Facebook’s Fatal Flaw

Given the fact that Facebook just filed for a public offering of its shares which will value the company at $100 billion and make thousands of its current investors wealthy beyond imagination, you might be forgiven for thinking that Facebook is a wild success. That, and the fact that some 800 million people currently use Facebook, or more than 10 percent of the total world population.

But despite all that, I think that Facebook is failing.

Do I think that Facebook is going to go bankrupt tomorrow? Far from it. I’m sure that it will continue to print money for years to come, based on sheer momentum alone. (Hey, AOL still exists.) But if you listen to the way that people talk about Facebook you sense – or at least I do – that its cultural moment has passed. This is just based on a very unscientific analysis of my own very small circle of acquaintances, but once upon a time, Facebook was this awesome cool thing that you just had to try. Lately, all everyone seems to say about Facebook is “I don’t get it” or “I find it annoying but I feel like I have to go on once in a while.” Facebook, in other words, is heading the way of MySpace.

Becoming MySpace, of course, is the specter that haunts the nightmares of every Facebook investor. The company has been super aggressive in trying to avoid that fate by trying to metastasize into something grander than an automated blogging site, sending out tentacle everywhere in order to become a ubiquitous presence that binds together every aspect of the internet experience. They have striven for immortality through intrusiveness. And this, I think, will be their undoing.

At its heart, Facebook is about gossip. In the movie The Social Network, the promethean spark of Facebook’s creation comes when a fellow student asks Mark Zuckerberg to find out whether a certain female student is attached or not. That’s it, Zuckenberg realizes: what people really want is the inside scoop on their peers. Who’s available for a potential hook-up? Who has committed a gaffe, or proven themselves untrustworthy? Who requires solace?

The desire for this kind of information is a fundamental aspect of the human experience. As E.O. Wilson argues in his new book, The Social Conquest of Earth, it is our talent for maintaining tightly knit, altruistic groups that allowed human beings to outcompete all the other hominins that once shared the earth with us. Gossip is an important tool in that process. It allows us to negotiate the complicated and treacherous shoals of social subtext. Keeping abreast of our contemporaries and maneuvering for advantage without being seen to do so requires an intricate dance. Though we may scorn it in public, most of us secretly crave it, and one recent study suggests that it may actually be good for us. In a paper published last month in the Journal of Personality and Social Psychology, UC Berkeley researchers found that when subjects witnessed a person engaged in dishonest behavior, their stress levels shot up—but they calmed down considerably when they were able to pass the information along to others who were at risk of falling victim.

Facebook, then, should be a focus of our online experience: it should be the irreplaceable source of the up-to-date social information that we so instinctively crave. Imagine some long-ago villager who knew exactly what everyone was up to, and could give you the low down, without boring you with useless facts about people you didn’t care about. This is the person you’d want to spend time with. This would be the person with savvy.

Once upon a time, Facebook felt like this. But the longer I use it, the less savvy it seems. Most of the information that crawls down my home page is about people I don’t even know. The information they’re conveying is stuff I wouldn’t care about, even if I did know them. Someone read an article; someone joined a group; someone commented on her own photo. The signal to noise ratio is too low. Facebook has gone from being the village yenta to the village idiot

In another moment from The Social Network (hey this is a blog post, how in-depth do you expect my research to be?) Zuckerberg mind-melds with Sean Parker after the veteran tech investor groks what Zuckergerg’s own colleagues don’t: that the most important thing for Facebook is that it be perceived as cool. Selling ads, figuring out revenue streams—everything else is secondary. Facebook must be cool. The minute it loses the respect of the public, it will face a severe downward slide. Who wants to share gossip with a loser? Once you lose the cred, there’s no getting it back, no matter how much you spend. Just ask MySpace.

If Facebook hadn’t overreached by trying to turn every damn thing we do into a social moment—a rather pale substitute for juicy gossip—it wouldn’t have turned into such a crushing bore.

In order for its grandiose ambition of universality to succeed, Facebook would need to be able to do something that every successful yenta can: arbitrage information. It would have to be able to filter out the interesting information from the boring, to know who wants to know what, and who wants what to be known by whom. Can computers carry out such a task? It’s way beyond the ability of current artificial intelligence. But like everything else that computers can’t yet do, it’s only a matter of time.

Someday, there will be a social network that dominates not just because of a Romneyesque sense of inevitability, but because it actually feels compelling and irreplaceable. Maybe that network will be called Facebook. But I’d wager that, given the life cycle of such things, by the time this era dawns, Facebook will lie buried under six feet of digital dust in some forgotten corner of the internet.

UPDATE: The ever-interesting Alexis Madrigal has a piece up on the Atlantic that points to an even more rapid erosion of Facebook’s cool quotient. In short, he posits that in order to justify its $100 billion valuation, Facebook is going to have to get more aggressive about extracting value from its users.

…when Facebook was merely trying to grow its user base, the incentives between Facebook and you, as a user, were pretty tightly coupled. Now, particularly in the United States, user growth is slowing and getting more money for each user is necessary. My guess is that Facebook’s need to monetize at higher levels and users’ desires will come into conflict more often the higher its revenue per user climbs.