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Why Facebook is no longer a tech company

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Chairman and CEO Mark Zuckerberg speaks at a Facebook Live session following the company’s earnings call at Facebook’s offices in Menlo Park, Calif., on Thursday, Feb. 1, 2018. (Paul Sakuma/AP)

For the last decade, tech companies — particularly Google and Facebook — have taken extraordinary measures to manufacture, then exaggerate, their user numbers. Former Mozilla CEO Brendan Eich has said that only 7 percent of the Internet users who registered with the company actually used it. But this is not the public option. The choice does not come from the market. It comes from the competition.

A century ago, it might have been perfectly reasonable for Google to design and define themselves as “the best search engine.” By 2000, that was starting to look self-defeating — and corporate enemies were already rising to challenge them. Google retained its success as long as it stuck to the simple premise that its superior algorithm would give higher quality results to an increasing number of searches. But when that argument was defeated, Google had to think about a new message, one that didn’t rely solely on the rate at which people were searching for information. It had to do something else to stay credible.

Thus the age of social media took off. Most people who had never read a word of the New York Times used Facebook to share excerpts of articles they found particularly amusing. Others began sharing stories and photos they had grown fond of on Instagram and Twitter, out of the desire to express and signal sentiments they were reluctant to share by using more traditional media. These new channels stood not only to offer more interesting photos and stories than their predecessors, but also to force a tension between the objectives of content creators and companies like Facebook.

Facebook took a firm line in favor of publishers and tweeted over and over that it stood at the center of an extraordinary new media ecosystem where news was not just something you received via email but was also a central element of the social interaction. To communicate through Facebook, you could also find news: the company added a “Dislike” button that implicitly could convey a personal lack of approval to one’s friends, breaking the rules of the traditional media, which were to be respected. The big three publishers on Facebook had been able to make the most of its interest in news by doling out exclusive content, like articles from the New York Times and New Yorker. This was more than just a favor: it was money for the big three and an expansion of the media ecosystem.

But as the Facebook news ecosystem grew in its dominant role, other digital publishing brands would sometimes be drawn into competition for Facebook users’ attention. For the last few years, one of the strangest relationships to hold has been between Netflix and Hulu. These two companies — and even Amazon — took great pains to build a loyal audience base and then offer superior products. When someone from Netflix or Hulu paid a subscription to watch a TV show or a movie, it was hardly a substitute for the fan base they had built. But it did take users away from the technology that had initially created them, Netflix and Hulu.

So the idea was to give people a bigger digital screen, one they could watch whatever they wanted on, now a show on Netflix. It was a mistake, as it turns out, because then other streaming services were all but free to eat up a larger share of their share of the consumer’s revenue.

Google responded to the problem by building and developing its own platforms, though very few people use them beyond Google’s own services. But if the company did actually want to raise the digital video experience for Google-owned YouTube, it had to fight to make everyone do so. This required that it compete with the likes of Apple, Facebook and Amazon — three companies with much larger audiences than YouTube and different strategies for media and entertainment. And even if they wanted to do so, they were reluctant.

And as television tech and media technology improved, that made it even harder for YouTube to produce and deliver the kinds of video that people were asking it to make.

As a result, it might be hard for even the biggest and most prominent social media companies to avoid the need to rethink their markets and business models. If they do, the disruption of the social media market could be catastrophic, because the recession of cable television is over.

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