What’s real about Facebook, it’s business model and the future? It’s something I ask myself again and again and again.
As of the time of writing their stock prices are near record highs.
Investors don’t seem to be concerned. But they should be.
And only a handful in society seem to be concerned, but I think more and more should be.
Facebook faces a lot of issues. At the same time and it looks like we are in for massive change. Let’s take a look at where Facebook is now and the pressure it might be feeling. We’ll also look at how these pressures might shape the future.
What Is Real?
It’s hard to know what is real at Facebook when they don’t even know. In a recent piece Michael K. Spencer pointed out their growing issue with fake users. It seems the spammers aren’t just wasting our time – they are wasting Facebook’s too.
But it causes a bigger issue for all of us. We don’t know how real Facebook is and where reality begins and where it ends. How many people actually use Facebook? This is key for their metrics. It is key for users. And it is key for advertisers.
It’s also key for regulators. When a company becomes so powerful it can change election results regulators what to know how powerful they are.
They Have a Lot of Power
And the truth is they have a lot of power. In a recent interview Facebook COO Sheryl Sandberg noted that the top management is flying around the world meeting with world leaders:
That’s a lot of power. What’s more? In his congressional hearing testimony back in 2018 Mark Zuckerberg offered to help Congress regulate Facebook. And now he is even gone so far to ask for regulation.
The truth is that everyone knows Facebook is a power player in the use of information.
The Government Is Getting Involved
The FTC is about to fine Facebook $3 to $5 Billion. I did a piece on why the fine wasn’t larger. Lots of interesting politics on why the government did or didn’t do what it did.
In the Shery Sandberg interview (linked above) she seems to acknowledge, without answering, that the FTC will also have significant oversight of Facebook going forward.
Meanwhile the government is looking at how to regulate social media. And it’s a worldwide deal. Governments across the globe are looking at this issue.
We are going to see a lot more interplay between the government and Facebook in the coming years. And where that lands will have massive societal impact.
They Are Starting To Play Politics
And Facebook knows this. Also noted in the Sheryl Sandberg interview (above) is the fact that Facebook has hired some top lawyers, formerly from Microsoft, potentially to get ready for an antitrust legal battle.
And Zuckerberg being in the news so much is likely no mistake. Facebook wants to get ahead of this issue and shape the conversation.
The lawyers and investors know exactly what’s going on here. If Facebook can get the regulations that affect them written their way their compliance cost will be lower than their competitors and it will act to keep new competitors from joining the industry due to the high compliance costs. It is an economic moat that they can build and control. Moats mean profits.
If they get this game right they can win a semi-permanent part of the economic pie and have the government work to tell others out. If they lose they could be headed out of business.
It’s a very high stakes game.
And if I was Facebook I’d want to be trying to win it too.
Are They A Utility?
So a looming question is is Facebook a “utility” under law? Are they like the electric company, the water company and the phone company?
Special regulations are put in place for utilities because they become quasi-monopolies and it’s not practical for others to compete with them.
More and more articles are emerging saying that Facebook is, indeed, a form of monopoly.
Which opens the next question of whether Facebook should be regulated like a utility.
It’s an interesting question, especially given the amount of political discussion on the platform.
Where Do We Go Next?
So where do we go from here? It’s really an open question.
What is for sure is that Facebook is big, and powerful and it’s future is uncertain. It’s clear Facebook is taking this very seriously and trying to shape it’s own future.
Who will win? It will come down to high-stakes poker currently being played in global capitals right now.
What do you think? Should Facebook survive? Or are they too big and powerful? Join me in the comments with your opinions.
By: The Our Shawn McBride, a speaker, trainer and consultant on The Future of Business, the host of The Future Done Right(TM) Show and long-time business attorney. If you want regular content on the future of business subscribe to get new blog posts from us here.
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