Intellect or Insanity, Jonathan Klinger's Blog

WPP, the advertising giant, leased a database that allows profiling more than 500,000,000 internet users and allows showing them, using this information, relevant and tiered ads. The profile based advertising method means that there is no actual knowledge about the specific person browsing the internet, but the advertising companies know better than him what he likes, where he browses and other information.

The collection of the information was made available mostly by third party cookies, the same cookies which are set in your computer when you browse websites by advertising and media companies. These companies have a better understanding than the specific sites they provide services to. For example, if WPP purchases media in websites A and B, it knows who uses both A and B, and moreover, it knows that if C, a person, uses the sport section more both in A and B, it will show him sport-related advertisements when it uses D, a non-sport website.

Well, as troubling as it may sound, just when we are are meant to be calmed down with privacy issues things get worse. Google’s launch of Google Plus, the search giant’s antisocial network, which was meant to be with privacy by design and allows sharing of information according to different circles of proximity: a person could be a left-winged activist for his immediate family, but be a closet right-wing bigot for his school friends. It’s not that the other antisocial-netowork, Facebook, does not have the functionality to create friend lists and share the information, but it’s a lot more complicated there.

So, Google Plus was meant to be a haven for privacy seekers: It brought the best from Facebook, which was a walled garden for many years and from Twitter, which allows asynchronous social contacts (meaning I could add Benjamin Netanyahu as a person I follow, without him having to follow me ). Theoretically, an intertopia.

But the question is: how does Google benefit from Plus? (or what’s the plus for Google). Google is a media and advertising giant more than anything else. It earns money from selling advertising space; therefore it is in need for two indices: the first is the number of webpages viewed by end users and the time they consume in said pages (billboarding) and the second is the quality of the data it has for selling advertisements better (profiling).

In billboarding, Google suffered a grave loss recently; people spend less time in Google’s services and more in the other antisocial network; moreover, Google, that displays advertisements in 3rd party websites, is in fear of the day where Facebook shall launch a competing service and allow displaying “Facebook Ads”. In profiling, Google had a not-so-awful knowledge on your browsing behaviour, the things you liked and the people you connected with, it just didn’t know how to organize them. For example, if you’re interested in three different data, Google did not have the ability to connect datum to datum.

In came Google Plus and helped to solve the two problems: First, at least in the launch date, more and more people use this service to meticulously sort their friends in close circles and spend more time in their website (more billboards and profiling).

Now, all that Google needs to do is to integrate the social network seamlessly in the services it already provides. If Facebook made people take effort to amend their website’s code and display the “Like Button” in one million websites within a year of the product’s launch [which, of course, allows behavioural targerting] then Google could take one simple step to kill the like button, which is reasonable and mean.

A material portion from the websites, as said, implement Google-Analytics, Google’s statistics service that collects behavioural data. It is activated every time that a user browses a website and retrieves a file from Google’s servers which include JavaScript commands that request data and collect statistics. In the same manner, Google could change the file to allow social interaction and display a social toolbar in a same way to how Wibiya interacts with websites, and they can do it without obtaining the websites’ consent.

Indeed, it is not an optimal step and might cause antagonism, but it could be implemented to wipe Facebook’s remains from the earth, just because it already holds a neat market share. At this moment, Google has the best data to sell advertisements, and that cannot be taken away.

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It is only a matter of time until both the Facebook Application Developers and Facebook Users join together and tell Facebook “there is no taxation without representation” while requesting Facebook both to amend its terms of service for enhanced privacy and allow application developers to rely on business models that are not subject to Facebook’s whims. The sanction, if not understood, is not mass removal of accounts, but blocking Facebook’s 3rd party services when not browsing in Facebook, therefore harming Facebook’s new found business model.

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The reason? Facebook has been vigorously expanding its control over both user information and application developers. It began today when Facebook coerced Zynga into an agreement to use Facebook Credits as its currency after a long dispute, and will continue when Facebook will do so to other application developers.

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Facebook forgot that it is solely a conduit, the incumbent who provides connection between users, other users and applications. It is not a core application and its business model is not based on being such. Two years ago, I wrote that “In a year or two Facebook’s shareholders will come to their senses and start asking money from the leading hundred applications, as they are allowed to do” … “when you develop a Facebook application or any other social network based application, you’re writing your source code on ice; it’s more than reasonable to assume that Facebook won’t charge you anything and will never shut you down. The problem starts when you want to establish a business model on something that’s more than “more than reasonable” (like investing your pension funds). That’s why, like you wouldn’t deploy a real product without contracting your deployment contractor, you really should consider doing the same with Facebook”.

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The time has come when Facebook wants to have its day. Facebook Application Developers raise capital from investors, some VCs target only Facebook apps, other VCs invest in another icy road, iPhone Apps raise capital as well, and quite a lot of it. The iPhone app store is also known to block applications, especially when those applications compete with Apple’s business models. Some day, Venture Capitalists will say to application developers that they will not invest in applications where the conduit may revoke them at any time and for no reason. Therefore, application developers will have to look for stable business models, such as using OpenID as a social network or allowing data portability, applications may prefer to use old social models or rely on Twitter as a social network instead of Facebook, just so they will not be coerced into using a currency of choice. No one will develop for a platform that has no stability (this is why, by the way, net neutrality is so important)

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Users, from the other end of the scope, will negotiate with Facebook. Explaining that it may not be as simple as Facebook reckons, and that without users, it is a mere conduit, connecting sockets and bits. “If you want us to stay here“, they will say, “you have to grant us our rights. We want to have the privacy of our choice, we want to have the ability to control, and if you grant us those rights, we will grant you the information you need to sell to ³rd parties“.

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Without such negotiations, Facebook is doomed. Funds will not invest in companies who develop Facebook Applications, as these applications have no solid business model, and Users will leave (or block) Facebook. It will remain with a magnificent apparatus that is left unused. And when unused, it will be sold, like scrapmetal.