Introduction

As a kid, I enjoyed Woody Woodpecker. I was particularly fond of the following line:

In light of Facebook’s greatest crisis to date and enormous loss of market value, I can’t help but think of that iconic cartoon quip. That is, what if Facebook had charged users all along? In fact, I argued more than five years ago that the company should begin charging its users in lieu of indirectly monetizing them via their data.

Of course, it’s a moot point now. That genie is out of the bottle. Boycotts and #DeleteFacebook are gaining steam. (I deleted my own account last night) Facebook’s senior leadership is in damage-control mode. We may well look back at recent events as a tipping point for Zuck et. al. The Cambridge Analytica scandal may irrevocably alter the company’s image and growth prospects. It may be the harbinger for regulation, and not just in the privacy-conscious EU.

Still, I wonder if the company would find itself in its current predicament if it had directly monetized its users.

It’s quite possible that the world would be a very different place right now.

On one hand, hackers and other bad actors still may have been able to access a great deal of information on 50 million Americans alone. So there’s that.

But we’re not talking about a proper security breach here. This wasn’t a hack à la Equifax. Rather, we have to consider the underlying business model of platform companies and their need to make money. As I write in The Age of the Platform, application programming interfaces (APIs) allow developers to do interesting things with a company’s core offerings. They effectively externalize innovation. Remember that Apple launched the iPhone in 2007 sans an app store. Steve Jobs was smart enough to realize that even his mighty, iconic juggernaut could not develop apps with the speed and depth of a vibrant developer community. As Cambridge Analytica demonstrates, not all apps are benign time-wasters such as Angry Birds.

Far from it.

Does this economic imperative excuse Facebook’s lax approach to privacy over the years? Of course not, especially since Facebook relies upon the trust of its users.

To be fair, though, consider the following. Is it possible for a publicly traded company sporting 2.2 billion users and outsize influence to completely police itself? We are learning the dangerous answer to that question. As many have pointed out in the past few weeks, Facebook, Twitter, and Google have become too powerful for even their founders to control. (Case in point: Twitter is asking its own users for help to make it less toxic.) Facebook’s imbroglio demonstrates the downsides of a platform being too open, but consider the alternative: By closing itself off to advertisers and third-party developers, $FB would not have ascended to such lofty levels.

Simon Says

News is unfolding quickly, but I can’t help but wonder what would have happened if Facebook would have allowed its users to become actual customers.  Make no mistake: there’s a big difference. What if no developers could have accessed so much of our valuable data, no matter what their apps were trying to do?

The world would be a very different place right now.

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What say you?