The new Yahoo? Facebook should heed the lessons of internet history

Yahoo failed because they were out-innovated. They weren’t the only ones. Lots of highly successful search engines got their lunch eaten by Google. Yahoo also suffered from a lack of leadership and some very poorly conceived acquisitions.

I don’t see any of that with Facebook. In fact it’s the opposite- people are uneasy with how effectively they’ve acquired users and their data and monetized it.

Further, they’ve pretty much only made incredibly savvy acquisitions and managed their integration into the Facebook ecosystem masterfully. Instagram not only exists today but has quickly become arguably the most valuable property. What about Tumblr? Flickr?

Say what you will about the ethics of the company but Facebook has demonstrated they have vision and the ability to execute and adapt. Yahoo didn’t. Most companies don’t. They have their existing business and customers and exist as long as the winds don’t change.

I chuckle at how repeatedly human nature leads to surprise when “our son of a bitch” [1] turns out to be its own son of a bitch.

[1] https://en.m.wikipedia.org/wiki/Anastasio_Somoza_Garc%C3%ADa

I think Zuckerberg and Facebook in general, are very aware that Facebook is on the decline, they need to diversify. That's why they bought Instagram and used it to flight Snap. That's why they spent such an insane amount on WhatsApp.

Zuckerberg knows they need to create or acquire the next big thing to make it in the long term. At least, that's what it seems like to me. I have a feeling they aren't going anywhere soon because of this.

My bet would be Facebook might disappear and Google has more of a chance of diversifying their business enough that they may survive. The reason is that ad driven business models are long term problematic for both but Google at least has alternate revenue streams (e.g. cloud infrastructure revenue, mobile phone revenue, content subscriptions, b2b sales for analytics, development tooling, etc). They have a much more diverse portfolio of products and services than Facebook. And that's discounting the stuff they do under the Alphabet umbrella. Facebook has just ads. Ads on Facebook, Instagram, Whatsapp, ....

The odds are stacked against pure ad driven business models. It's a race to the bottom. There's privacy legislation, browsers are being upgraded to counter tracking, and users are slowly getting a clue about it being kind of scary that big companies know a lot of shit about them. Add to that the stream of negative news about them and you are looking at serious challenges to what is the only business model Facebook ever had: create addictive engagement driven properties and claim as much time of their users as possible on it so they can measure what they do and feed them ads, fake news, sponsored content, and other stuff 24x7.

Facebook needs to diversify their revenue streams and not just their user facing properties. If they fail to do that, they'll peak and eventually decline.

My guess is that the pressure on Mark Zuckerberg to resign will keep on building until he eventually resigns. Then if they fail to change course under a new CEO, they could suffer the exact same fate as Yahoo where shareholders milk the existing business dry and eventually sell whatever remains for scraps. In the case of Yahoo, this only took a decade or so.

I predict that FB will continue to push ads for short term profitability, slowly leak active users and find that a bunch of competitors will beat them by accepting a lower margin than FB are willing to accept.

The main hope for FB is that they can identify and acquire these competitors before they get a large enough network to take them out.

Being better than Facebook doesn't mean just replicating its technology, it means having a better social graph.

That's a hard problem to solve.

The article is by The Economists, but I tend think the societal costs outweigh the financial to shareholders and employees.

However, this must not be captured by an entity who's sole target is profit, neither a state owned entity. Both will hamper the communication at some point, either by manipulating or censoring information.

My only hope is that a benevolent AI will coordinate this, having prime directives not to harm humans ( by the means of interfering with the communication ).

EDIT: some typos, and also mentioning that the affirmations from above should be read in the perspective of Facebook disappearing/dying and being replaced by something else.

That's called "pulling a Myspace".

Facebook has reached the point that nothing above the fold is about my friends. Remember, sharing is spamming.

Does this passage make sense? With a high flying stock, Facebook would be paying more for mediocre employees while the rsu’s vest than if their stock is lower. If Facebook increases rsu’s to even out the employee’s comp, then the net cost to Facebook will be the same at the lower stock price.

Their only risk is if Facebook’s stock starts appreciating again and they are on the hook for more rsu’s at the higher price.

What she is (in hindsight) expected to have done is to have insisted that Facebook's news feed algorithm be used as a content filter to suppress stories promoted by politically marginalized groups.

This is much the same way China's government uses its Great Firewall to control which information reaches the people.

During the civil rights era, the Soviets supported the work of Martin Luther King. In the modern world, Russia supports certain third party views and anti-establishment perspectives, for obvious reasons, just as the US supports pro-Ukraine groups and other fringe political groups that are in close orbit to Russia.

So we are being told that Sandberg failed to utilize the firewall capabilities of Facebook to suppress anti-establishment content. We are told this is a big deal because Russia-linked entities spent money to promote some of the ads. Keep in mind the total spend by Russian-linked entities (could be NGOs, private citizens, oligarch-funded research institutes, etc.) was a miniscule $150K in an election with total funding approaching $2B.

Yet Sandberg may be relieved of her position because she failed to anticipate how such a small spend could dramatically influence the outcome of the 2016 election.

News flash: It didn't. There are a lot of reasons to be concerned about some aspects of Facebook -- my #1 concern is the extensive use of dark patterns designed to make people over-share -- but the "not doing enough" critique is complete bunk.

It is 100% motivated by political partisans in the US who unfortunately have a great deal of influence in possible regulation of Facebook and have made it very clear that they plan to use all of their power to force Facebook to act like the well behaved Great Firewall they want.

To be very clear, politicians want Facebook to be used at their bidding as a Great Firewall and they very much want to see certain views suppressed and others amplified. They also want to (and already do) use the massive amounts of metadata held by Facebook, Google, etc., to supplement whatever data they have when investigating Americans, who may or may not have committed a crime. It is, essentially, a transparent social credit system for US officials to use at their whim.

So the only difference between Facebook as politicians want it to be used and China's Great Firewall is that Facebook exists a bit higher up the protocol stack and its censorship/suppression is much more laser-focused and harder to detect.

There are plenty of short sellers who would benefit from FB’s plummeting stock. In reality, FB’s DAU/MAU are largely unchanged. The stories that young people “deleted Facebook” were downright falsehood. There is simply no viable competition for Facebook in market right now like what Yahoo had in terms of Google.

Why is there so many facebook propaganda crap everywhere now?

Everyday without fail, you can expect a few here. If we had real journalists in this world rather than propagandists, that would be an interesting investigation and article.

Why is the entire media/propaganda apparatus from the nytimes to the economist spanning both sides of the atlantic spamming non-stop propaganda about facebook?