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How Facebook’s Social Graph lock harms competition

Ed Terpening
f8_day1keynote

Is Facebook Opening Up?

At F8, Facebook’s developer conference, the social networking leader demonstrated encouraging signs that it is opening up its “walled garden” by providing developers and brands increased access to core features and apps, like Messenger.  It’s a smart move that anyone familiar with “Digital Darwinism” can appreciate.  As a disruptor, these tactics help manage the risk of being disrupted by upstarts.  It also makes brands and partners more dependent upon them. That’s the good news.  The bad news: Facebook basically owns the world’s social graph, that is, the connections and artifacts of life on which human relationships are based.  That’s the draw for so many developers and brands. But, as partners sign up to be part of Facebook’s ecosystem, they are sacrificing some of their ability to engage and monetize their users outside of Facebook.  For these developers and brands, it’s a great way to get started with a large audience—but the tradeoff: they’re not their users, they belong to Facebook.  

Does Facebook’s Power Serve Public Interest?

What’s the harm in one company having this much power?  The United States has a long history of seeking the right balance between ensuring a thriving economic sector and personal freedom.  1887 was a pivotal year when—due to the outrage of citizens faced by monopolistic railroads—Congress passed the Interstate Congress Act.  Over the years, a series of related anti-trust laws were passed to prevent businesses from abusing power that could threaten freedom and competition.  One great example to consider in the context of Facebook is when regulators—under the Reagan administration, no less--broke up AT&T in 1982.  I argue that—in many ways--Facebook is the AT&T of today.

Portable Social Identity

When one company has this much power (information is power), we should be concerned.   To define antitrust, it’s important to remember the legal definition of trust: “where one person holds property for the benefit of another” (Wikipedia).  In this case, your property is—in practical terms—your identity: whom you know and your relationship to them (social graph), your political (and other) associations, even what you had for lunch!  Central to that is your social graph.  Like me, you may have invested years in making connections, sharing and building relationships on Facebook.  How easy would it be—should your trust in Facebook erode—to replace it with another network?  There are hacks to do this, but we need an easy solution most consumers can accomplish, and most important, supported by Facebook.

This gets to the idea of portability, which in this case is the amount of friction involved in leaving one business for another, giving you true freedom of choice.  Regulators have a history of recognizing portability as a key idea in antitrust.  Consider your cell phone number, which (since 1997) is portable between wireless carriers.  You get to keep an important aspect of your identity by having the freedom to keep your phone number regardless of carrier.  One in 20 phone numbers are transferred annually between carriers, so clearly it’s working.  T-Mobile has used this as a key strategy to increase market share.  According to BGR, since 2012, T-Mobile has gone from having 33 million wireless customers to 55 million.  Europe is even testing the portability of banking accounts, to make switching banks easier.

I think we should demand portability of our social graph.  Just imagine, being able to switch among new social networks, by simply demanding the transfer of your social graph from one network to another. Given that Facebook (tied with LinkedIn) still sits at the bottom of user satisfaction among social networks, my guess is consumers would welcome such a move.  I’m not saying this would be easy.  In the mobile phone number example, an independent third party stores that information for transfer between carriers, but the social graph and other data you might want to transfer between social networks is far deeper and richer.  A start would be the ability to at least export your connections and meta data about them, such as the relationship type.

I think it’s time to insist upon a portable social graph that ensures consumers have freedom of choice.

P.S., Facebook has been successful at winning antitrust lawsuits in the past in narrow cases, for example, when challenged for controlling user experience on its network.  My point of view is that its dominating control of the social graph of so many is an intangible issue that regulators may be struggling to understand. Although, in the “revolving door” that is the FCC, Louisa Terrell, Advisor to the Chairman of the FCC, was the Director of Public Policy at Facebook. ☺