Zuckerberg Trials (Part I)

Listening to Mark Zuckerberg testimony was scary… in the sense that his mission statement providing the “world with their voice” is well beyond the original vision of Facebook, and possibly a “bridge too far” even for Facebook.

Or is it?    Facebook is generating $20 billion/year in profits annually, and along with other industry NEWBE giants, like Google and Apple, they now have an enormous war chest of cash.   This means they can do about anything they want to.    They are larger and more powerful than some countries and most Fortune 500 corporations. Cash is King and Information is Queen.    Mr. Zuckerberg’s testimony is exhibit A that the Information Age has really arrived.

Listening to the media pundits and our distinguished legislators, reminded me that they are in the age of selling lists (circa 1990) for direct mail promotions. Today’s Internet communities and customer databases are playing by different rules.

As an officer at Equifax (circa 1995), I was on the team charged with creating a new revenue opportunity for targeting the massive Equifax consumer data for their buying propensity for direct mailers.   I actually made a call in NY to Readers Digest direct mail guru and father of multi-variant regression analysis.    Turns out..in our testing, the most pervasive indicator was someone who just purchased something vs. dormant buyers.    Equifax wisely made the decision NOT to sell targeting services.

Targeting is the same model Facebook and others use today – only more sophisticated. Targeting is not selling data, but identifying candidates to deliver offers/ads based on requirements specified by the advertiser….not the member.

We are also dealing with two new consumer generations (Millennium and X-Gens) who have grown-up connected to (and through) their devices.   Yes, we are entering into a new age of consumer usage, but also consumer demands and leverage.  Community loyalty can turn on a dime. They can simply move on to the next in-vogue venue.

Zuckerberg’s going “it alone” before congress reminded me of an old movie where a young conquering emperor stood before the elder tribal counsel and said “War is hell, we have casualties, but many victories. I am here to ask for your support for my world conquest. We can be victorious in our global efforts to conquer the world. Trust me.”

Zuckerberg’s testimony risked everything based… not only with government overreach, but with the consumer perception.    Two factors were at risk.   First,  the impact on stock and second was the Internet communities sheep herding mentality driven by media.     If the people declare Facebook “bad” and leave in droves, this could cause a downward spiral leading to the end of Facebook.    Just ask MySpace.

The problem with the second  scenario is there are really no other alternatives to Facebook’s global reach – except Google.   Many would argue they are more dangerous from a consumer privacy then Facebook.   When someone emerges to challenge Facebook, like Instagram, Facebook buys them in a bidding war – because money is no object (ref. above).     Yes, this has shades of Anti-Trust, but they buy young companies early and grow them utilizing (and benefiting) from their existing global customer base.    Merging megas would attract government anti-trust scrutiny.

And alas, Mr. Zuckerberg did well and Facebook stock, at my last reading, actually went up.   People did not leave in droves and hopefully, many are now more aware that “what” they post is exposed to bad actors and big brother – even with the best efforts of Facebook and our government.   It was a one day “event” and the media has seemingly moved on.

Or did he?    Knowing this, do you want your children and grandchildren on Facebook?   Is that a world view you want them exposed to pro-actively based on their curiosity, or targeted by others with less honorable intentions?    Would you leave your kid alone in a mall?

Part II    Facebook responsibilities and remedies