The Great Facebook Heist
Long before users, Silicon Valley saw the value in digital versions of real relationships
Written by Karan Bhasin | Published: March 26, 2018 1:35 am
Long before users, Silicon Valley saw the value in digital versions of real relationships (Thinkstock Photo)
When does it become obvious that a heist has occurred? Loud alarms and smatterings of broken glass strewn are an obvious indication. Yet many of the greatest heists in history have been without spectacle, only becoming obvious much after the fact.
Russia’s privatisation in the early 1990s is a classic tale of deceit and gullibility. Post the breakup of the Soviet Union, Russia tried to shake off the all-encompassing ideology of communism and re-organised its economy around market-based principles. The reformers at the time undertook this through the means of a voucher privatisation scheme, wherein vouchers for shares in more than 15,000 public-sector firms were freely distributed to 98 per cent of the general Russian public.
For a brief time, each member of Russian society had a share in the national wealth of the country. But soon a lack of understanding about this voucher programme resulted in people quickly trading away their shares for more material short-terms needs.
The mistake made by the Russian people only became apparent several years later when a whole new class of oligarchs was born, who systematically stripped away assets from the newly-privatised enterprises. The consequences for the economy were devastating — increasing inflation, poverty, economic inequality and GDP contracting an estimated 40 per cent between 1991 and 1998. The rise of Vladimir Putin, who campaigned for dismantling the oligarch class, and the erosion of any semblance of democracy in Russia can be tied to this privatisation effort.
This digression into Russian history seeks to illustrate the principle of the unconscious heist — people trade away assets they perceive to be of very little value, which in time demonstrate their true worth and reap huge dividends for those smart enough to accumulate enough of these assets. History is replete with similar examples of the unconscious heist and its effects when the heist becomes known.
George Santayana noted that “those who do not learn from history are doomed to repeat it”. An examination of Facebook’s business model bears out this statement. Facebook owns the digital version of our real-life relationships, whether with parents or friends. While the internet permits a theoretically infinite number of digital replications of these relationships, the only digital versions that matter, in terms of significant monetary value, reside on and are owned by Facebook. We are not used to thinking of our digital relationships and data as having value or being classified as assets due to the relative newness of the internet and smartphone era. A lot of thinking is yet to be done on the nature of digital assets, how to value them in an age of infinite replicability and what rights need to be associated with them.
The argument has always been made that users of Facebook willingly traded away these digital assets for the value they get from it, that is, connecting with friends and family no matter where they are on the globe. Increasingly, though, the value derived from Facebook is under question, with the company itself admitting that greater time spent on the site is making its users unhappy and key features of the product offering such as video calling and messaging are being fully commoditised.
The billion-dollar plus market cap of companies such as Facebook, Snapchat, Twitter show the monetary value of the digital version of these real-life relationships. Like in Russia, this value has been captured by only a tiny number of professionals in Silicon Valley. In both cases, masses of people were convinced to give up immensely valuable assets in exchange for short-term benefits while the accumulators of these assets, tiny in number, reaped exponential value from their accumulation.
The arguments made in Facebook’s defence range from “most users like the product offering” to “people who don’t like the service can just leave”. Such arguments ignore the human realities of addiction. After all, heroin too is immensely likable to its users. The realities of network effects and the collective action problem prevalent in human culture means that we are stuck with Facebook, until another paradigm shift as transformative as the smartphone era begins.
The current backlash against Facebook, in the wake of the 2016 US presidential election and the Cambridge Analytica fracas, should serve as a flashing red light. People have begun to feel a sense of disquiet around their relationship with the platform. Media outlets and journalists who have seen their business model wither away in the new Facebook-dominated era are leading the charge against it. Certainly, technologically elite opinion has turned sharply against Facebook and more generally against the techno-optimism that characterised mainstream media coverage between 2007 and 2015. The question remains when that sentiment will filter down to the ordinary Facebook user. Perhaps the realisation of one of the greatest unconscious heists in the modern world will be the straw that breaks the camel’s back.
The writer, 25, is a consultant
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