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Facebook has the data already. How can anyone compete with that?

The controversies that trail Facebook have everyone, experts to users alike, wondering what the possible alternatives might be. After all, with Mark Zuckerberg in Washington defending the social media platform’s privacy missteps, the days of feigning ignorance over its flaws seem to be behind us.

While some believe that a competitor that makes privacy a priority and puts users first will be key to displacing Facebook, others fear that’s unlikely given its unprecedented scale and market dominance. Indeed, while different models exist, it’s hard to imagine any company being able to compete with the mammoth platform and its two-billion-plus users.

The fundamental issue may be Facebook’s business model, shared by some of the world’s biggest tech companies, which trades privacy for convenience.

As media scholar Douglas Rushkoff wrote in a recent article for CNN, “Zuckerberg is less the reason the internet went bad than he is the product of an internet running on the wrong business model.”

Facebook chief executive Mark Zuckerberg is surrounded by media as he arrives to testify before a congressional committee in Washington Wednesday.(Leah Millis/Reuters)

This model has made data one of the world’s most valuable commodities by establishing a social bargain wherein users agree to give corporations access to as much personal information as they’re able to collect, in exchange for supposedly free access to their products.

The Facebook advantage

The challenge for would-be competitors is that the access companies like Facebook have to their users’ information also gives them an unbeatable advantage when it comes to designing a product that gives people exactly what they’re looking for.

Like a data-driven mind-reader, the company is able to continuously stay one step ahead of users to produce the optimum experience.

Facebook reconnects users with friends they haven’t seen in years, highlights media relevant to their interests, and promotes advertisements for products targeted toward individual users — almost before those individuals themselves know what they want.

That lack of privacy actually creates the features that make Facebook work– Paul Budnitz, co-founder of Ello

But as the last few weeks have shown, all of that comes at a steep cost to privacy.

“That lack of privacy actually creates the features that make Facebook work,” said Paul Budnitz, a co-founder of Ello, a social platform hailed by many in the media as “the Facebook killer” at the time of its launch back in 2014.

“What we’ve become used to, and what a lot of people really like, is that when you go on Facebook it suggests all these people you went to high school with and people you’d forgotten about.”

Facebook is able to create all these connections because it’s reading your contact lists and the contact lists of all your friends, and tracking your online behaviour.

“If it didn’t know all that stuff, it couldn’t provide the experience that it does,” said Budnitz. One of the reasons it was difficult for Ello to grow initially was that it didn’t have all of the user data that drives the Facebook experience. But as Budnitz explains, that was sort of the point.

Facebook holds an advantage over other social media platforms because it mines your online habits.(David Donnelly/CBC)

In fact, Ello’s initial buzz was generated largely due to a manifesto Budnitz wrote with his partners for how they envisioned the social network to operate. The thesis, which in hindsight sounds particularly prescient, was “you are not a product.”

It’s a novel concept. After all, as Steven Johnson noted in the New York Times, “ordinary users on social-media platforms create almost all the content without compensation, while the companies capture all the economic value from that content through advertising sales.”

But while Ello eked out a place for itself as a narrowly focused platform for artists to connect and share their work, it didn’t become a “Facebook killer.” That was mostly because of the platform’s business model, which explicitly forbids the collection of data and selling of advertisements.

Nonetheless, Ello’s success as a niche platform hints at potential alternatives to the Facebook model, with paid subscriptions and optional premium services that allow the company to earn revenue without having to rely on advertising sales and what Budnitz calls a “data Hoover” approach.

The Ello founder points to the New York Times and the Wall Street Journal. “There’s certainly people who are willing to go beyond the paywall for online services that they were used to getting for free.” LinkedIn is another example of a platform that successfully offers subscription plans for premium services.

Alternative business models

Meanwhile, upstarts such as MeWe and Sola.ai are are hoping to create a new kind of social network with a decentralized model, prioritizing privacy, and in some cases, even compensating users for their content.

For example, MeWe promises no tracking, censorship or ads, while Sola.ai lets users monetize what they post, effectively flipping Facebook’s model.

The hurdle for would-be competitors is that, for now, Facebook still has an edge because of the network effect, which essentially presumes that the more contacts you have on a platform, the more useful and enjoyable it will be to you.

While almost three-quarters of Canadians claim they plan on scaling back their use of Facebook, it’s hard to imagine a mass exodus from the controversial platform without a viable substitute for users to relocate to.

Despite the fact that alternatives to the social media giant do exist, the most successful ones reach only hundreds of thousands of users, not the billions that have made Facebook a global force.

The irony of this digital conundrum is that while wary users are searching for an alternate to Facebook because of their deteriorating trust in the social platform, their distrust also makes them less likely to download a new app, especially when the prerequisite of reaching Facebook’s global scale requires that companies prompt users to share their contact lists.

Times have changed, and so have users.

“Facebook got in early, and they already have that data,” says Budnitz. “To me that’s really the greatest barrier.”


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