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People may be leaving Facebook over privacy fears, but social media is here to stay

The challenge to Facebook, Google and the other social media enterprises comes less from concerns about privacy and more about effectiveness

Hamish McRae
Saturday 21 April 2018 18:10 BST
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People are leaving Facebook but finding it hard to wipe their data from the platform
People are leaving Facebook but finding it hard to wipe their data from the platform

If you want to give yourself an intriguing hour or so, have a look at the data that Facebook or Google has on you. Most of us neither know nor care that just about everything we do is tracked, but Mark Zuckerberg’s testimony hearings 10 days ago has started something big. There have been a string of stories on people closing their Facebook accounts, though there have also been a lot of stories about how hard it is to wipe your record even if you do close your account.

I think it will be some months before we know for sure whether we have really reached “peak Facebook” – my guess is that we have in the sense that it will become a less valuable franchise – but in the meantime a lot of people are going to think more about privacy.

If you are a journalist you should not expect to have much privacy, though as it happens I have never bothered to go on Facebook. However, a quick check on my Google account showed exactly where I have been almost every day for the past year or so. For example, it knew I took the tube to have a coffee with a friend in Westminster this morning, the amount of time I took to get there and back, and the corner of the street where we drank it.

Anyone can check their information and a lot more will do so in the weeks ahead. But the challenge to Facebook, Google and the other social media enterprises comes less from concerns about privacy and more about effectiveness. Social media is here to stay. You cannot get the toothpaste back in the tube. But economics will, I suggest, change social media, because at present the market giants are too general. Yes, they know where we have been, but they are too clunking. They pretend to their advertisers they know a lot about us, and in some senses they do, if we’re thinking about where I had that coffee this morning. But that information is not really useful and often just plain wrong. (Google thought I was on a sandbank in the middle of the Solway Firth a couple of months ago. Fortunately, given the Solway tides, I wasn’t.)

Social media will likely split into two broad groups. There will be mass-market services, run by the Facebooks, Googles and Amazons of the world, and their Chinese competitors, which will remain huge. But two things will happen to it. First, that market will be either stagnant or in secular decline. There is no cachet in being on social media because everyone is on it, which means it becomes a public utility rather like gas or electricity services. Second, the market will be regulated with increasing rigour by governments around the world. Regulation will change the nature of the business and it will combine with consumer push-back to make it less profitable.

Zuckerberg hearing: CEO outlines how Facebook will respond to data scandal

The other broad group will be elite services. That is where the next burst of growth within social media is likely to take place. High-earners (or people with the skills that are likely to become high-earners) are the hardest people for any business to reach effectively. It is fascinating that one of the crudest forms of advertising, direct mail, is booming because putting a note through a letterbox in an affluent neighbourhood does get at least an instant of attention. An inappropriate or ill-targeted advertisement on a mobile device can seriously damage the advertiser, and the better-off the recipient the greater the commercial damage. As in so many other corners of the economy, the space will be either at the top, where margins are greatest, or at the bottom, where sheer numbers are so massive that tiny margins don’t matter.

These affinity group services – which may be a better categorisation than to call them elite services – will blossom. If, for example, you want to sell a vintage car, you don’t need to reach people who have a general interest in vintage cars, but rather those who are really likely to buy one. Their Facebook profile won’t tell you that. Indeed, they are probably not on Facebook anyway.

If this line of argument is right, what are the implications for society? There are obvious positives; people are becoming more aware of the adverse impacts of social media, and a combination of legislation, regulation, and self-restraint will curb some present excesses. I hope, too, that these companies will find they have to pay proper taxes rather than constructing artificial (and I am afraid, in effect, fictitious) corporate structures to avoid them. Expect people, too, to pay for privacy.

But there will be downsides. A huge amount has been made of the way in which social media has compartmentalised the news industry, and how people are only directed to news that fits in with their view of the world. But if social media becomes more segmented, then it will reinforce a trend that is already in place.

I can give you one example that highlights the way in which up-market online dating apps are increasing social inequality. There was a fascinating story on Bloomberg a few days ago which reported how young professionals used these apps to meet people like themselves. If you meet someone in bar, or even at work, you would be mixing with people of other backgrounds. If you meet on an app, meeting different people was less likely to take place. The result was an increase in wealth gaps. And even before online dating was developed there was an increased tendency for social mixing in the US. Indeed, this was one of the main reasons for increased inequality. Now it is becoming even more marked.

We’ll see. I think the world of social media has really reached some sort of inflexion point and that privacy will become increasingly important. But I worry that the next great shift in the communications revolution will have its downsides too.

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