Search and Social: The Information Oligarchy of Google and Facebook

Twenty minutes of every hour spent on the Internet in the US is spent on websites owned by four companies. It’s Stanford versus Harvard, the Cardinal versus the Crimson (both fashionably singular), graduate dropouts versus undergraduate dropouts. It’s Google and Yahoo! versus Facebook and Microsoft.  The Top 10 websites in the US (all owned by one of these four titans) account for 32% of all Internet traffic (source: Experian Hitwise).

Plenty of ink has been spilled and pixels illuminated in the business and tech press over these companies. Those of us with dormant Yahoo! Mail or Hotmail accounts recognize that Microsoft and Yahoo! are in their twilight, while Google and Facebook are basking in the noonday sun. I do not wish to speculate now on whether the greybeards of Redmond and Sunnyvale will shrivel, die, or resurrect themselves; we’ll wait for the autopsies. What I am interested in here is the reigning information oligarchy of Google of Mountain View and Facebook of Menlo Park.

Neither Google nor Facebook invented their respective spaces; in fact, both were considered late entrants to the market. Despite pronouncements that search was dead, Google’s spartan aesthetic and spot-on search results catapulted past Yahoo! and its splashy, flashy directory listings. Likewise, Facebook’s decorum and exclusivity rolled up the windows, locked the doors, and accelerated right past the red light district of MySpace. Both Google and Facebook did less than their competitors but did what was essential with excellence.

Businesses exist and thrive based upon their ability to create value. Both Google and Facebook create value for Internet users by providing complimentary access to seemingly limitless information. But as the economic adage says, “If you’re not paying for the product, you are the product.” Google and Facebook fund their burgeoning empires by monetizing information, by taking a briefcase full of user data to the currency exchange and leaving with a Brinks truck full of money. For both companies, collecting massive amounts of personal data is imperative for their success. You and I give them our data (for free) and they aggregate and disaggregate it in order to sell it (“monetize” it) in the form of micropayment advertisements and high-ROI derivative products. It’s one of the most lucrative business models in history, a billionaire’s recipe.

While I applaud the economic value produced by this “buy low, sell often” model, I contend that there is an intractable economic problem underlying the companies’ use of data. The problem is in the diametrically opposed information agendas of these companies and their users. In order to understand this fundamental impasse, first we need to differentiate the information agendas of the two companies.

If you’re at all familiar with the inner workings of a major research university, you will recognize that Google is an R-1 engineering lab disguised as a company. The only substantive difference between the company and the Stanford lab where it was hatched is in the funding mechanism: rather than writing grant proposals, they sell ads. From the nerdy puns for their search algorithm and their campus, PageRank and the Googleplex, to their “triumvirate” management structure, to setting their IPO valuation at a natural logarithm, Google is cerebral to its core(tex).

Google’s PageRank is an expression of a distinctly academic epistemology. The accuracy of Google’s search results is predicated upon the assumption that the credibility of information is a function of the relative expertise of the source. Inbound links serve as a digital proxy for academic citations, which, in turn, serve as a proxy for verifiable knowledge. The algorithm, therefore, follows the precedent of academic journals’ impact factor rankings and scholars’ citation indices by favoring sources with frequent citations from other prestigious sources.

As it turns out, the academic paradigm of validating source credibility is a strong one, and thus Google became and remains the king of the search mountain. The only way they could be knocked down from their perch is by someone presenting an alternative paradigm for validating source credibility. Enter Facebook.

Most people in most places for most of history have not had access to definitive answers from prestigious experts. Outside of patrician campus quandrangles, the Encyclopedia Britannica (RIP) was until the mid-90s the closest approximation of expertise accessible to the masses. How did we make decisions prior to the Web? Well, we asked our fellow plebian friends, colleagues, and acquaintances. Facebook capitalizes upon this entrenched folk epistemology. In techspeak, you could say the social graph tapped by Facebook predates the page graph tapped by Google. Facebook is positioned to supplant Google as the front door of the Internet because it is built upon this notion of relational credibility.

Though Facebook has the potential to dominate search, the company has given no indication that they want to do so. This is because they view the Web through a completely different lens than Google. Where Google sees a packrat’s attic of information that needs to be organized, made accessible, and put to use, Facebook sees a platform for sharing information and, in their words, empowering people to create a more open and connected world. Both companies look at the Web and see information, but they foreground different kinds of information. And this preference for certain information boils down to its essence the difference in their business models.

Google cares what you’re looking for, and Facebook cares who you are. Google’s primary expertise is in interpreting existing objective content, while Facebook is primarily concerned with generating new subjective content. Google makes money selling ads targeted to keywords, while Facebook makes money selling ads targeted to demographics. Google is focused on back end, transactional advertising, while Facebook is focused on front end, brand marketing. In a word, Google sells intention, and Facebook sells attention.

Though Facebook doesn’t seem to care about search (besides intra-FB search), Google frets over social. Google+ (nee Google Wave-Buzz) is the company’s latest stale attempt to capture a segment of the social graph and, significantly, to graft it into the page graph. Google’s desperation to “get social” is motivated by their fear of Facebook’s data assets. They recognize that Facebook is Janus-faced: it is a social network, yes, but it is also a global marketing database complete with personal data and interpersonal distribution networks (that happens to also print money by renting its platform to social game developers). The most significant threat to Google’s advertising revenue (aka Google’s revenue) is a mass defection of advertisers to a hyper-targeted Facebook platform. Lest Google be left behind in this information arms race, it is compelled to compromise user privacy (euphemisms: openness and relevance), intruding into personal browsing histories, geolocation, etc.

Constant changes to Terms of Use statements are not merely symptoms of overzealous legal departments; social companies are structurally predisposed to impinge upon user privacy. Facebook’s privacy “gaffes” are not gaffes at all. They reveal the dichotomy embedded in the social business model: Facebook must coax users into divulging a maximum amount of personal data in order to exploit that data for monetary gain. If, however, users suspect that the intimate details of their profiles will be reflected back at them in the form of consumer marketing, then many of those users will be reticent to share everything, and the quality of Facebook’s data will be undermined. Even the Facebook addict set—those who share every minute detail of their lives and don’t mind the targeted marketing—get squeamish when Facebook adjusts the blinds on their data, giving a peak to random gawkers. But Facebook’s openness mandate compels them to push the envelope, to prompt, cajole, or even dupe users into more and more sharing, because sharing generates more data. Facebook’s business will falter if it allows usage to plateau or if it places user data on lockdown, so it has to occasionally “stumble” and bump its head on the reset button for privacy settings. Holding its forehead with one hand and your data with the other, it apologizes for its klutziness with a wink toward Wall Street.

As Google has already discovered, it gets harder to avoid being evil as you scale from carefree startup to Sarbanes-Oxley behemoth. Facebook’s IPO will ratchet the pressure on The Social Network to wring every dollar of value out of every status update. These oligarchs hold a duopoly over the ferries that connect our information islands. They may not charge me for passage, but they own me along the way.

About Ben Ponder, Editor-at-Large

Ben Ponder, PhD, is Editor-at-Large at Media Rostra. Ben has received decorative pieces of paper conferring upon him an unnamed set of “rights and privileges accorded thereto” from the University of Arkansas, Regent College, and Northwestern University (where he was a Presidential Fellow). He studied (in alphabetical order) architecture, classics, communication, history, political science, rhetoric, and theology. He is the author of American Independence: From Common Sense to the Declaration (“Sizzling.” – TMZ) and the co-editor of Making the Case: Advocacy and Judgment in Public Argument (“Six-pack abs-olutely great!” – US Weekly). Ben is currently an executive in the educational software industry. He and his organic wife, Amy, live with their four free-range kids in a farmhouse Ben designed and built. His personal site on the Interweb is benponder.com, and he can be reached on Twitter @ponderben.

Comments

  1. “Wait for the autopsy”
    I like that. I think I’m going to start incorporating that strategy in my professional life.

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