26 April 2010 ~ View Comments

Facebook, Google and the Value of Trust

my only category

Facebook is in many ways the hedge to Google’s bet that social machines are oiled with the trust of their users. As competition between Facebook and Google becomes increasingly visible, so too will the issues of trust that separate them.

When I upload a photo or post an update to Facebook, I assume that the world can see it. I make this assumption because there are too many privacy settings to remember, and because Facebook introduces new settings so often that I have no way of knowing when I have been defaulted into new ones.

I don’t have this problem with Google. I know my GMail, Google Finance and Google Analytics data is private, and I know what I share in Google Reader or post to Blogger is public. In exchange for this trust, Google gets my email, stock portfolio, voicemail, calendar, contacts, web stats and office documents. Facebook gets none of this. I don’t contact people through Facebook messages, I don’t use Facebook events and I won’t be using its new docs.com service. Google gets much more data from me, but knows that in order to keep accruing it, it can only monetize it in ways that I don’t find invasive. Google wants me to be comfortable.

Facebook cares very little about my level of comfort. Its goal is to identify the threshold of invasion at which a user will abandon the service, and keep the user marginally (but safely) above that threshold. Zuckerberg is betting that the value Facebook gets out of the lesser data it does collect from me outweighs the value of the data I am withholding. By adopting this strategy, Facebook can force or coerce its users to expose data that lures other users, making it an excellent strategy for growth. And Facebook is exceptionally talented at keeping users just happy enough to keep using the site. Users are constantly complaining about Facebook’s policies, but not leaving the site.

But what data is Facebook not receiving due to this lack of trust, and at what cost? First, there is the direct cost. If it’s enough data to drive 11 million ad conversions, then Facebook is losing the revenues of 11 million ad conversions. More importantly, there is an opportunity cost. Facebook cannot launch a service based on data that users are hesitant to hand over. For instance, if users don’t trust Facebook with private messages, then Facebook has no opportunity to launch a GMail competitor or a Google Voice competitor. Its docs.com partnership with Microsoft will suffer accordingly. Unlike Google, acquiring medical records or personal finance data will be a non-starter.

None of these things stand in Facebook’s way right now, but will they in three years? The trust that Google accrued when it was a smaller company opened doors for many unforeseen consumer products. Every time Facebook uses data in a way that makes its users uncomfortable, it closes those doors a little further.

More EPIC than ever before.

...prepare to die!