A claim that Facebook actually isn’t different, that they’re just a bunch of rapacious capitalists out to suck the maximum possible into their own wallets – excellent, how rich that makes us all. For this is the point of the system. People attempt to provide themselves with hot and cold running Ferraris by producing something we value and thus will fork out for. The more value they create for us then the more they get – they get richer precisely because they are making us richer.
Sure, there’re problems at times, we don’t want people to be doing this without accounting for the externalities of their actions, people can produce value in the mode of public goods and not get rich but these are known problems with the system and ones we can and do deal with. This does still leave us with the underlying truth, we want people to try and get rich. For it’s that lust for and pursuit of gelt and pilf that makes us richer. Again, not wholly and entirely, it’s the competition for our money that limits how much they can vacuum up but still, that’s the reason the system works better than any other socioeconomic system anyone’s ever tried. They only get rich by making us so, that’s why those of us living in roughly market and capitalist societies are richer, living higher on the hog, than any humans ever have done anywhere.
Then we get this complaint:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Each episode was accompanied by the usual apologies and we’ll-do-betters. But last week’s scandal – an email cache released by the tenacious digital, culture, media and sport committee – is different. It revealed the inner workings of a calculating corporate hellbent on growth and crushing competition. The most damning exchange was between Justin Osofsky, a Facebook VP, and Mark Zuckerberg himself. Osofsky proposed limiting the access of Vine – a potential rival – to certain Facebook data after it had released a new feature. “Yup, go for it,” replied the boss. You might not have noticed, but Vine doesn’t exist any more. Most companies do this sort of thing all the time. Opposition research is standard practice, and what business doesn’t seek to outmanoeuvre rivals? But Facebook had spent years convincing us that it wasn’t like other companies. It was absolutely not The Man and making money was largely coincidental to its social mission of connecting humanity. So when we learn it spends millions on lobbying, buys or crushes competitors and hard-balls regulators, well, it’s just more annoying. [/perfectpullquote]Isn’t that delightful? They’re not wandering off down the paths of snowflake wokeness, they’re instead concentrating upon making us all richer. Super.
And yes, they are making us richer. We pay nothing at all for Facebook. And yet it has a value to us. A significant one:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]According to research by the National Bureau of Economic Research, search engines are worth $17,530 a year per person, email $8,414 and digital maps $3,648. Even Facebook is worth $322. Those numbers are, of course, a joke, and a little titter at their spurious accuracy is appropriate. But given the best techniques we have they’re about right to the number of digits and the size of the first one.[/perfectpullquote]Call it $300 a year for each user:
[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””]In principle, the change in consumer surplus (compensating expenditure) provides a superior, and more direct, measure of the change in well-being, especially for digital goods, but in practice, it has been difficult to measure. We explore the potential of massive online choice experiments to measure consumers’ willingness to accept compensation for losing access to various digital goods and thereby estimate the consumer surplus generated from these goods.[/perfectpullquote]2 billion users, $300 a year each, that’s $600 billion of human enjoyment of value being created each year. That’s pretty damn good really. That’s about a Denmark a year* of human enjoyment being added by Zuck and his crew. Why it all works this way being described by this year’s Nobel Laureate here. Near all of the gains to innovation do flow to consumers.
So, the complaint, Facebook are just the usual rapacious capitalists. The answer being, Yup, Great, how super that is.
Even, 2 billion people get Facebook for free and people want to whine about this?
*Yes, about $300 billion of GP, as the consumer surplus is normally thought of as equal to GDP, thus the total of CS and GDP is twice GDP.
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I do wonder about that 2 billion user figure for Farcebook. What's a Farcebook "user".
This was the subject of an argument with a mate only yesterday. He was singing the praises of FB as a marketing gateway. I was pointing out that if you were marketing on FB, you weren't marketing at me because I never look at it.
Depends on how you define "user". To him, everyone & their cat's a FB user because FB's an important part of his social media life. He has one FB account. I seem to have accumulated half a dozen over the years because I've needed to access something, needed a FB account to do so & couldn't remember the logins for the accounts I already have. The latest I noticed was Tinder. Tinder presumably thinks all potential Tinderers are also FB'ers. Why I can't imagine. if you're out on the prowl for members of the opposite ( or same for that matter) you're hardly going to be sitting at home in your underpants Farcebookfiddling. The value I accrue from FB is either zero or some minus figure depending on what FB hoops I was required to jump through to access something I probably didn't want in the first place & what then becomes involved in digging out whatever FB has installed on my computer in the process.
The value being attributed to e-mail is presumably freemail. Like many other people & most of the people I receive mail from, I pay for mine - thanks very much. Part of the service for domain hosting. Freemail's a bane. So much so it goes straight to spam on most of my e-mail accounts. You can pretty well define the people you don't want to read mail from as freemailers. Trouble is, they'll be the people who have one's e-mail address in their contacts list & be sharing it - inadvertently or not - with people you want to hear from even less than them. Plus sharing the content of your mail with all & sundry if certain revelations about the mail providers' data exploitation are true.
Search engines? That's a service I'd be more than willing to pay for if the market wasn't completely dominated by the free search providers. To be sure that one's search results were actually what one was searching for & not a marketing opportunity for the search engine provider.
So, yes. There's a lot of value accruing from the activities of these internet companies. But who it's accruing to & who's paying for it is far from obvious.