It’s been another bad week for Facebook, which seems rapidly to have become the most scandal-prone of the tech giants. This time the big story
is Facebook paying users, including minors, and circumventing the app store to track what they do on their phones. Arguably
this is no different to what hundreds of other companies do, but it’s a sign of how strong anti-Facebook feeling has become that the story has gained real traction.
Whenever a narrative becomes dominant, I’m always intrigued to look at the other side - and it’s fascinating how powerful the pro-Facebook narrative could be and yet so rarely articulated. Take this paper
, published this week by a group of economists, on Facebook use. There are a number of negative results for Facebook in here - most notably that people who stop using Facebook report increased well being! - but buried in there are some startling positives:
[An estimate] of $100 ([high end:] $180) in consumer surplus per 27 days would imply an annual flow of $1,351 ([high end:] $2,433) per user. Multiplying this by the estimated 172 million US Facebook users would give a nationwide annual consumer surplus flow of $230 billion ([high end:] $420 billion)
I’ve written a lot about the potential negative externalities of GAFA
, but this is the other side of the story: enormous customer surpluses that far exceed their profits.