Facebook’s size itself is its other looming problem

While scale helps a social network initially, returns diminish

Facebook’s social contract is coming unstuck. Its users provide massive amounts of data, which the company uses to sell advertising. In return, it provides a free service. The same is true of search engine Google. But while more data makes Google’s service better and more accurate, it has tended to make Facebook less entertaining. With questions about how Facebook data was used in political campaigns, that could make users more wary of the trade-off.

Scale helps a social network on the way up. Facebook is only useful if friends are on it. But there are diminishing returns. After, say, 100 friends, it’s impossible to keep up with all the updates, videos and interactions. And the longer a user stays on a social network, the more tangential friends they can acquire. Facebook’s answer is an algorithm to sort the wheat from the chaff.

Yet recommendations based on behaviour like what a user read, liked or what similar people enjoyed is an imperfect guide to changing tastes, especially when algorithms can privilege activity. The user sees their neighbours bickering about politics, but doesn’t see that their favourite band is playing next week.

Moreover, targeting users based on interest can be gamed by bad actors, ranging from sellers of useless products to foreign states seeking to spread discord.

Now compare this to Google’s searches. Data breeds accuracy: translations get better; road traffic data gets more helpful. True, Google also faces problems where subjectivity creeps in. European regulators fined the company 2.4 billion euros for putting its own services high up in search results, for example. Video service YouTube relies on divining users’ tastes algorithmically to serve up content they didn’t request. The core search product, though, ought to get more useful over time.

User engagement key

Usefulness and entertainment value are hard to measure. User engagement isn’t, though. Time spent on Facebook declined by 50 million hours a day after changes to its news feed, and its number of daily users in the U.S. and Canada fell in the last three months of 2017. This matters because Facebook users are effectively weighing how much information they will give up in return for free service. Unfortunately for the firm, the cost to consumer is becoming apparent just as the perceived benefit may be falling.

( The author is a Reuters Breakingviews columnist. The opinions expressed are his own )