Why we dislike Facebook

The rules do need to change and users should get greater control over their data, but getting regulation right in this area is tricky.

For what it’s worth, I find Facebook increasingly painful to use. When I joined in 2005 — encouraged by other students at uni — it was a simple, efficient way to ­remember people’s names and ­details, a tool to help navigate social networks and, let’s be honest, occasionally stickybeak.

It’s changed dramatically since then. Rather than the witty status updates of yore, it’s become a moving scroll of digital trash, a never-ending rollcall of mindless memes, cats wearing hats, babies, other people’s “memories”, and profoundly useless “suggested posts”.

Does anyone care which of their “friends” “like” LG televisions, the Sydney Swans, or NAB?

It’s become a risk to our collective IQ.

Getting off Facebook isn’t so easy, though. Elements of the interface are extremely useful, such as being able to search for and contact people, keeping abreast of announcements by friends and family, and ensuring one is informed of upcoming events.

“Going off Facebook” has become fashionable in certain circles; but most of those who do soon slink back, furtively “reactivating” their accounts, having missed out on valuable bits of information in the interim.

Yesterday, I looked myself up in the White Pages — which, remarkably, still exists — and sure enough, I wasn’t there. I’ve not tried to suppress my details; the experience was a reminder how ineffective 20th century directories have become.

Directories are still valuable, however, probably more than ever in an increasingly globalised economy. And the more people one has listed, the more useful it is.

Imagine if your friends and family were spread across three different social networks, and every time you wanted to communicate with them, or look someone up, you had to do it three times.

Elements of Facebook are a natural monopoly. It’s the modern-day telephone directory, with extra information about individual listings barely imaginable a generation ago. About 15 million Australians are signed up.

The unfolding scandal in the US, where the Facebook data of 87 million users somehow found its way to political consultancy Cambridge Analytica, has reminded us how easily troves of data can be transferred and manipulated by third parties, quite apart from Facebook itself.

It’s shone the spotlight on an area of business where a cost-benefit analysis hasn’t yet been applied. The rules do need to change, but the risk is ham-fisted regulation entrenches the existing providers such as Facebook.

Standard economics texts were written long before the tech giants or even the internet came along. Facebook and the other social networking platforms such as LinkedIn or Instagram appear to be “free”. They aren’t: the data users provide, wittingly or unwittingly, is highly valuable to advertisers. That’s how Facebook makes over $US40 billion ($51.60bn) in revenue each year, almost entirely from selling ads.

Users should be given greater control over their data. Customers should have a clear option when they sign up to insist their data not be aggregated or provided to third parties, for instance.

Perhaps such a “premium” service might elicit a charge; perhaps not. We don’t know what the competitive price would be. Indeed, if there were enough competition, maybe users would be paid for their data!

Trying to elicit competition among social network providers will be a far bigger challenge. If another Facebook-style platform came along offering to charge $2 a month in exchange for promising to prune all the rubbish I’m currently exposed to on Facebook, I’d sign up in a flash.

But Facebook would need to allow such a competitor’s interface to be interoperable with its own, which it most certainly wouldn’t want to do.

Right now, it’s pointless to bother competing because any rival cannot start without the critical mass of users. There’s a co-­ordination problem: swathes of Facebook users would need to agree to switch social networks all at once for it to have any hope at all, which is impossible.

Facebook should be compelled — just as the banks are about to be in Australia and have been in Britain — to provide their users’ data to third parties, potential competitors, if users instruct them too.

It’s the interface Facebook provides — the display, the functionality, the digital bells and whistles — that can and should be subject to competition, rather than possession of customers’ raw data and personal information.

The ACCC is looking at the power of digital platforms in Australia, with a report due later this year. Regulators around the world are looking at similar issues.

Getting regulation right in this area is tricky. For one thing, it’s far easier for politicians to mandate interoperability than to make it a reality. Only a handful of highly trained people understand the technology that sits behind digital platforms such as Facebook.

New regulation will be more likely to entail hand-wavy exhortations to “protect data”, which will increase Facebook’s costs of doing business without fuelling competition. Greater costs will make it harder for new entrants.

When Facebook was the poster child of the digital era, the political class didn’t dare threaten it. Now that its reputation has been tarnished, politicians are emboldened. Witness gleeful US senators grilling CEO Mark Zuckerberg this week. The likely outcome is Facebook starts donating, directly or indirectly, to pet government projects in order to ward off even more penal regulation.