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Some fun Facebook facts from the earnings call/report

- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.

- Facebook's headcount is now at 20,658. That's up 43 percent since last year

- Average Revenue Per User Rises 23% to $4.73, Down from 4Q 2016

- Facebook Offers No Break Out of Instagram Revenue

- 2Q Daily Active Users 1.32 Billion, Monthly Active Users 2.0 Billion

- Shares Up 1.6% After-Hours, Near Session Highs

- Zuckerberg: WhatsApp and Instagram Stories each have more than 250 million people using them daily. Each of those is a single SNAP whose entire daily user base is around 170 million.

Wow, this is a company that is killing it right now.

Facebook and Google combine to account for up to 99% of advertising growth.

As this relates to SNAP, I have to think that investors will spend atleast a year spending marketing budges with SNAP but after that, RIP Snap......

Also as a crazy aside, Meg Whitman just resigned from the HP Board and has been reported to be visiting Uber.....




Maybe I'm just a crazy millennial, but I absolutely loathe the idea of FB / Insta stories. Snapchat going under wouldn't convince me to move over -- I'd just stop using the service and move on to communicating some other way. And Stories aren't the only appeal of SNAP, though I suppose they are a large producer of revenue.

HN just loves to hate SNAP, and I can't really fathom why. I can get being skeptical but every comment here seems like they /want/ to see the company fail.


Another crazy millennial here. I don't have an Instagram either, and frankly I don't want one.

As for why HN hates Snap, I'm not exactly sure. Is it because the average user on HN is older and isn't targeted by Snap? Maybe it's seen as a frivolous plaything? No matter what the reason, there's definitely a lot of hate for Snap on this site.


At first, I dismissed snapchat thinking "people will hack the protocol and save messages anyway, and the whole idea will fall apart". Then, I was a little envious that someone else had the idea, and I now think it was a good idea, and that I was blinded by an overly-technical analysis of their product.

But it doesn't look like the couple good ideas they had were enough to make a long-term business. So, unless they do something cool in the next 12 months, RIP. Founders got a nice payday, so who cares?


40 year old, here. I mainly use snap to play with filters with my young kids. I'd never use it for communication because the UX is horrendous. A while ago, there was an odd corporate push to try to use snap internally (was there some marketing push?). And, all of my co-workers spent lots of time brainstorming how to even use snap effectively.

The swarms of 13 years olds that roam through my house only ever seem to use their mobile for Instagram, snap, and youtube. However, more recently I've noticed that the boys have been walking around with bluetooth headsets on as they have a large group chat going on in the background. Not sure what app they're using.


Discord is growing like crazy and their voice chat is easy to use and reliable for groups


My reasoning for loathing snap was their refusal to even allow a snap client for windows phone to exist.


No more entries, we have a winner for the most obscure reason to dislike a social service.


I don't loathe Snap, but I do dislike their decision for not supporting Windows 10. Microsoft even offered a cash incentive to Snap for creating an app and Snap still outright said no. Surely no matter how much you hate a platform, if you're being offered an incentive, you would say yes?


There's a huge opportunity cost in putting some of your developers on creating an app for a niche market. Snap probably felt that Microsoft's incentive didn't cover that cost.


Not to mention maintenance and upkeep.


Sounds like they made the right choice because the platform collapsed. It makes no sense spending design and dev time on a platform that simply isn't taking off.


I think he's on about allowing a third party to create and support a Snapchat app for Windows devices. There was 6Snap which worked really well, but got shut down because Snap were forcing third parties to close their apps. Someone also created an open source app on Windows, but I'm not sure what happened to that one.


There actually was an unofficial Snap client for Windows Phone for a time. I thought it was pretty good to be honest.


6snap, also the same author as tinder and insta clones.


I have an android phone (S7 edge). Before I got this phone, I was a light user of snapchat. On the new phone, Whatsapp, Facebook and Instagram were pre-installed. I set them up, they started working perfectly. I downloaded snapchat. It crashed on login. I literally could not get it to work on my brand new flagship device. That's my reason.

PS: also a millennial here, not very crazy though, regrettably


Confirmed - it's a frivolous plaything - very well put!


It's because people at SNAP made a lot of money and {HN_user} did not.


Downvoting doesn't make it false.


> As for why HN hates Snap, I'm not exactly sure.

Why must it be hate? Couldn't it just be, simply, that we're not that interested in yet another chat application? To me, Snap is a slightly modified ICQ client. Fine, but not very interesting.

Real progress would be some sort of open standard, so who you're speaking with isn't determined by which company's chat server you connect to. But then again email has supported this for several decades already, so maybe the demand isn't there.


Yeah, I don't get it either. As far as I'm concerned Snap is one of the most interesting startups recently because they started with as a software company that managed to actually make a Good consumer hardware item that I wear everyday. I love my Spectacles, I wasn't even a snapchat user before they released, but they are a slick device.


Do you ever feel a little creepy wearing those?

I've seen a few people with them on, and my immediate gut reaction every time is to get out of their eyesight. I'm sure I'm not the only one and it makes me wonder if most spectacles owners even think about it.


I quite like the idea of them, but I can't get past the design (which I know would look ridiculous on myself). Would be interested in playing around with a pair but they're not very common where I am.


HN is bearish on SNAP, just like Wall Street is. Sure, they could end up hugely successful, it would just surprise people. Even their own underwriters gave them a HOLD rating as soon as they were allowed to. http://www.cnbc.com/2017/07/11/snap-underwriter-morgan-stanl...


I'm not rooting for Snap to fail, any negative comments I made (and have seen here) were because I thought their IPO price was absurd. I think they can carve out a niche and be profitable but the expectation that they grow to the size of FB / GOOGL I just don't see it, and the IPO seemed to be priced based on that.

I also thought their stock set up with zero voting rights was crazy but that's a separate issue.


Zero voting rights make a lot of sense for the founders in today's world of activist investors. Caveat, the founders act in good faith.


And make little sense for investors.


Used it starting in 2013, uninstalled after they started filling it with crap.

For me its killer feature was how easy it was to send videos. But it's not worth all the advertising they're stuffing into the app.


I love Insta stories. It's an immersive way to see what your friends are up to. Just sit back and tap/swipe, takes 30 seconds, pretty passive.


I dunno, my friends (in their mid-late 20s) are much more active on Snapchat for stories. Most of the people I follow on Insta aren't my friends, so their stories aren't very interesting to me


> HN just loves to hate SNAP, and I can't really fathom why

Their entire product was marketed on the lie of ephemeral messaging. That's why I've always hated it. I don't like it when people talk down to the general public like that and lie to them about what technology can and cannot do.


Snapchat's founder always came across as hubristic in a way Facebook's wasn't. I try not to hate, but I don't like it when people act like they've made something wonderful when actually they built the thing with other people's money and made hardly any revenue.


Same, SnapChat is the only "social" app I use. I don't even use stories. Very few of my friends publish stories. I think mostly marketers use them.


Everyone in my teen sons social circles use snap. Nobody is on Facebook.


Where did you see hate for SNAP? GP's comment said Facebook is killing it and speculated that SNAP has no chance against them.

Like 5/6 of the comment is an excellent summary of the call (on a story that is behind a paywall), and then a couple of sentences of opinion and speculation and from that you get HN hates SNAP? I don't get it.


Do they have a working android app yet?


This makes me sad. I wish it was the case that the top companies have produced the most productivity/useful goods, not a messaging site with advertise that people use at their off times.


Facebook lets over a million companies get their products in front of people who are inclined to purchase them.

When those Facebook users do in fact click and make purchases it is often (not always) a profitable exchange for the companies advertising. Those companies take the revenue from the sales and use it to pay people to do other work for them. Wherever it is you work, they probably advertise on Facebook.

Creating a profitable revenue engine for a million companies is absurdly useful.


If not with Facebook and Alphabet, there would still be most of those companies selling their products, with other means or site. There's not much that Facebook adds other than number of people it has using their site during their off times. If people needed to buy things, they could have easily looked it up on other sites or real places. There are many companies that do much more important things, produces more useful goods/productivity/services.


If you are producing a useful good or service would you honestly prefer to market it pre-Facebook? The volume, price and ability to focus narrowly on only the people most likely to care... It's worth a lot to a lot of makers.


If it's worth so much to so many people, why can't people simply accept that there are also people who find all of it useless and highly unimpressive?

Yeah, I would like to market pre-Facebook. In exactly the same way I wouldn't want to advertise with Stalin, no matter how effective his apparatus. I bet you there were people who couldn't understand that either.

My life is a painting. I already have brushes and paint, and while I could of course use more and better brushes and paint, there are also those offers to shit all over my painting for a truckload of generic, lame colours, and thousands of stamps with all sorts of shapes designed by "professionals", because making those with your own brush is just too hard. I say no to that, that is a net negative value for me. I don't live to earn money, I earn money to live. FB is right out. As the song goes: you might win some but you just lost one. Nothing more, but also never anything less.


I don't doubt facebook's usefulness to many companies and online only businesses.


Ah yes, no need for internet at all. We could already send messages via other means before it.


I don't follow


very dangerous and unpopular thought way out of the HN comfort zone - but you're not alone!


- Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.

How many companies in total have more than $35.5B cash/equivalents? Including Apple, for example.


Ignoring debt:

Microsoft ($126b), Apple ($256b), Facebook ($35b), Berkshire Hathaway (near $100b), Cisco ($68b), Google ($92b), Oracle ($66b), Softbank (a lot), Amgen ($38b), Ford ($40b), Samsung ($73b), Johnson & Johnson ($39b), GE ($82b)

There are a lot of financial entities and the like that have more cash than that of course. It's held under a different financial context than the cash that eg Apple is sitting on. JP Morgan for example has $650b, Citi has $422b, Bank of America has $643b, etc.


Thank you!

Out of curiosity, how did you put together that list? Googling seems to only bring up second-hand lists like https://thenextweb.com/insider/2011/08/22/big-money-the-comp... but I think I'm using the wrong terms.

(That's an interesting list too -- for comparison, Apple apparently had $76.2B in 2011.)


I put most of it together off the top of my head, from knowing a bunch of the companies that were cash rich, then checked on a few I suspected were (like Samsung), and then finally cross checked a few lists for any stragglers I missed (eg Amgen). I dug through some of China's companies (eg BABA or CHL), but didn't run across any offhand that made the list (their banks obviously do as with US banks).


Apple is also running up quite the debt (over $100B) in the US so the overall figure is actually lower.

http://www.barrons.com/articles/apple-plans-to-sell-lots-of-...


They do that because interest rates are low and much of their cash hasn't been repatriated (taxed) to the USA.


Yes, but that doesn't really change the fact that their money in the bank needs to be considered partially encumbered.


And to be fair, "ignoring debt" is kind of an odd way to measure something like "who is sitting on cash"


It is odd, but not as ridiculous as it sounds. For one, many companies couldn't issue 10s of billions in debt so you do have access to that much capital (normally at reasonable costs).


Think of it not as "what's their net worth" and more as "what's the biggest cheque they could write today that wouldn't bounce."


That would hopefully be a much smaller number, unless they're all storing their entire cash reserves in a single account somewhere.


In any real scenario, debt should obviously never be ignored, but we're counting cash in a vacuum here basically.

Some of these companies are carrying vast amounts of debt now, Microsoft and Apple for example. They can't discharge all of that cash without suffering severe consequences due to their need to sustain a high credit rating.

I added the ignoring debt tag, because who knows which of those cash / cash-like instruments are being used in what way in relation to some of those immense debt piles.


> They can't discharge all of that cash without suffering severe consequences due to their need to sustain a high credit rating.

What do you mean by this?


Microsoft for example has $76 billion in debt, accumulating at a rapid pace. Apple is in a similar situation. They're adding debt at a historic pace.

Despite the immense profitability the companies have, their debt holders will get freaked out if those large cash piles were to get discharged down toward zero. For example, Berkshire Hathaway got slapped for allowing its cash to drop a bit low (relatively speaking) a number of years ago (also coincided with the worst of the great recession), their credit rating got dropped a notch in part because of it (despite it being very unrealistic they were actually more risky just because cash was briefly at $30 billion versus $50 billion). You'll often see the ratings agencies & analysts talk about wanting to see Berkshire maintain a large amount of cash due to its obligations.

Apple and Microsoft are paying very, very low interest rates on their debt. Given the scale of those debt piles now, they'll desperately want to maintain those low rates. Maintaining a sizable pile of cash will assist them in doing so.


I am naive in this area, but if the creditors freak out, what does that mean? Seems like a "freak out" would mean higher interest rates, and when those rates cross the return from the cash stockpile, they just would stay paying down the debt more aggressively?


Sure; it's just that we're talking about spending the cash stockpile. Microsoft has $126b "in the bank" but that doesn't mean they could actually spend all $126b on some moonshot, because by the time they'd spent half of it it would affect their interest rates and they'd have to start doing something about their debt.


They take on debt instead of drawing down their cash pile because they'd be paying much higher taxes on foreign cash than interest on their loans. The low rate they receive on loans is tied to the existence of their massive cash piles


If they spent all of their cash (in a not-obviously-investment way) it would hurt their credit rating (and their business can't operate the way it does without a high credit rating). So they might have $43B (say) "in the bank", but that doesn't necessarily mean they could actually spend that $43B if the debt markets didn't think what they were spending it on was sensible.


Ford has $40b cash and its market cap is $43b ?? I should buy some.

Edit: I guess I missed "Ignoring Debt" they have too much debt.


About $70Bn in short-term debt liabilities. [0] May create some hesitation in buying ;)

[0] https://finance.yahoo.com/quote/F/balance-sheet?p=F


Maybe. Net tangible assets are $30 billion. Obviously much like GM, they're carrying a large pile of liabilities around on their balance sheet. I suspect Ford has to keep a significant amount of cash on hand for numerous legacy reasons (pensions?) to support their credit rating. $244b in assets stacked against $213b in liabilities.

GM is far more profitable than Ford, has $22b in cash, and $39b in net tangible assets. With a $53b market cap, GM is sporting a realistic 4.x to 5.x PE ratio currently (depending on how you want to account for their 4Q16).


This is a problem, a lot of money that is not going back to the market. It's taken out of economy making it impossible to redistribute it again. It's not healthy.


as I understand it, that cash is not sitting in actual bills under mattresses, it's sitting in bank accounts of some sort or other (could be short-term notes perhaps and still qualify as 'cash'). Those banks in turn invest those funds (in loans, etc) to other people and businesses. So the money isn't completely taken out of the economy - it stays in the system and is put to work (by other people). So I'm not sure how it's an actual problem for the economy.


Slightly interesting aside, 3.9B for 20,658 employees is ~$188K/employee profit, which is about a 20% drop from a few years ago[1]. I'm not an economist nor statistician.

1. https://www.buzzfeed.com/peterlauria/what-18-of-the-biggest-...


$3.9B is only their profit for the quarter. Over the last year, they've reported a little over $13.1B in profit (>$600k per headcount).


That's what I was missing!


Well, one thing is that the marginal profit of labour is bound to be diminishing at such scale. However, keep in mind that it's not marginal revenue, but profit. This means that it's still a viable strategy to increase the amount of employees for them. That drop is not necessarily an issue in accounting terms.


Why is that interesting?

Companies should hire more people until marginal profit per new hire is $0 to maximize profits. And that number says nothing about marginal profits.


No, because hiring affects future income and expenses, not just present.


Companies don't try to maximize total profit, but rather return on invested capital.


This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number?

Your theory predicts that price discrimination can't happen because companies would rather sell M widgets at X price than sell M widgets at X price and N widgets at Y price.


It's completely right.

Why would you invest $250K for a year's pay of an employee for $0 return. You can invest that $250K in a CD for 2% and get $5,000.

Shareholders are going to have no interest (long term) having companies invest their capital in the form of cash on the balance sheet at below market rates. Hence dividends or buybacks if they can't demonstrate sufficient roic on internal projects.

You can back into a target revenue/employee by looking at risk free rate of return + equity premium (say 7%), net margin (35% for FB this Q), and say if an avg employee earns $250K .... then they'd want a bit less than $800K/employee (35/100 * x >= 250k + (.07 * 250k)).

I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No, they'd distribute it to shareholders so they could invest it in bonds or other companies, and that's the analogy.


> I don't think your comparison to widgets holds up. Would a company invest capital in more production capacity to sell more widgets at zero margin (all else being equal)? No

Who said anything about zero margin? You're claiming that if I can sell one widget at a high price (high margin!), I should be unwilling to sell any at a lower price (but still high margin!) than the first one would sell for, because my rate of return on investment would go down (assuming the cost of producing a widget is dominated by variable costs). This does not describe the behavior of anything.


> This can't possibly be right. Why would you forego making extra money to keep your statistical average up? What are you getting from the average number?

You're serving the best interests of your shareholders, who have other things to be doing with their capital. They'd often rather invest $10 and get 10% than invest $20 and get 7%, even though that means getting $.10 rather than $.14.


You're comparing quarterly numbers with annual numbers.


Bitten by a denominator once again!


Important to remember that advertising revenue _always_ peaks in Q4, and that was an election year too, so even if they're down YoY this Q4 I wouldn't worry too much about it.


Given Facebook's global reach, every year is going to be election year. I appreciate nobody spends on elections quite like the USA, but there's still a lot of money to go around in other countries.


> I appreciate nobody spends on elections quite like the USA

The scale is nowhere close. Maybe if you include black money, India might be a contender, but how much of that is spent online?


> Maybe if you include black money, India might be a contender, but how much of that is spent online?

Not much. And besides, I don't think you could spend it online even if you wanted to. Unless Facebook is accepting cash payments for ads in India ;-).


Your establish fake accounts and pay those IT cells

You pay influencers/fake news outlets/biased media sources.

Though, not much is probably spent in India this way, but it's definitely there


99% of the growth!!

Thoughts on anti-trust? If you're capturing every single part of the growth of a huge previously diversified market, whats the arguments against?


I believe its 99% of the growth in digital advertising[1], not all advertising.

[1]https://www.businessinsider.com.au/facebook-and-google-domin...


It seems like it would be a disaster to break up Facebook. You can't really have more than one social network that everybody uses. Forcing everyone to split off into groups wouldn't work, to put it mildly.


But we could have an open social network that operates outside a single company... building on the foundational principles of the internet.

These "social networks" exist because it's still too hard to setup and manage a personal website, and those sites lack the interactiveness of FB.

Imagine if everyone had their own 1-click website with glorified RSS feeds, webrtc-based chat, access control, media sharing, and standard APIs for 3p apps - plus, perhaps, a web-of-trust or some other mechanism for validating identity. All rolled into standardized APIs backed by large competitors of FB (perhaps MS/Goog/etc?).

If the ISP monopolies can be broken, perhaps all that could be hosted on a little Android-like box connected to a home ISP - your little social box, connecting you to every human on earth... always online, it caches messages from friends when your phone looses signal, p2p shares videos from friends so you can watch high quality with no load time, and automatically curates content from connected feeds (perhaps with some on-board ML).

No ads, no big brother, for pennies a month.

I know Google's ad revenue is getting eaten by FB - perhaps they would profit from something like this. Cap FB at the knees by giving people FB's functionality without the corporate data-mining/lock-in, and reap ad revenue from the increased relevance of el Goog's search.

There are similar benefits to shops, manufacturers, services, bands, etc all too. Standard information/inventory protocols, and a review system connected to those individual personal identities, could undermine Yelp and even AMZN.

I've been thinking about this quite a bit and I think it's mostly a matter of execution. There is prior art covering all of the pieces, but no one has assembled all the pieces into a compelling product (think: iPod vs prior mp3 players, FB versus the myriad of ex-competitors)... hard but tractable with the right support.


The biggest issue is what the rules are and how that affects the user interface.

Using email, the rule is that if someone sends you something, you own it; they could ask you to do delete it, but you can refuse. Facebook and other social networks let you edit and delete posts. Snapchat became big because you can send pictures that are automatically deleted after you view them.

Sure, you can reimplement basic message exchange in a decentralized way, but figuring out how to enforce the same rules in a decentralized system is nontrivial.


I think RSS is a closer analogy than email, but anyway... it could be argued those rules don't really exist today.

Good snaps get stored and shared forever, everyone knows to screenshot dumb posts on FB, and there are plenty of twitter archival tools. Youtube's DRM and takedowns work OK against film pirates, but it's still easy to find many movies and redistributed personal content online.

Though I'd be curious what fraction of those instances are someone speaking without thinking, or accidentally sharing to a broader audience... the former seems PEBKAC and the latter is a solvable UX issue.


Despite the exceptions and workarounds, the defaults matter for the user experience and social dynamics of an online forum.

Even on Hacker News, the various moderation features and things like being able to edit your post after publishing make a difference to how the community works. It's not only what you can get away with but also what people feel like they have a right to do.

An interesting proof of concept might be to try to create a forum like Hacker News, but using distributed software.


I think those features are compatible with this model - RSS handles edited content just fine (clients can store the old content, but there is a canonical "latest" version).


The vast majority of Facebook users don't want to install and maintain a home server. A distributed social network will never take off if it requires users to purchase another dedicated piece of hardware.


That's the point: They don't have to!

If you have protocols and software that lets someone run a social OS on their personal hardware and connected to the global network, then the walls have been broken. Any 3rd party can integrate or offer hosting.

You could also take the rabbit hole of battery improvements leading to running this on mobile devices or sending data through a distributed p2p network instead of personal HW. None of those are orthogonal to the proposal.


Make it run on as a part of a distributed cloud computing service on a device that consumers are paid to install and keep. Maybe its a radiator/secondary water heater too. The payment is for reduced datacentre cooling expense.


>I know Google's ad revenue is getting eaten by FB

No it's not.

>For the first three months of this year, Alphabet reported just over $26 billion in revenue, up 21 percent from the same period last year. Without the EU fine, it would have notched $6.87 billion in operating income, up around 15 percent from the second quarter of 2016.


The market is growing, of course both FB and Google will keep growing for a bit - but FB's 39% (and growing) share is nothing to sneeze at. FB is a cancerous walled garden that is increasingly hostile to search engines.


It turns into email with all of it's problems. And everyone will just use a gmail equivalent or whatever else they signed up with 15 years ago anyway.


It doesn't necessarily need to be broken up, but if you wanted to weaken Facebook you could mandate that they made their APIs open so that social networks that wanted to spring up would be able to automatically show you content from Facebook in their UI.


That's a good one. I'm not sure how enforceable that would be, but in principle that'd be beneficial for competition.

There are a multitude of problems, like privacy concerns and the fact that FB would have no incentive to keep the API very up to date or reliable, but I wonder if something like that could work.


I guess the Microsoft Office anti-trust rulings should be instructive here. Their monopoly is effectively broken in the sense that you can read Office documents in other software, but that hasn't really killed their business; though it did make the transition to Google Docs easier for me.


I'd argue that the monopoly action against Microsoft was an unqualified success, even if the consent decree ended up being weak tea.

Before the antitrust action Microsoft was knifing the baby and cutting off the air supply whenever anyone threatened their hegemony. Afterwards, a million little inroads were made that ended up making their monopoly irrelevant.

In fact the continued existence of Apple is a product of the antitrust action. Bill Gates struck the deal with Jobs in order to keep Apple alive as a "showcase competitor." If Gates didn't feel the need to keep up appearances he would have crushed Apple by ending the Office port.


The anti-trust action certainly changed Microsoft, and Microsoft has lost it's Monopoly power, I'm just not sure how closely those two are linked and what the lessons to learn are.

I feel like the thing that really hurt Microsoft the most was the web, which made the OS far less relevant and has largely been their downfall. The failure of the mobile web seems to be largely why mobile OSs do matter.

Clearly, without the anti-trust ruling Microsoft was doing all it could to make the web proprietary, but the web wasn't pre-ordained to happen, and if it hadn't we might still be locked into Windows, regardless of what the anti-trust authorities did. Or maybe we'd be largely where we are today with the web having never happened and the focus shifting to mobile anyway.

And to look at Office, I feel like the real downfall of the network effects of Office was when PDF readers became ubiquitous and embedded in browsers, so that you could export a PDF from whatever editor you were using and send it to everyone and expect that they could read it.


>You can't really have more than one social network that everybody uses. Forcing everyone to split off into groups wouldn't work, to put it mildly.

Of course you can, you just need to have standardized protocols.

You and I can use any email provider we like, your client can use exchange to talk to it's server and mine can use a version of POP from the 80's and it /doesn't matter/ because the servers talk over a standardized protocol.

Facebook and Google used to support this. There was once a time when Facebook and Google Plus both had XMPP gateways for their real time chat traffic, which meant you could send a message from Google Plus to Facebook Messenger with no problems.

They shut it down because they both have a strong incentive to push vendor lock-in. They've been so successful that you've started to forget that life could ever be otherwise.

Take a look at projects like diaspora and mastodon. There's nothing stopping Facebook from reaching out to these projects and working with them to incorporate Facebook nodes into their network using the same protocol.

But it'll never happen, because Facebook needs the corral nice and enclosed before they can start tagging you and selling you off.


There's a real engineering cost to federation. Your email example is a good one, I think. But digging a little deeper, what's the last major feature that got added to email? For example, we've been trying to get encryption in email for longer than WhatsApp has ever existed. WhatsApp rolled out encryption for everyone on its network last year. That's a billion people! I'd be surprised if 100 thousand people regularly used encrypted email, and even fewer used effectively encrypted email.

Social networks have been adding lots of features over the years to compete with each other. Realistically I think that fractured platforms would struggle to catch on because each provider would prioritize different features. Since social networking grows in utility superlinearly with the connectivity with your friends, features get less useful and the whole thing stagnates.

Basically: Microsoft Outlook is a social network of the kind you envision. Even Outlook for Mac versus Outlook for Windows is a sharp divide in terms of features! Do you think that people would use social networks if they looked like Outlook?


The idea that centralization leads to better UX results is demonstrably false. Popcorn Time is a great example of distributed streaming providing a considerably better UX than most commercial solutions.

Additionally, the notion that the necessity of making group decisions on a protocol must lead to stagnation is not guaranteed. There's plenty of space for Facebook, Google, LinkedIn and Twitter to form an an industry working group and make a protocol that meets their needs, and then throw it out and say "this is what we're using. Keep up or get left behind".

However, to more directly answer your concerns, there's nothing stopping Facebook from exposing basic functionality via an established and fairly firm protocol, and keeping advanced features as their competitive advantage. Textual Timeline posts, IM's and event RSVP's are good candidates for things to be exposed by the protocol. Facial tagging of images is a good example of something that a core social protocol could skip.


They just need one viable competitor. That's the crux of it.

They need something on the other side of the "or" in "Uses Facebook or ..."

They do their best to buy anybody that sneaks in there.


> They just need one viable competitor

I'm not convinced that is sufficient. Facebook at 80% isn't really any different than facebook at 99, or whatever. Google has a viable competitor in Bing, but google still dominates search to a massive degree.


I don't disagree, but it's more like having a viable alternative in the background that gets relatively popular and stable.

As long as it's there, then if there's every a major ball drop on Facebook's part that makes a lot of people want to switch to something else they'll have somewhere to go. When people moved to Facebook from MySpace it was driven by a lot of issues with MySpace that pushed people away.

Something like this past year's election with all of the controversy over how the trending news was handled could have promoted a movement of "Enough, I'm done. Going to X." Enough "me too's" and you start a trend.

A lot of that happened with Instagram. People wanted a place they could go free of political rants and Instagram largely provided that...and Facebook owns them.

You've seen a lot of "quitting Facebook" trends this year and I believe that it's largely a result of lack of a viable alternative.


Sure you can break Facebook up without destroying the Facebook.com social network. Facebook's dev tools and infrastructure (including Oculus) is spun off into a developer tools focused company. Facebook advertising is spun off into a separate "ad agency." Facebook.com can be this new ad agency's launch customer, but they're free to add their ads to other sites such as Twitter. Instagram and Whatsapp are spun off into separate entities.


but they can break out instagram/whatsapp


They could be the global distributor for individual companies operating different regions, like a franchise but without regional providers existing under one corporate umbrella. That could open the market to competing distributors and regional operators.

Unlikely and less efficient but that could be one way to handle it.


Split it into Facebook back-end, Facebook Red, FB Green, and FB Blue. FB back-end is the current back-end. The Red, Green, and Blue are separate front end that all have equal access to the back-end so a user of FB Red can friend a user of FB Blue. FB Red, Blue, and Green compete with each other on prices they charge to advertisers and can change their user interface to compete for users. Any user can use any one of FB R, G, or B and to get full access, but with their preferred UI


That's a good point - how could one even break it up? It depends on the network effect to get revenue from the ad platform. Maybe all the acquisitions or something - it's all so intertwined. Instead of it being a cable company, its more like "TV" as a whole.


I don't even think it's clear that it would be a disaster to completely outlaw facebook.


How would you write such legislation that doesn't also outlaw Reddit?


You'd write "Facebook".


At which point the freshly rebranded BookFace would continue as usual.


Pesky Constitution always getting in the way.


Calling Facebook a religion is a bit much


OP was referring to freedom of speech, I assume?


No Bill of Attainder or ex post facto Law shall be passed.


Bills of Attainder were against humans. Limited liability corporations exist by consent of the state and the state has no obligation to grant them new charters or continued use of their existing one.

Facebook could continue operating as a partnership - that would be much harder to stop - but they might not want to given the liability implications.


It's FB and GOOG that account for 99% of growth, not just FB.


Typical arguments over the past 30 years seem to be "it's in the best interest of the consumer".

Next thing you know, Facebook and Google end up merging.

Please knock on some wood for me.


Wait... So FB makes $1.60/mo per users through all that invasive marketing?

...Can I just give FB $5/mo to not keep their creepy profile on me? They get more money, I get not as creepily tracked.


No, because the set of users that would take FB up on this offer are the ones advertisers would like to reach most, and the subscription revenue would not come close to offsetting advertiser losses.


FB makes $1.60/mo per user _on average_.

The fact that you want/can pay $5/mo probably means FB earns a lot more than the avg on you.

Advertisers pay more to reach people with higher disposable incomes.


Are you aware that facebook is very popular in the developing world? It basically is the internet for large amounts of SEA users. If that $5/month isn't sizeable to you then chances are that they make a shitload more off of your demographic than $1.60.


Likely so, but there's two facts to consider:

I offered to pay 3x the average rate to account for some of that. I think that moves me into covering the average spread across the US and Western Europe (about a third of their active users). Now, I'm still probably one of the more valuable people, but it would be the average cost if all the revenue was spread across people who could afford that cost.

Facebook already claims they don't use a profile to market to me. (It took some digging, but you can delete your tracking profile conclusions and turn off a lot of things.) Which means (assuming they're honest), I'm probably not a high value user because they can't target me for high value ads. This would just be giving them an alternative revenue stream to compensate for that. (So a strict improvement for Facebook.)


So you pay for basic Facebook benefits without being tracked ?


> Monthly Active Users 2.0 Billion

Just as a reminder of how insane this is, the population of the entire world is 7.5 billion.


Users not people, right?


Is that $4.73 per user per year?


> - Facebook has a massive, $35.5 billion hoard of cash, cash equivalents and marketable securities. It's the third biggest S&P 500 company by this metric that isn't paying a dividend, after Berkshire Hathaway and Alphabet.

It's "massive" but compared to AAPL's $250 billion in cash, FB's cash it is still fairly small.

> Facebook and Google combine to account for up to 99% of advertising growth.

They both pretty much dominate the search/video/social media space.

What is most astounding to me is that every nation doesn't develop their own google/FB. I still find it incredible that most of europe is dominated by google and facebook. Even india.

I respect what FB and GOOGL have done, but their "tech" isn't hard to replicate. With regulation and government authority, countries like germany, india, france, etc can develop their own FB and GOOGL.

China, Russia, Japan, Korea, etc are smart in developing their own local tech/social media/etc industries. I'm so astounded that germany, france, india, etc have completely ceded their territories to google/FB/etc.

I can understand britain/canada/australia ceding control to the US since we are anglo nations with similar culture, language and historical roots. But why don't spanish speaking countries, german speaking countries, french speaking countries, etc have their own "google/FB"?


This is the point where I'm smiling happily because I moved from being an FB user to being an FB stock owner.

I feel like this pattern could be applied more often in real life... some company is being "evil"... don't just abandon them, buy stock in them!


Buying their stock is supporting them so if you feel they are evil do not buy their stock.


You are assuming I don't want to profit on them being evil.


That makes you part of the evil. Really, your reasoning about this is not sound.




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