Technology category

Social media

Social media has copped a bit of flack in recent times. Facebook founder Mark Zuckerberg was dragged before Congress to testify about privacy, data mining, regulations and the whole Cambridge Analytica controversy. More recently, Facebook revealed that about 30 million of its users had their accounts breached via the theft of access tokens (which allow you to stay signed in).

Twitter has been accused of “shadow banning” controversial (mostly right-wing) individuals and groups. If you get shadow banned you stop showing up in searches, user feeds and such. You essentially become a ghost, able to tweet but no one can hear you.

Google gave up completely and closed its social media platform, Google+. The final nail in the coffin for the ailing network came after discovering it had left private profile data exposed.

It all begs the question: have we reached peak social media? The New York Times, for the first time that I am aware, published an article helping people disconnect. How to Delete Facebook and Instagram From Your Life Forever provides a step-by-step guide for people who want out, from backing up your data to the deletion process itself.

I purged my Facebook account over 5 years ago. I actually deleted it but apparently “delete” really meant “deactivate”, as everything was still there when I signed in again a few years later. So I went through the process of removing just about everything I had previously uploaded to the network (the process is easier than it sounds with the use of third-party tools). I did the same with Twitter just a few weeks ago.

Now I don’t for one second believe I’m some kind of thought leader, moving well before the masses with my decision to ditch social media. I just wasn’t getting enough value out of them given how much personal information I had to sacrifice. And the data do indeed show the opposite: more people than ever are using social media.

Facebook users Twitter users

My decision to abandon Facebook was made around the middle of the first chart, right when growth in the number of users really accelerated. Conversely, I only quit Twitter a few weeks ago, yet its growth plateaued back in 2014! I’m clearly not ahead of the curve.

But that doesn’t mean I can’t be skeptical about the future of social media as it currently exists. Social media is a great way for people to organise events, stay in touch and connect with one another. But I’m not sure how centralised platforms such as Facebook, the business model of which depends upon harvesting user data for profit, can survive in the long run.

Hear me out. Facebook and Twitter are not social media companies; they’re advertising companies. 98 percent of Facebook’s revenue and 86 percent of Twitter’s comes from advertising. The two companies provide platforms for their users to network primarily for two reasons:

  1. Direct advertising. Much like radio and television, Facebook and Twitter display advertising on their platforms. That includes allowing organisations to promote posts/tweets, accounts and even trends. They use algorithms to make sure promoted posts/tweets make it into the right users’ feeds.
  2. Data mining. Everything you share on social media, whether public or private, is mined. That includes the people with whom you associate, the events to which you are invited, down to your location and the device you use to access the service. This data is used to improve the effectiveness of direct advertising, but it’s also sold off to third parties.

The provision of the social network enables the above. As the old saying goes, if you’re not paying for the product, you are the product. Social media companies sell you and any information you choose to provide, knowingly or not.

To date, people seem happy with this arrangement; the growth of Facebook, Twitter and smaller platforms such as Snapchat are testament to that (Instagram is owned by Facebook). But they all use variants of the same model. As do the likes of Google, which data mines your searches and even your email (do you use Gmail? Or send/receive to people using Gmail? Google’s bots scan it all).

But I’m not so sure this model is viable in the long term. Do I know what, if anything, will replace it? No. But as more and more information about the nefarious nature of how these companies generate revenue is revealed to the public, there will be pushback. Fewer new users will sign up, existing users will give these companies less face time and rivals - for example, encrypted and/or decentralised alternatives (e.g., diaspora*, Friendica, GNU social, Signal and Wire) - will slowly capture the more privacy conscious among us.

I’ll leave you with the following quote, written about a certain social media company:

Well on the way to becoming what economists call a ‘natural monopoly.’ … Users have invested so much social capital in putting up data about themselves it is not worth their changing sites … Its massive user base will help maintain its dominance.”

That wasn’t written about Facebook or Twitter. It was about MySpace, which has since faded into obscurity. Not because of antitrust regulation but because a new competitor, Facebook, was simply better.

Does the same fate await today’s social network providers? I’m not sure. What I do know is that we live in an ever-changing world where business models need to constantly adapt just for a firm to maintain its status. Today’s advertising and data mining social media model seems antiquated to me, but I’ve been barking up that tree for years.

Creative destruction and the NBN

One of my many concerns about Australia’s National Broadband Network (NBN) was the toll it would take on future innovation and competition. A legislated monopoly, entrepreneurs would be forbidden from competing with it, eliminating potential consumer benefits before they can even be discovered. Fortunately for Australians, I was wrong:

Lightening Broadband is connecting homes and businesses using microwave links capable of delivering both 100 Mbps download and upload speeds. That’s better than the comparable NBN Tier 100, which offers 90 Mbps download and 30 Mbps upload speeds.”

Another telco start-up, DGtek is offering its customers a full fibre alternative service … [it] uses Gigabit Passive Optical Networks (GPON) and runs it directly into tightly packed homes with the dense population of inner Melbourne. As a sweetener, DGtek offers free internet service to government organisations – such as schools and hospitals – in areas they service.”

iiNet in Canberra has launched its Very-high-bit-rate Digital Subscriber Line (VDSL2) as its own superfast network. According to iiNet, it is made up of fibre and copper and provides a faster connection than ADSL and most NBN plans.”

Then there’s the competition from an area I did forecast, namely 5G wireless broadband:

Optus and Telstra are both launching 5G services in 2019. This represents a quantum leap in wireless technology that could win away millions of current and potential NBN customers.”

The total accounting cost of the NBN is already over $50 billion. With competition on all fronts preventing it from monopoly pricing, and its mandate of cross-subsidisation (e.g., rural households) driving up costs, that figure will only grow.

At this stage - nearly 10 years after its inception - there’s an almost certain chance that the taxpayer will see a negative return on its NBN investment.

As the situation worsens, something will give; that’s just how politics works, and the NBN is a political beast. The easy (and wrong) option would be to regulate or tax the NBN’s competition away. The more difficult (and better) option would be to remove the NBN’s legislated fixed-line monopoly altogether and sell it off, owning the loss and salvaging whatever we can from the carcass.