Facebook Is People!

Why I quit the online collective data farm that made Mark Zuckerberg rich

On May 18, as his brainchild company went public, Mark Zuckerberg’s face filled the multistory video screen adorning the Times Square Reuters building, his image a grinning, pasty vision of triumph—little brother as Big Brother.

In the 30 seconds after the bell rang at the NASDAQ exchange, more than 80 million shares were traded, and with the IPO (really the night before, when the underwriting banks bought the stock from Facebook), Zuckerberg made $25 billion.

But he wasn’t making any money off me.

I joined Facebook in 2007, back when you still had to identify your school to become a member. Carefully curated pics were promptly uploaded to my profile, and soon I was scrutinizing my future college classmates, accepting friend requests with bright-eyed, bushy-tailed pride. I was never really addicted to Facebook, but for several years I would log on at least once daily, friend-ing old summer-camp acquaintances and lustfully stalking sweet laxers (look it up).

After awhile, however, I found posting and viewing spring break beach shots (cellulite airbrushed out, cleavage brushed in) vaguely vulgar. The entire site seemed to be based around a strange, self-branding tango of exhibitionism and voyeurism. Still, I maintained my account to keep in touch with friends, to make sure my little sister didn’t post any photos she would live to regret, and to participate in the enduring who-looked-hot/not dialogue with my peers.

Initially, I was even excited by the sharp-shot targeted ads. ‘Ee-gadz! I do want to check out that conflict-free diamond tennis bracelet, I do want to support Prop 19 and I do want to invest in blue-light acne treatment!’ I found myself cooing over and over again. But after a while, Facebook’s apparent telepathy had me jittery. I was a 20-something, prep school-educated Californian with a hazily expressed penchant for all things acceptably unorthodox, and Zuckerberg and his army of youthful-genius programmers had successfully pigeonholed me. I found myself fitting perfectly into the Facebook algorithm (or rather, it fitting perfectly into me), and no number of Grateful Dead dancing bear T-shirts could counterbalance it.

My attitude toward the site had already generally soured when I heard last February that Facebook was going public, but within a week of the news, I deactivated, permanently, and I’ll tell you why.

Aside from Facebook’s use of my clicking habits and social-network connections to tailor ads, I had another unsettling realization. Facebook is a service and a product to its users. But they pay nothing to use it, and there is no native revenue stream. The value of the company—its main asset, to itself and any potential business partners—is the users themselves, and access to them and their information. What they were planning to sell shares of was me. It was you.

With 900 million users, and an initial $104 billion valuation, let’s say each Facebook profile is worth about $100. Now, the relative worth of a profile of course varies, based on level of engagement and other factors, but for argument’s sake, to Facebook, and now to its shareholding public, you are worth about as much as a matinee ticket to Rock of Ages. But that’s just one you. It’s the collective you that really matters.

Of course, data gathering as a for-profit enterprise is not unique to Facebook. For instance, the other company of comparable size whose main product and asset is its users is Google. However, there is a key difference: Google is transitive, whereas Facebook is reflexive. In other words, Google and its data collection are outward moving, leading to other destinations on the Web, other resources. Facebook’s project builds entirely on the sum of its users interactions with one another.

In this sense, Google could be likened to a librarian, whose services we enlist in exchange for the concession that what books we ask for will be tracked. Facebook, on the other hand, is like a party that all your friends attend, but in order to attend yourself, you must agree to have all of your interactions recorded. In this way, the data, the information and ergo the value of Facebook is internally generative: The more interactions, the more information, the more the collective you is worth. And the rate of addition to the data value is astonishing. According to Facebook’s own numbers, more than 3 billion “likes” and comments are posted per day, along with the uploading of more than 300 million photos (per day!)

It’s then either a post-modern joke or a Marxist irony (or both at once) that we are able to buy shares of us. But either way, I don’t want you buying shares of me.

(Add to this the further irony that before the ostensible public offering of Facebook’s stock, the vast majority was spoken for by the big-ticket clients of the banks that underwrote the IPO. And of the shares that were available to retail outlets, those were distributed preferentially to clients with the biggest accounts. Poor? Join Facebook. Rich? Buy Facebook.)

In the weeks since the IPO, Facebook’s stock slid below its offering price of $38—and as of July 2 was at $30.77 a share—but the daily stock prices are not the point, at the moment. Even as Zuckerberg’s personal fortune fluctuates in multibillion-dollar swings, his project is bigger.

Projected to have 1 billion users by year’s end, the sheer size of the Facebook community makes it hard to grapple with. There are few commodities, aside from air and water, used by as many people. Only Coca-Cola and Microsoft, and maybe McDonald’s, can claim comparable numbers. Fully half of all Internet users are on Facebook, and that’s a lot of eyes on ads.

But display advertising has proven to be a limited source of cash, and Facebook is focusing revenue streams from other sources. As the company itself noted in its SEC filing, “In 2009, 2010 and 2011 and the first quarter of 2011 and 2012, advertising accounted for 98 percent, 95 percent, 85 percent and 82 percent, respectively, of our revenue.”

(The company also gets a growing proportion of its revenue from fees paid by third-party apps and plug-ins, including 12 percent of overall revenue from Zynga alone, the company behind the popular game Farmville.)

The solution to the diminishing ad business, it seems, is tied to making Facebook into what Zuckerberg has called an “identity layer” for the entire Web. That is to say that in his ideal version of the site (and world), everything you do on the Internet will be through Facebook, including online transactions.

This is ambitious, but given the size of its user base, and how thoroughly it is already ingrained in people’s Internet habits, imminently achievable. Even a modest version of this would be a revenue juggernaut. If the company were to, say, realize a revenue rate of 1 cent a day per user, by taking a percentage of transactions from vendors, that would be roughly $10 million a day, or $3.5 billion a year. And that seems to be on the very conservative end of the hopes.

Now, this is troublesome when the head of the company has, let’s say, “innovative” ideas about privacy. In 2010, Silicon Alley Insider obtained instant-message conversations from when Zuckerberg was still christening Facebook at Harvard, in which he refers to users who have voluntarily given over their personal information as “dumb fucks.” The bluster of a power-drunk 19-year-old, maybe, but in 2010, tech blogger Nick Bilton Tweeted an exchange he had with a Facebook staffer. “Off record chat w/ Facebook employee. Me: How does Zuck feel about privacy? Response: [laughter] He doesn’t believe in it,” the Tweet said.

And indeed last month, the company was hit with a $15 billion class-action lawsuit from a group of users claiming the company violated the US Wiretap Act by tracking their Internet use after they had logged out of Facebook.

The fact is, the more information Facebook gathers about you, and the more ways it has to monetize that information, the more the company is worth. Zuckerberg wrote in his letter to investors, “Facebook was not originally created to be a company. It was built to accomplish a social mission—to make the world more open and connected.” Even taking this at face value, it doesn’t really matter anymore. It is a company, and a publicly held one at that. And even though Zuckerberg has a controlling interest in Facebook, it now has to be accountable to stockholders. The tension between user privacy and monetizing data in service of stock price is a real one—and seems unlikely to fall on the side of users.

I see congressional hearings in our future.

And what did Zuckerberg, whose personal fortune is now bigger than the gross domestic product of Jamaica, offer to the legions of users, whose time and information have imbued Facebook with its vast value? “In the past eight years,” he said magnanimously, “all of you out there have built the largest community in the history of the world. You’ve done amazing things that we never would have dreamed of, and I can’t wait to see what you’re all going to do going forward. So on this special day, on behalf of everyone at Facebook, I just want to say to all the people out there who use Facebook and our products, thank you.”

He’s right: It’s all us. Which is a sweet sentiment, though not as sweet as the billions we earned him.

Despite all of this, I don’t expect an exodus. A critical mass has been reached, and projections suggest the site will continue to grow in the foreseeable future. I am not fighting against Facebook; Facebook has already won. By next year, one-seventh of the world’s population will have an account on the site. Facebook is not a bubble that can burst—it has become a reality unto itself. Still, I’m enjoying life as a conscientious objector. I don’t need or want a third party to manage my personal relationships for profit.

So, if you want to catch up, just e-mail me. But in the meantime, can you “like” this article?