Recently I was in a TekPersona Corporation Hangout On Air on Google+ with J.C. Kendall, former Technology Evangelist at Microsoft, to discuss The State of Facebook. More recently, Sana Ahmed asked me in the comments of a Google+ post to elaborate on what I talked about with the phony “economy” of Facebook Likes, but at the time I was still considering the matter. I’m known not to be a fan of Facebook, so I challenged myself to disprove my own convictions that Facebook’s business model is a sham.
I couldn’t. The longer I thought about it, the more I have become convinced that if Facebook’s economy of buying Likes isn’t criminally fraudulent, it’s only because we haven’t made laws to cover it, much as pyramid schemes and selling snake oil as a miracle elixir were once perfectly legal. I’m further convinced that Facebook is, for some inexplicable reason, being allowed to do this even though if it was Google, I’m certain Joaquín Almunia would be frothing at the mouth to add it to the EU’s antitrust investigation. Microsoft would likely be crucified for trying pull off such a scam.
To be clear, I’m not talking about third-parties literally buying and selling Likes. That’s fraudulent even by Facebook’s standards (though they don’t seem in any particular hurry to fix it, and to be fair neither does Twitter or Google). I’m talking only about Facebook’s own efforts to evangelize the value of accumulating Facebook Likes through paid advertising, sponsored posts, and well generally anything that involves you paying money to Facebook. I’m also not talking about followers/friends/subscribers. That’s another topic in and of itself, but is also slightly-less fraudulent.
Facebook considers Likes a strong ranking factor. Or, at least, that’s what they keep telling everyone to convince them to pay up. That’s probably true, too, but also a sign in itself that something is seriously wrong, because the equivalent on Google+, the +1 button, is considered a very weak ranking factor. Why? Because Google’s advertising works, and Facebook’s in general doesn’t (the difference being, Google Search captures purchasing intent, Facebook doesn’t), and because Google has a wider ecosystem to “sell” to advertisers, which is why they control the majority of web and mobile ad revenue.
Having little else of true value to offer to marketers, Facebook has long made Likes a cornerstone of their social economy, far more so than their failed experiment with Facebook Credits. In the process they have committed something that, if not legally fraud, should legally be considered fraud.
According to Google’s definition (search string: define fraudulent), fraudulent means:
1. Wrongful or criminal deception intended to result in financial or personal gain.
2. A person or thing intended to deceive others, typically by unjustifiably claiming or being credited with accomplishments or qualities.
Facebook’s phony economy of Likes may not qualify as “criminal” under any current laws (though as I said, it should), but “wrongful” fits, as does the second definition in its entirety. It’s not just that Facebook says Likes are a Facebook ranking factor, which is true, it is that they make rather bold claims about the value of accumulating Likes. If they only had a disclaimer, something along the lines of “Likes may be fake. You may discover that most of your Likes come from robot accounts in Egypt. We make no promises that this will be money well spent. Oh, and we might invent fake Likes or confusing Related posts that resemble Likes.” They don’t, of course. That kind of honesty would destroy the illusion, reveal the man behind the curtain for all to see in all his glorious humbuggery.
Here’s a simple question, and if anyone can honestly answer this question, then I will withdraw my assertion that the “economy” of Facebook Likes is almost wholly fraudulent, comparable to a pyramid scheme in that some will benefit but the majority are being knowingly deceived by the very people selling them on the idea:
What is the absolute maximum number of Likes anything on Facebook can ever get? I’m not asking what has the most Likes up to now, I mean what is the number of Likes a thing can get beyond which it cannot get any more? A real economy has a finite number of currency units. Even if they might increase that number at times (i.e. inflation), it is always with an eye to making sure not to devalue the existing currency units overly much that it bankrupts the entire economy. So what is the maximum number of Facebook Likes?
Let me save you the trouble, because there is no answer. The answer, if any, is theoretically infinite, and potentially greater than the population of the Earth. That this hasn’t happened yet is only due to certain practical factors that conspire against it, but on a smaller scale this has surely already happened, for example a site receiving 10,000 Likes from profiles claiming to be from an Egyptian village of 800 people. Very few people if any are checking these things, sadly.
When Facebook can define a maximum number of Likes, ensure that each comes from a unique user, and ensure that those Likes all reflect actually “liking” instead of, say, entering a contest to win a New iPad, then they can tout the virtue of Likes as a form of social currency all they wish. Until then, it is in essence no better than Bernie Madoff’s ponzi scheme, where a very few benefit at the expense of the deceived masses.
Mark Zuckerberg should thank whatever higher powers he believes in (or the inefficiency of lawmakers, perhaps, in keeping up with new technologies) that the law hasn’t caught up to this scheme yet. If they had, Facebook wouldn’t be valued at tens of billions of dollars, they wouldn’t even be valued at ten billion dollars. They have a business model based largely on naive marketers for whom the basic math of an infinitely-inflatable currency eludes them.
Some of this can surely apply to other social networks, to be fair, but why go after a pickpocket when the guy right next to him is robbing a bank? Facebook created this false economy, they are its architects and masters, and nothing but mass exodus of the users, or a rational application of pre-existing legal principles regarding fraudulent claims and truth-in-advertising to this new form of fraud is likely to stop them. They’re making billions and getting away with it, so why would they stop?