Monday, 23 July 2012

The darker side of Facebook

And some things Facebook is doing that aren't so great...


Lack of innovation: Having lauded Facebook for being early to the platform game, I have to say that in recent years they have dropped the ball on the innovation front. The sad fact is there is little that people do on Facebook ago (posting pictures, organising events, playing Farmville) that they weren't doing two or three years ago. Despite Facebook's attempt to roll out major innovations such as Timeline or its souped up Open Graph API, the company still seems to be waiting for its next killer app. That's a problem, because in fast moving world of tech if you can't see the guy that's standing still, its probably you.

A ruthless disregard for users privacy: Facebook's mission statement is to make the world "open and more connected". The flip side of this however is that this is in opposition to the demands of personal privacy. You cannot be both private and more open and connected. And generally when Facebook has had to choose between the two it chooses openness over privacy.

A simple experiment. Go to Facebook. Go to your Account Settings. Try to figure out what's going on with your privacy. Then go to your Privacy Settings cos some of the functions are shoehorned away there too. Facebook is a smart company full of smart guys who can build smart UIs. However in this case they've clearly built the most labyrinthine system of menus and settings possible (reminiscent of some of Nokia's worst UI crimes) to keep you as far away from your privacy settings as possible.

This cavalier attitude is a two-sided coin. On the one hand its a short-term win for Facebook. Most people have pretty lax privacy settings because they don't know how to change them for the better. However in the long-run its bad because it destroys trust between the user and Facebook. As an informed user I trust Facebook way less with my private data than, say, Google. I have no confidence that Czar Zuck won't run out and sell my personal data to the highest bidder. Just sayin...

Mobile: The world is doing mobile. Over half of American users are on smartphones, except for smartphone read "small general purpose compute device that fits conveniently into your pocket with a wireless connection". And guess what - Facebook users are following suit. This is a challenge for Facebook because a) until earlier this year it didn't do much to monitise (i.e. advertise) on mobiles and b) even when you do advertise on mobiles the revenue per user is generally less than on a desktop computer (think less display space = smaller billboard = less ad revenue). To a degree this will be balanced by higher growth in the number of smartphone users, but mobile is a risk for Facebooks ad-driven revenue line.

China: Facebook has 85% penetration in Chile. Facebook has 60% penetration in the US. Germany? 30-40%. China? Zero.

In a business environment where people ask "what's your plan for China" in the same way they used to demand "what's your plan for the internet" that's a big gap. So far the Great Firewall of China hasn't been kind to Facebook and many of its service remained blocked (nice Communist dictatorship disagreeing with site that wants everything to be open; imagine that). So far Facebook hasn't found a solution round it maybe it compromises like Yahoo (you want some dissidents email addresses Mr Hu? Sure thing!) or plays hardball like Google. The problem is as Google reaches saturation point in its core markets, it will have to either a) compromise to enter new markets like China or b) accept lower growth. Go fig.

Anyhow the last two posts have provided a whistlestop tour of Mr Zuckerberg's Once and Future Kingdom. In our next exciting episode we'll delve into the murky world of Facebooks financials, ahead of their maiden results Thursday.

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