism for the American government. My question is the following: if Facebook plays a surveillance role for the government, how come this revenue stream is not accounted for or acknowledged for in any of Facebook’s public registration statements or financial exhibits? Additionally, if Facebook is not receiving money from the government, what is Facebook’s incentive in establishing and maintaining this relationship? | | | | |
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< | First, Facebook is
merely one of a large number of industry "partners" of whom the
national security state has been asking help since its creation in
the mid-twentieth century, and in wholly new areas over the last
twelve years. That help can be officially voluntary, or officially
in compliance with many different forms of compulsory
information-gathering. Second, Facebook, like other companies
holding vast amounts of personal information and "social graph" data
is asked for favors or presented with supposed orders to enforce
cooperation by governments all over the world. The United States
government would like to know who is asking for what, what is given,
and to whom. Third, the intangible benefits of ongoing relationships
are called "goodwill," in accounting parlance, and they show up as
assets, without having any P&L associated with them. What is the
difficulty in recognizing the presence of that goodwill?
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> | Diaspora* is FREE
I think the best way to get people to initially use open source social platforms such as Diaspora* is to emphasize that [1] it costs nothing to join, and [2] there are no monthly charges to remain a member. From my experiences, the best way to get someone to try something new is to highlight how there is nothing to lose by trying the new option.
At first, I believe that many people that start using Diaspora* will not delete their Facebook immediately. However, I think that many people will enjoy their Diaspora* experience more, and over time people will spend less and less time on Facebook. | | | | |
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< | Relationship with the Government | >
> | Additionally, I think it is important to note that though Facebook does not currently cost any money, it runs the risk that non-neutral intermediaries will start charging users for touching Facebook.com, which makes it long-term sustainability vulnerable; Diaspora*, because it is open source, does not face this same third party pressure. | | | | |
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< | After looking at Facebook’s public registration statements, I have been unable to find a source or document that states that the government directly pays Facebook. Further, in all the IPO research we did for Investment Banking project, the research analyst reports never mentioned this relationship between Facebook and the government. Thus, Facebook must be getting some other kind of tangible benefit from the government in order for it to continue providing the government with this type of surveillance information. More specifically, we have discussed how the United States has become the center of the global data mining industry, which has the goal of “knowing everything about everybody everywhere.” However, in order for this type of data mining to be successful, Mark Zuckerberg and Facebook need to be properly incentivized. | >
> | Therefore, I feel that the most powerful action I can take is to get friends of mine to try Diaspora*, and I think that the best way for me to initially convince them to do so is to remind them that joining is costless and there is only upside in trying it as an alternative to Facebook. | | | | |
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< | Facebook could decide to do surveillance for the government if it needed the government’s help in order to become the dominant player in the social networking market. But this does not seem to be the case as Facebook currently has over one billion users. Another incentive would be if the government made laws that enabled Facebook to be the only social networking platform, but there are other social networks that compete with Facebook, such as Google+. Therefore, though we know that the government uses Facebook, as well as other websites, to data mine, I have trouble seeing what Facebook’s monetary benefit from this arrangement is. Further, if Facebook does receive value from its relationship with the government, than maybe this helps to explain why the market (e.g. investment banks) speculated that Facebook’s shares would be worth much more than their current, actual value. | | | Why Do I Continue to Have a Facebook Account? | | | The last thing I wonder is what would happen if the United States government publicly announced that it used Facebook as a surveillance mechanism? Even if this were the case, I think I would still use Facebook, but I would put even less material on it; for example I would take down all my pictures and be much more selective in deciding who I friend on Facebook. Because I do not egregious things, I do not feel there would be any consequence from this announcement.
However, I do know, if Facebook started charging money, I would stop using it almost immediately. | |
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< | First, that tells us
that Facebook's services can't really be all that valuable to you,
because apparently you can adequately replace them without spending
any money at all. That's pretty fatal right there. Second, this
shows that Facebook must have service neutrality in the mobile
networks, which is not what mobile network operators want anywhere in
the world. If a non-neutral intermediary starts charging
people for touching facebook.com:80 through their networks (as the
big Indian carriers for example plan to do), Facebook is vulnerable
to collapse from charges levied through intermediaries. Facebook
knows this, but you've overlooked its immense significance.
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