Is Google and Facebook's imitation game doomed?

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You heard it here first. The two giants of modern media, Google and Facebook, are in trouble and might not even exist in their current form in a few years.

Google logo on wallAt the moment, these two global behemoths seem to be part of the very fabric of the world. In June, two billion different people used the social media site, and Google remains overwhelmingly the search engine of choice.

But it is not a stretch to say that this might be the peak of their power. This is not just because, as they get bigger, they are running out of new humans to generate growth and new revenue. It is mainly because businesses are by their nature only temporary. Remember MySpace, which once ruled the social media landscape? Don't be surprised if these two modern giants go the same way.

To understand the dynamic, we need to look at what a business is. The first stage — captured cleverly in the film The Social Network — is intensely creative and risky. Often, it is not the inventors who make the business. They are usually left lamenting how they have been cheated, like the Winklevoss brothers were with Facebook. Rather, it is those who understand how to translate an idea into transactions who reap the rewards; that is, the people skilled in creating a business.

Once that initial stage has been completed — whereby the product offering creates sustainable profits — businesses then turn to repetition. The aim is to keep people buying the product at a price that is profitable, over and over. This allows businesses to achieve economies of scale. That is why management is mostly about controlling repetition in order to make it progressively more efficient. After a while, such repetition comes to characterise the business. Creativity has by then been lost.

The approach works for as long as the market doesn't change. But as soon as it does, incumbent businesses have enormous difficulty altering their strategy (despite all the quacking about 'innovation' and 'change management'). It is at that point that decline sets in.

There are very few examples of companies that have been able to genuinely change when confronted with new circumstances. Apple under Steve Jobs is perhaps one instance. But usually companies keep on doing business as usual until they have no business left. And it can apply to entire industrial sectors, as can be seen in the fate of the media industries around the world. These companies have almost all been caught like rabbits in headlights when online advertising changed their situation.

It looks increasingly to this writer that Facebook and Google are approaching this situation. In the case of Facebook, there are competitors. Snapchat has 166 million daily users, Twitter 328 million monthly users. But the challenge is likely to come from some quarter that is new and surprising — just as the demolition of conventional media came from two companies that could have barely been imagined just 20 years ago.

 

"That users of Facebook are not disturbed by the fact it is the greatest surveillance machine in the history of the world can be explained by our desire to imitate, in the absence of knowing what to think and desire ourselves."

 

One ominous sign is the increasing intrusion of politics into what are pure businesses. Salil Mehta, adjunct professor at Columbia and Georgetown, who teaches probability and data science, was recently banned by Google — who knows why. Google owns YoutTube, and is increasingly dictating who can make money from ads along political lines.

Facebook, likewise, is intruding more and more into the views of its user base, claiming to get rid of fake news and hate speech. But where exactly that line sits is at the very least problematic, especially when the so-called mainstream media has become one of the worst offenders when it comes to confected stories. That is dangerous because of the nature of the consumer base. Facebook, and to a large extent Google, rose to prominence because of word-of-mouth. That is usually how businesses thrive, the difference is that these recommendations could be global.

In the case of Facebook, the word-of-mouth had at lest two layers. The Silicon Valley billionaire Peter Thiel, who invested early in the company, commented that 'Facebook first spread by word of mouth, and it's about word of mouth, so it's doubly mimetic.'

Thiel was impressed by the French philosopher René Girard's idea that humans are motivated by what he called 'mimetic desire': observing what others are doing, or want, and then copying. Girard thought this was the basis of all human behaviour; he would no doubt consider the growth of Facebook to be a demonstration of his thesis. That users of Facebook are not disturbed by the fact it is the greatest surveillance machine in the history of the world can also be explained by our desire to imitate — in the absence of knowing what to think and desire ourselves. If we don't know what we want, we are not particularly troubled about being spied on.

The problem for the two giant players is that such imitation can shift at any point; it is by its nature fickle. Today, billions like to look at Facebook to see what others are doing, or reflexively use Google to search. But this can just as easily change. If it does, the two businesses that now seem dominant and invulnerable will fade away like so many other businesses have in the past.

 


 

David JamesDavid James is the managing editor of businessadvantagepng.com. He has a PhD in English Literature and is author of the musical comedy The Bard Bites Back, which is about Shakespeare's ghost.

Topic tags: David James, Facebook, Google


 

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I've sometimes tried to find the reason why I am so repulsed by Facebook when I think that social media can be a good thing. The duality (I almost used the word 'perversity') of human nature maybe. I'm interested in the work of D H Lawrence and I was most interested to read these words about him from W H Auden: "A sufficient number of years have passed for us to have gotten over both the first overwhelming impact of Lawrence's genius and the subsequent violent reaction when we realised that there were silly and nasty sides to his nature." This statement has only increased my esteem of Lawrence. But not of Facebook.
Pam | 27 September 2017


Agree whole heartedly with Pam who has put it far more succinctly than I could manage.
Pete | 28 September 2017


“The aim is to keep people buying the product at a price that is profitable, over and over. This allows businesses to achieve economies of scale.” Patrons of FaceBook and Google are users, not customers. They use these ‘products’ for free; that may be the only reason they use these products in preference to another. FB and Google are no different from free-to-air radio and TV, your free suburban newspaper and no-paywall online journals such as ES. Free subscription services rely heavily on the charity of the advertisers who, themselves, are probably punting with no real evidence to show for it that their advertising is returning a benefit ---- not that there is a consequence to wasteful advertising budgets because the tab for these are picked up as a business expense by the taxpayer. If FB is making $x billion annually from advertising revenues, it’s because various government treasuries around the world are assuming the opportunity cost of letting them do so.
Roy Chen Yee | 04 October 2017