Why America’s Social Media Firms Aren’t ‘Parasites’

 

It’s hard to be a big tech company these days without somebody rooting for your demise. But some cases are a bit more understandable than others. Like this one: “Bannon says killing Huawei more important than trade deal with China.” I mean, I get it. Former Trump White House adviser and nationalist Steve Bannon wants America to launch and win a Tech Cold War against China. Taking an ax to what might be its most important tech company, a key player in the global 5G rollout, might be a big step forward in such a plan.

But it’s not Americans wanting to shut down just Chinese tech companies. Sometimes it’s Americans going after American firms. “Maybe we’d be better off if Facebook disappeared,” writes Sen. Josh Hawley, a Missouri Republican, in an op-ed for USA Today. And his problem isn’t just with the social media giant run by Mark Zuckerberg. According to Hawley, Twitter and Instagram, though oddly not YouTube, are also “best understood as a parasite on productive investment, on meaningful relationships, on a healthy society,” He claims they’ve created an “addiction economy” based on extracting and selling data gleaned from uninformed users. The first sentence of the piece: “Social media consumers are getting wise to the joke that when the product is free, they’re the ones being sold.”

To be sure, Hawley is not using “disappear” in what’s been called the “post-Argentina transitive use of an intransitive verb,” as in “disappearing” a political opponent. Although, some of the more intensive anti-tech critics might want to disappear these companies. But even calls for heavy regulation or anti-trust action — banning business models or breaking up big firms — requires serious argument and evidence, as well as proof of harm from elected officials. This also means grappling with research contrary to your thesis and understanding trade-offs. Does Facebook have value? As I wrote recently:

Lots of people seem to like Facebook as we know it, even with occasionally disturbing videos, privacy leaks, and foreign election meddling. So what is the value of Facebook as it currently is? That’s exactly the subject of the new Stanford University study “The Welfare Effects of Social Media.” In the run-up to the 2018 midterm elections, researchers used Facebook display ads to recruit nearly 3,000 users who indicated a willingness to deactivate their Facebook accounts for a period of four weeks ending just after the midterms. Then about half were asked to actually do it with their inactivity verified.

So what happens to you after four weeks without Facebook? According to the study, participants reported they were happier and desired Facebook less. And while they were less informed, they also seemed somewhat less politically polarized. Even so, people still wanted their Facebook. With the costs comes benefits. The researchers concluded their “results leave little doubt that Facebook produces large benefits for its users” with a majority of the people in the study valuing a month of access at $100 or more. That valuation implies “annual consumer surplus gains in the hundreds of billions of dollars in the US alone. The 60 minutes our participants spend on Facebook each day is itself suggestive of the substantial value it provides.”

Another study found that Facebook users would need to be paid, on average, more than $1,000 to deactivate their account for one year. Indeed, the evidence that Facebook provides value may be stronger than the evidence that it or other social media platforms are “addictive” in any sort of clinical sense. Oh, and by the way, the “users are the product” framing is problematic at best.

Published in Economics, Technology
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There are 11 comments.

  1. OmegaPaladin Moderator

    Do you think if you are nice to big tech, they will deplatform you last?

    • #1
    • May 23, 2019, at 4:57 PM PDT
    • 3 likes
  2. Bob Thompson Member

    James Pethokoukis: So what happens to you after four weeks without Facebook? According to the study, participants reported they were happier and desired Facebook less. And while they were less informed, they also seemed somewhat less politically polarized.

    Someone would need to explain further precisely what it means to be less informed.

    • #2
    • May 23, 2019, at 7:18 PM PDT
    • 2 likes
  3. Joseph Eagar Member

    So, how much does Facebook contribute to America’s balance of payments? 

    • #3
    • May 23, 2019, at 10:44 PM PDT
    • 1 like
  4. I Walton Member

    Can we do away with these things, or fix them without giving the government too much power? Will the left, those who look at the government as the be all and end all of politics, use such powers disinterestedly? We have to proceed with extreme caution and if we can’t figure out how to do matters without creating too much government power we need to return to the drawing board and find some positive long term way to reduce their threat. Probably within existing anti trust laws. We must remember governments are the source of tyranny and decay, private business and organizations use government as a tool of their interests. These new internet companies seem different, but we have to figure out how to reduce the risks they pose in ways that do not continue to empower the government because government has always been the threat.

    • #4
    • May 24, 2019, at 3:44 AM PDT
    • 2 likes
  5. OccupantCDN Coolidge

    So the social media firms – lets be fair are not technology firms, they’re media conglomerates. They get users to create content for them for free, that they then monetize to advertisers. How is that not parasitic? I know YouTube shares some revenue with their top performing content creators – but it amounts to a small fraction of their overall revenue.

    • #5
    • May 24, 2019, at 10:29 AM PDT
    • 1 like
  6. James Lileks Contributor

    OccupantCDN (View Comment):
    They get users to create content for them for free, that they then monetize to advertisers. How is that not parasitic?

    It’s voluntary. People create content for the platforms / publishers because they think it’s the best way to show the content to other people. See also, GeoCities

    Alternatives are possible, but don’t have the reach, and most of the competitors to the big established brands are awful. 

    PS I loathe FB for every possible reason and will entertain some fanciful ones as well

    • #6
    • May 24, 2019, at 12:55 PM PDT
    • 3 likes
  7. OccupantCDN Coolidge

    James Lileks (View Comment):

    OccupantCDN (View Comment):
    They get users to create content for them for free, that they then monetize to advertisers. How is that not parasitic?

    It’s voluntary. People create content for the platforms / publishers because they think it’s the best way to show the content to other people. See also, GeoCities

    Alternatives are possible, but don’t have the reach, and most of the competitors to the big established brands are awful.

    PS I loathe FB for every possible reason and will entertain some fanciful ones as well

    Yes. it is voluntary. Its like volunteering at a soup kitchen vs a fast food counter – both work loads are similar, but when someone develops a revenue stream from your work, they should share it with you.

    I agree the social media companies need to be held to account. The following episode of “How is this a thing?” shores up your point at about 6:15, its more reasons to dislike YouTube – if you didnt have many already. (the video should start at 6:15 where he goes into the metrics of the trending tab)

    • #7
    • May 24, 2019, at 1:20 PM PDT
    • 2 likes
  8. Stina Member

    OccupantCDN (View Comment):

    James Lileks (View Comment):

    OccupantCDN (View Comment):
    They get users to create content for them for free, that they then monetize to advertisers. How is that not parasitic?

    It’s voluntary. People create content for the platforms / publishers because they think it’s the best way to show the content to other people. See also, GeoCities

    Alternatives are possible, but don’t have the reach, and most of the competitors to the big established brands are awful.

    PS I loathe FB for every possible reason and will entertain some fanciful ones as well

    Yes. it is voluntary. Its like volunteering at a soup kitchen vs a fast food counter – both work loads are similar, but when someone develops a revenue stream from your work, they should share it with you.

    I agree the social media companies need to be held to account. The following episode of “How is this a thing?” shores up your point at about 6:15, its more reasons to dislike YouTube – if you didnt have many already. (the video should start at 6:15 where he goes into the metrics of the trending tab)

    Heh free market of ideas, indeed.

    • #8
    • May 25, 2019, at 5:36 AM PDT
    • Like
  9. Tex929rr Coolidge

    Social media allows us to get information out to the public much faster with a much broader reach, Dangerous conditions for burning (red flag days), flooding conditions, road closures, or any number of things can get out in seconds. The fact that people can post additional information is usually an added benefit. Trolls will always be with us, but as far as emergency services go, Facebook and Next Door have been a net good for us. (We don’t do Twitter). Facebook gives public agencies data showing how widely our posts are read, or at least how often they show up in people’s feeds, and the numbers can be astonishing.

    • #9
    • May 25, 2019, at 7:41 AM PDT
    • Like
  10. Joseph Stanko Member

    OccupantCDN (View Comment):
    Yes. it is voluntary. Its like volunteering at a soup kitchen vs a fast food counter – both work loads are similar, but when someone develops a revenue stream from your work, they should share it with you.

    Do you object to Ricochet’s business model as well? Here we must pay for the privilege of creating free content for this site.

    • #10
    • May 25, 2019, at 11:46 AM PDT
    • 1 like
  11. OccupantCDN Coolidge

    Joseph Stanko (View Comment):

    OccupantCDN (View Comment):
    Yes. it is voluntary. Its like volunteering at a soup kitchen vs a fast food counter – both work loads are similar, but when someone develops a revenue stream from your work, they should share it with you.

    Do you object to Ricochet’s business model as well? Here we must pay for the privilege of creating free content for this site.

    No, because we pay for the site – not advertisers, we can police the commentary for polite and sociable disagreements.

    • #11
    • May 25, 2019, at 10:35 PM PDT
    • Like