EA CFOAV, CFOINT e CFOINF 2019 (SEGUNDA ) VERSÃO A 10

Though most of Facebook’s users are global, its US users generate

I’ve been waiting 15 years for Facebook to die. I’m more hopeful far more profit than users in the rest of the world. Losing a US user
than ever is expensive. Even more important: the US is Facebook’s home
Facebook is struggling to retain users, fending off regulation, trying base, and its US user base is its main bargaining chip in resisting
to pivot to VR, and paying a massive wage premium to attract the US regulation, and in securing US support in its regulatory battles
workers it needs to make any of this happen. The company is on the abroad.
ropes Speaking of regulatory battles abroad: Facebook is on the brink of
I’ve been praying for Facebook’s collapse ever since it attained having its business model declared illegal under the European
liftoff. In a 2007 article, I predicted that “your creepy ex-co-workers Union’s General Data Protection Regulation (GDPR). Fending off
will kill Facebook” by demanding to know why you won’t “friend” that scenario will depend on vast capital expenditures and friendly
them, prompting an exodus to the next platform. That was the social European regulators, and Facebook’s running short on both. Oh,
network cycle back then: a new network opens, and you and the and Europeans are Facebook’s second most valuable users.
people you genuinely like enjoy a rollicking group chat until all the Admittedly, when a company’s shares decline, it’s not like the
people you have to pretend to like show up. company itself has lost any money – those losses hit shareholders,
That’s the double-edged sword of products that rely on “network not the business itself. However, Facebook’s costs and share-price
effects” – the economists’ term for a product that gets better when are intimately bound together, thanks to tech firms’ reliance on stock
more people use it. Sure, you might join Facebook because your grants as a way of scoring a discount on their wage-bills. Engineers,
friends are all there (and more people might sign up lawyers, and other high-paid, in-demand professionals are glad to
because you’re there), but that also means that every time your take much of their compensation in stock, betting that the
friends leave Facebook, it’s a reason for you to leave, too. company’s share price will balloon and that they can cash out their
My prediction failed. For a decade and a half, Facebook resisted the shares and keep their winnings, thanks to the tax-preferred status of
fate of all the social networks that preceded it. In hindsight, it’s easy capital gains – in most of the world, the wages you earn for doing
to see why: it cheated. The company used investor cash to buy and useful work are taxed at a much higher rate than the winnings you
neutralize competitors (“Kids are leaving Facebook for Insta? Fine, get from lucky bets on stocks.
we’ll buy Insta. We know you value choice!”). It allegedly spied on Even before its stock fell off a cliff, Facebook was mired in a multi-
users through the deceptive use of apps such as Onavo and year hiring crisis. Nobody wanted to work for Facebook because it’s
exploited the intelligence to defeat rivals. More than anything, it a terrible company that makes terrible products that everyone hates
ratcheted up “switching costs.” and only use because the company has rigged the system to punish
“Switching costs” is another economic term: it means “the price you users for switching.
pay when you switch from one service to another.” Switching from Facebook was already paying a wage premium, offering sweeteners
Facebook to a rival means saying goodbye to the communities, to in-demand workers in exchange for checking their consciences at
friends and customers you hang out with on the platform. Normally, the door. Those sweeteners mostly took the form of shares, which
tech has really low switching costs: want to change from T-Mobile to means that all those morally flexible “Metamates” got a hefty pay-cut
Verizon? Just port your number. Your friends don’t even have to when the company’s stock price fell off a cliff. Expect a lot of them to
know you did; they can still call you and you them. leave – and expect the company to have to pay even more to
Tech’s rock-bottom switching costs are what kept the industry so replace them. Companies with falling share prices can’t use share
dynamic in its early days. Microsoft could deploy an army of grants to attract workers.
corporate salespeople to turn Microsoft Office into an industry Facebook is now famously trying to pivot (ugh) to virtual reality to
standard, then Apple could come along and reverse-engineer the save itself. It’s an expensive gambit. It’s going to alienate a lot of its
Office formats and make the interoperable iWork office suite. That users. It’s going to alienate a lot of its in-demand workers. It’s going
means that Windows users could switch to the Mac and open their to freak out a lot of regulators.
Word docs in Pages, their Excel spreadsheets in Numbers and their Meanwhile, the switching costs for people who want to jump ship
PowerPoints in Keynote. keep getting lower. It’s not merely that fewer and fewer of the people
It’s different for Facebook. The company’s ascendancy coincided you want to talk with are still on Facebook. Even if there’s someone
with an overall concentration in the tech sector, and, with it, laws whose virtual company you can’t bear to part with, lawmakers in the
that protected winners of the latest round of the interoperability wars US and Europe are working on legislation that would force
from new challengers. Apple was able to reverse-engineer its way Facebook to allow third parties to “federate” new services with it.
out of the Microsoft Office trap, but woe betide a company that tries That would mean that you could quit Facebook and join an upstart
the same trick on Apple – try to make a program that lets you run rival – say, one by a privacy-respecting nonprofit or even a user-
iPhone apps on an Android device, or read the media files you buy owned co-op – and still exchange messages with the communities,
in Apple’s book, movie or music stores, and you will quickly discover customers and family you left behind on Facebook’s sinking ship.
that the law is now on the sides of the giants, not the upstarts. For 15 years, I’ve been waiting for Facebook to suffer the fate of
That same legal shift is how Facebook has kept its switching costs every network-effects-driven success story – to experience the
high. Fifteen years ago, it was safe to make a Facebook-MySpace precipitous decline that is triggered by people leaving the service
bridge that would let you leave MySpace but stay in touch with your and taking the value they brought to it with them. Facebook now has
friends there by scraping your MySpace inbox and moving the to somehow retain users who are fed up to the eyeballs with its
waiting messages to your Facebook inbox. Try to build one of those never-ending failures and scandals, while funding a pivot to VR,
bridges today – blasting an escape tunnel through Facebook’s while fending off overlapping salvoes of global regulatory challenges
walled garden – and Facebook will sue you until the rubble bounces. to its business model, while paying a massive wage premium to
But high switching costs have their limits. If you make your service attract and retain the workers that it needs to make any of this
terrible enough, a certain number of users will find the cost of happen. All that, amid an exodus of its most valuable users and a
switching preferable to the pain of staying. And as users leave, frontal regulatory assault on its ability to extract revenues from those
network effects start to work in reverse: though every user that joins users’ online activities. Stein’s Law holds that “if something cannot
makes your service more valuable, every user that leaves makes go on forever, it will stop.”
the service less valuable. If you’re only on Facebook to stay in touch Facebook can’t go on forever.
with a small group of friends, each one of those friends who departs
makes it easier for you to make the jump, too. And once you go, it’s
even easier for the rest of the group to bail.
 Cory Doctorow is a science fiction author, activist and
journalist. He is the author of many books, including the
This is very bad news for Facebook. After years of slowing US
forthcoming book Chokepoint Capitalism, with Rebecca
growth, Facebook just experienced its first-ever US shrinkage,
Giblin, about monopoly and fairness in the creative arts
which precipitated a $230bn stock crash, the largest in global
labor market. In 2020, he was inducted into the Canadian
corporate history.
Science Fiction and Fantasy Hall of Fame
.