Why are Google and Facebook free? The answer might be worse than you think | Hacker News Reader

Why are Google and Facebook free? The answer might be worse than you think

tuta.com

20 pointsdotcoma26 comments

How is it worse than you think? There is nothing new in this article, even my parents know this stuff and they are almost 70, non tech. In the end, it feels like a ChatGPT SEO article for this company's email service.

Indeed. “Nothing is free” is a wee bit older than the Internet.

I wonder if commerce smarts are getting better or worse.

Maybe this is a republish from the mid-2000s? Probably not :/

I know a lot of HN readers are probably of the mind already that, "when a product is free, you are the product", and "these companies use zero marginal cost to create economies of scale".

The article hints to much worse impacts than that — with massive data harvesting and collection, companies can effectively monopolize knowledge, create information asymmetry advantages, allowing customers (e.g., data brokers) to charge consumers the maximum that they are able to pay, directly increasing prices.

I think the most astonishing aspect of this is how quickly consumers flipped from paid to free models for communication: we spent most of modern history paying for communication tools - from messenger boys, to stamps, to telegraph, to landlines, long distance, pagers, SMS and VOIP. And then over the course of 5-10 years services like AIM, ICQ, Hotmail and Gmail flipped the value proposition and changed the default consumer model from “communication is expensive and limited” to “communication is free and unlimited”.

All it took was for companies to figure out how to make users pay indirectly or pay with their data.

We still pay for the connection itself, which seems more on par with the historical examples. The internet has just removed needing to pay to connect to a particularly endpoint, you connect to it and then you've already paid your fee to communicate with anyone else on it. Maybe that's why all these internet services are free, they don't offer enough value proposition that another middleman can replace. It's a race to the bottom and the bottom is where we are now.

Because they want to exploit your personal information to sell to advertisers and take a cut from other advertising sales?

Exploit is an interesting word. It's almost always exploited by people as a way to frame basic economic transactions negatively. Such as in a situation where people can search for information or store thousands of photos and communicate with others for free.

Anyway, google and facebook don't sell personal information. They sell the ability to target ads at people using the information they collect.

It becomes exploitative when there is a power imbalance that is leveraged against the weaker party.

It seems like OP meant for it to be negative because they think that it is negative. You're just explaining their point back to them.

Just because transactions are "basic" doesn't mean they aren't also negative and, therefore, exploitative.

The bit about them not selling your information outright: the way that they sell those ads is based off of your information. The way that they do so matters, but not as much for this particular conversation: they are still exploiting your data regardless of the precise way that they package it.

Yes, you can use their services to get features and abilities for free. Nobody is saying that part is bad. The problem is that they have made it hard/impossible to go anywhere else if you don't want to use them.

The "company stores" of yore also made it particularly easy to get the tools and supplies you needed, but it was still an unfair trade. The fact that Google and Facebook make such massive economic profit off of something supposedly so worthless as personal data just doesn't add up.

If it's a fair trade made between consenting, rational, partners both in full possession of the facts, why are companies so cagey about what information they're gathering from users? If it was a fair trade and users were aware, they surely don't need to be so worried. You wouldn't need to threaten with data protection laws, and you wouldn't have to require consent for information gathering and tracking, users would know exactly what it is worth and give it willingly if they agreed with the value propositions.

Or, is it actually that very many people are almost entirely unaware of the information they're providing (leaking) in the "transaction", or are unaware they're even making such a a trade in the first place. A bit like having a small, discreet, densely typed sign saying a shop is using CCTV and by entering you agree to be surveilled, but what you're actually doing is using the cameras to read PINs entered into the card readers.

About fifteen years ago Eben Moglen's keynotes included variations on the delightfully acerbic observation that the deal between Facebook etc and the user was:

"I will give you free web-hosting and some PHP doodads and you get spying for free all the time."

The people likely to see and read that article are probably already aware of the problem. The real problem here is convincing the faceless masses that there's a problem.

Times sure do change.

Contrast with, "Why are libraries or the community park free?" where it is laughable to suggest that the users are the product. The truth was they weren't free, in a sense, but were understood as free because everybody could enjoy them.

Millenials are probably the last generation to have had the opportunity to experience the old search experience: library indices. Trying to learn things at the library was a "fun" (tedious) experience with such indices, that was how research got the connotation of effort even for amateurs whereas today people view online research quite skeptically as low effort. Typically those microfiche indices or bound volumes were made on the budget of the local library, in turn funded by some tax at the local, provincial or national level. When Google began, it was often much better and faster than searching via library indices, nowadays the library index feels competitive again due to over commercial creep on Google and competitors.

Millenials also witnessed the breakdown of public spaces to meet and catch up with one another. For some reason, boomer and earlier generation individuals saw youth gathering in public as a problem. Many parks starting featuring anti-loitering rules to rid them of the "nuisance" of skateboarding and hackysacks. Parks slowly stopped being a place in many communities where people would go for leisure, with some mild exceptions around basketball courts but many of those also deteriorated in many small communities. Millenials were forced to go to the mall and present a facade of consumerism in order to be acceptably seen out of the house. Again these places were often funded by taxes or local non-profits.

Society is better when some things are not artificially scarce or perversely steering people towards private financial interests. Taxes are the way that we create such public goods.

They're free because they could not achieve network effects if there was a monetary cost involved for users. So basically if they weren't free they wouldn't exist (at scale).

Generally, these services are free because they have a low market value. Most users would not be willing to pay for them. So, they have to finance themselves by other means like ad income.

>Why are Google and Facebook free?

The answer is much worse than you think.

These are not the kind of things that are supposed to be worth money.

Why is GitHub or HN free?

GitHub is free for normal users (mostly) bc enterprise customers pay a lot for it and it gives Microsoft a lot of pull in the open source community.

HN is free bc it’s a ycombinator recruiting tool and is probably cheap to run.

GitHub is not free, HN is not a product, but a marketing tool for YC.

There is a free tier to GitHub.

“Free - The basics for individuals and organizations: $0 USD per month forever”

https://github.com/pricing

Oh... they actually say "forever".

I don't think MS has a cunning plan to suddenly start charging again for the basic plan, but still forever is a long time.

Incidentally it's the only money I pay Microsoft (with the exception of a few windows licenses).

I was on the $7 plan for unlimited private repos when github was independent and I got converted to some $4 plan after the buyout. I never bothered to research if i actually need the $4 plan or I could switch to free.

Do... do you think this site is just some completely altruistic hobby project divorced from what ycombinator's ends are?

For wildly different reasons.

GitHub is free for individuals and small teams so that big corporations feel compelled to use their products, since all of their employees are accustomed to those already.

I'm less familiar with the financial workings of y-combinator but it's a great PR move and a recruiting tool. Someone more familiar with the matter might be able to expand on this.

Facebook and Google sell advertising, so they sell their users.

GitHub and HN sell things (hosting and startup jobs & equity), so they sell to their users.

There is a big difference between selling your users and selling to your users.

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