Recently, Jason Kottke wrote about how Facebook is “a step sideways or even backwards (towards an AOL-style service) for the web”. Essentially, he argues that because nearly all data on Facebook is in their “walled garden”, inaccessible by Google and other non-members on the open web, the service is ultimately doomed.
I’m a huge supporter of and believer in the open web and the power of unrestricted information flow, but I disagree with Jason in this instance. I think there is a fundamental difference between Facebook now and AOL some years ago. In order to illuminate that difference, I’ll examine Jason’s claim. Do bear in mind, however, that I am not nor do I claim to be a professional economist or sociologist.
Jason claims, “In competitive markets, open and messy trumps closed and controlled in the long run.” Of course that statement is correct when dealing with goods and services that are traded on the open market, but in the case of Facebook this doesn’t hold true. One of the reasons that Facebook’s value can’t be traded on the open market is that the value itself is predicated upon the closed system.
In the traditional goods and services model, the value of a good or service is evaluated by what it can be traded for on the open market. That trade on the open market involves two parties in control: the buyer and the seller; or the producer and the consumer. In Facebook’s case, what is the good or service? It seems to me that the obvious service offered to users is the ability to connect and keep up with friends. That by itself, as Jason points out, is nothing unique — you can accomplish the same on MySpace or a number of other networks.
I find another value provided by Facebook, however, that turns the traditional model completely on its head. In a word: privacy. Facebook gives its users not only the ability to keep in touch with and learn about friends, it provides an unprecedented level of control for users over their own data. This is huge. Once you re-evaluate the market relationship of Facebook and its users with this factor in mind, a completely different picture is painted. The value is found precisely in the control over personal information that Facebook provides, so putting that information on the open web completely destroys that value.
The difference between Facebook and AOL should now be clear: Facebook is fundamentally based on the tenet that people want control over their personal data, whereas AOL operated under the assumption that people were little more than bank accounts with eyes, to be exploited at every turn via advertisements, proprietary lock-in and endless table coasters. By giving people complete control of who can see what personal information about them and how it is seen, Facebook singlehandedly created one of the largest and most detailed databases of intimate personal details in the world.
Of course there is the possibility, as Jason mentions, that Facebook will open up their network by way of letting people share their data with the open web if they so choose. While plausible, this doesn’t seem like a compelling move for Facebook so I wouldn’t expect it. The value for Facebook is derived from the massive usage their site gets and the advertising and sponsorship revenue that it brings in. Unless people stop putting value on control over their personal information, I don’t think Facebook has any real threat from the open web.