Fred Vogelstein's essay in Wired, "Great Wall of Facebook: The Social Network's Plan to Dominate the Internet -- and Keep Google Out" describes the intensifying clash between Google and Facebook--a clash that focuses on the ability to target advertising:
Like typical trash-talking youngsters, Facebook sources argue that their competition is old and out of touch. "Google is not representative of the future of technology in any way," one Facebook veteran says. "Facebook is an advanced communications network enabling myriad communication forms. It almost doesn't make sense to compare them."
1. Build critical mass. In the eight months ending in April, Facebook has doubled in size to 200 million members, who contribute 4 billion pieces of info, 850 million photos, and 8 million videos every month. The result: a second Internet, one that includes users' most personal data and resides entirely on Facebook's servers.
2. Redefine search. Facebook thinks its members will turn to their friends--rather than Google's algorithms--to navigate the Web. It already drives an eyebrow-raising amount of traffic to outside sites, and that will only increase once Facebook Search allows users to easily explore one another's feeds.
3. Colonize the Web. Thanks to a pair of new initiatives--dubbed Facebook Connect and Open Stream--users don't have to log in to Facebook to communicate with their friends. Now they can access their network from any of 10,000 partner sites or apps, contributing even more valuable data to Facebook's servers every time they do it.
4. Sell targeted ads, everywhere. Facebook hopes to one day sell advertising across all of its partner sites and apps, not just on its own site. The company will be able to draw on the immense volume of personal data it owns to create extremely targeted messages. The challenge: not freaking out its users in the process.
I find it amazing that people will willingly post personal information to websites that will only use it for data mining and advertising revenue. They lay their entire life open to a corporation that's only looking to profit from the information said corporation can gather for itself or it's affiliates.
When the government reads our emails, listens to our phone conversations, reads our text messages and monitors what we do online people are outraged at the invasion of our privacy. But then they log in to Facebook or Myspace or Twitter and reveal all.
The Facebook "community". Please. It's a way for Big Business to pry into our private lives and exploit us in any way they can for the money they can make.
While most in the PETD crowd are too young (or just historically deprived) to know the words to The Internationale (my favorite line: "Masses, slaves, arise, arise!"), one can easily imagine them kicking off PETD meetings with a somewhat more recent anthem, Aquarius, from the hit 1967 rock musical Hair:
When the moon is in the Seventh House
And Jupiter aligns with Mars
Then peace will guide the planets
And love will steer the stars
This is the dawning of the age of Aquarius
Harmony and understanding
Sympathy and trust abounding
No more falsehoods or derisions
Golden living dreams of visions
Mystic crystal revalation
And the mind's true liberation
Nothing better captures the spirit of that thankfully-bygone era of narcissistic self-indulgence than the beginning of the 1979 film version:
Yes, Virginia, the marijuana-induced socialist-utopian delusions of the Sixties live on in a new generation of Techno-Aquarians, who want to have their digital cake--and eat yours too. Something for nothing, free lunch for everyone! Down with profit, up with privacy! The "vision" (as in "Golden living dreams of") behind this frenzy of frustration with online capitalism and PETD's demands for regulation is what Thomas Sowell has called the "Vision of the Anointed," "the talented few" who consider themselves wiser than everyone else, and therefore seek to impose their preferences on others, as Adam Thierer and I have both discussed.
But back to Wired:
The drumbeat of controversy surrounding Facebook illustrates the catch-22 the social network faces: It has a massive storehouse of user data, but every time it tries to capitalize on that information, its members freak out. This isn't an academic problem; the company's future depends on its ability to master the art of behavioral targeting--selling customized advertising based on user profiles. In theory, this should be an irresistible opportunity for marketers; Facebook's performance advertising program allows them to design and distribute an ad to as narrow an audience as they would like. (It has also developed a program to create ads that are designed to be spread virally.) But as the Beacon debacle showed, there is a fine line between "targeted and useful" and "creepy and stalkerish"--and so far, not enough advertisers have been willing to walk that line...
In a way, Facebook's dilemma extends from its success. Users see the site as sanctified space, a place to engage in intimate conversations with friends--not to be laser-beamed by weirdly personal advertising. But with initiatives like Connect and Open Stream, Facebook can sell ads beyond its own site. Just as Google's AdSense program sells ads on any participating Web site, Connect and Open Stream will eventually push Facebook-brokered advertising to any member site or app. But unlike with AdSense, Facebook's ads could be exquisitely tailored to their targets. "No one out there has the data that we have," says COO Sandberg.
Wired suggests that Facebook's strategy played some role in causing Google to embrace Interest-Based (behavioral) Advertising, playing catch-up to No.2 Yahoo!:
Google has even shown a willingness to join Facebook in gingerly tapping the third rail of Internet marketing--behavioral targeting. The search giant has long assured its users that it would never use their personal information to deliver targeted advertising, relying instead on aggregate data or search activity that preserves anonymity. ("There is a line with users that you don't want to cross," Google CEO Eric Schmidt said in the wake of the Beacon controversy.) But in March, Google started its own behavioral targeting campaign--tracking users' browsing to deliver more-customized ads. Users have the option to either edit their profiles or opt out entirely.
Today, global online brand advertising accounts for just $50 billion a year. Offline brand advertising, meanwhile, accounts for an estimated $500 billion.
Connect and Open Stream don't just allow users to access their Facebook networks from anywhere online. They also help realize Facebook's longtime vision of giving users a unique, Web-wide online profile. By linking Web activity to Facebook accounts, they begin to replace the largely anonymous "no one knows you're a dog" version of online identity with one in which every action is tied to who users really are.
To hear Facebook executives tell it, this will make online interactions more meaningful and more personal... But you don't build a competitor to Google with people alone. You need data. And Connect and Open Stream are intended to make Facebook a much more powerful force for collecting user information. Any time someone logs in to a site that uses Connect or Open Stream, they give Facebook the right to keep track of any activity that happens there--potentially contributing tons more personal data to Facebook's servers. Facebook Connect and Open Stream are also designed to make each user's friend network, which belongs to Facebook, even more valuable and crucial to the Web experience. Together, they aim to put Facebook users' social networks at the center of all they do online.
Heaven forbid we should allow those who offer "free" content and services to extract... profit from the unwashed masses of helpless consumers who are either too stupid, too lazy or too ignorant to manage their own privacy, no matter how powerful the privacy management tools at their disposal! The better alternative is empower users to make their own decisions about privacy, rather than imposing top-down "Industrial Policy for the Internet" on the entire country through outright prohibitions or restrictive defaults concerning data collection and use for targeting advertising--as Adam and I have said:
The ideal state of affairs would be to create a system of tools and data disclosure practices that would empower each user to implement their personal privacy preferences while also recognizing the freedom of those who rely on advertising revenues to "condition the use of their products and services on disclosure of information"--not to mention the viewing of ads!