Monday, November 22, 2010

Facebook's Implied Agency Contract

From Flowing Data, one of my favorite blogs
Jessi and I have started talking a real estate management class and it's been a ton of fun. The first part of the class talked about the Agent / Principal Relationship. I'm not sure why these terms were chosen, but the Principal is the owner of something (a house, a car, their body) and the Agent is someone one acts on behalf of the Principal. Here are a couple examples:
  • A real estate agent (Agent) sells a house of a home owner (Principal).
  • A husband (Agent) can make medical decisions for his wife (Principal) if she's incapable.
  • The CEO (Agent) runs a company for the stockholders (Principals).
What we've learned is that there are many types of relationships. Some are very explicit where it's spelled out exactly what the Agent can do for the Principal - called an Express Contract. In many ways, this is what a privacy policy is: it clearly states what a company (Agent) can, and cannot, do with a user's data (Principal).

There's another type of relationship called an Implied Contract. The idea behind this one is that if the Agent does something and the Principal doesn't say "Don't do that", then that action becomes part of the contract. Here's an example:

You're standing in line to checkout at the grocery store. Suddenly, somebody cuts in front you. If you've been in this position, you know there's a short amount of time when you can say something. You also know that eventually there comes a point in time that if you haven't said anything yet... it's too late and that person will get to stay there. Otherwise, it would be completely awkward to mention it because you've let them stay there so long already. You have implicitly allowed them to cut.

Another way to think about an Implied Contract vs. an Express Contract:
An Implied Contract is seeking forgiveness
An Express Contract is asking permission

OK, that's the concept. Now for the application: Facebook.

I like the service that Facebook provides. I enjoy connecting with my friends and reading about what they're up to. However, I do not like Facebook the company. I am apprehensive about their intentions and don't like the way they implement many of their changes... I know. I know. I'm just as hypocritical as someone who hates Walmart but shops there anyways because "they have such ridiculously low prices."

Anyways, last week was the Web 2.0 summit and  Mark Zuckerberg, Facebook's Founder and CEO, was interviewed. In the blog post's recap there was one paragraph that stuck out to me:

"The conversation also turned to Facebook’s habit of asking for forgiveness rather than permission. Zuckerberg didn’t really address this directly, choosing instead to discuss the value of the relationship between people who have deemed each other friends. Yes, it’s possible to tag someone in a bad photo or add them to spammy groups, but the user made the decision to add this person as their friend, which confers that power to them. The answer Zuckberberg can’t say: pushing the limits without asking for permission is what allowed Facebook to grow this much, this quickly."

You see, whenever Facebook changes something, they do it in hopes that not enough people say "Don't do that." With over 500 million users, the chances of enough people rejecting the changes (and voting with their clicks), is so small that Facebook doesn't have to worry about it. Worse yet, now Facebook has set an Implied Contract of being able to make changes and forcing it upon people.

This really bothers me.

As such, I have a hopeful prediction regarding the future of Facebook. The nice part about the web is that I don't have to wait too long to see if it comes true. Here's my prediction:

I don't think I'm the only one who doesn't like the way Facebook (the company) treats me. I think many people feel trapped like I do: so many of my friends are already on Facebook that if I want to get any sort of interaction (comments, likes, etc.), I too need to be on there. This situation feels very similar to what Microsoft had just a little while ago with their operating system.

My prediction is that a true competitor will emerge sometime in the future. It will probably never be as big as Facebook just because Facebook has reached a tipping point, but it will address many of the issues I have. When that option emerges, I will definitely be checking it out. I know it will also force Facebook to change how it treats users, which is good for everyone.

Side note: Facebook is proud to own the "social graph" - all your friend connections. Wouldn't be interesting if they continue to "own" it, but all the sharing and interaction happens on other sites. Yes Facebook, you won, but it just might have been the wrong fight...

Finally, one of the things that has kept Microsoft (and Google too, I suppose) so dominate is that it makes ridiculous amounts of money. That allows it to afford the resources to keep innovating and at the very least buying competitors before they become a true threat. Facebook has yet to attain that type of revenue stream. This leaves them vulnerable. If another group is able to create a similar (preferably better) product, and generate strong revenue off it - just like Google did - then Facebook will be in major trouble... And I won't feel bad for them.

No comments:

Post a Comment