Facebook’s rude shock over data

Over the last few years, you will have heard a lot about how the strength of the “network effect” means that Facebook can’t fail. So many people use it – to socialise, to organise events, to make work contacts and to get their news – that its long-term dominance of all of our social and a large part of our working lives simply isn’t in doubt. We haven’t been 100% convinced by this (see endless editor’s letters past) and this week we are less convinced than ever. Why? Because the value of the networking effect depends on a critical mass of people staying with the platform in question – and that depends on them continuing to trust the platform.

This week, they don’t trust the platform.Thanks to new data abuse revelations, the fourth top trending topic on Twitter on Tuesday was #deletefacebook. The share price is down 7%. Mark Zuckerberg is several billion dollars poorer and anyone who was fool enough to still think that the big tech companies are an unstoppable force (for good or bad) has had a bit of a shock.

If this were the first reputational issue to hit the firm, it might be easier for enthusiastic shareholders to wish away. It isn’t. Facebook has long seemed blasé about its users’ privacy, very blasé about how it curates and censors the information on its platform and very much too blasé about how much tax it pays in the countries in which it operates (it has only itself to blame for UK and EU determination to introduce some kind of revenue-based taxation).

Mark Zuckerberg is right to be pleased with how he has proved the doubters wrong as he has built a $500bn company over the last decade. But if he goes on like this, he might soon find himself proving them right.

The good news for Zuckerberg is that this isn’t just about him being in a little over his head. The misuse of data at Facebook has reminded everyone of the wider risks to socially cavalier companies priced for eternal growth: all the big tech stocks have seen their share prices nastily hit. But my guess is that it is also going to turn into a nasty reality check for the many start-ups set up for the sole purpose of harvesting and flogging data.

Once we start to think about how our data is collected and sold it won’t just be what we “like” and don’t “like” that we want to keep private. Will we hand over our email addresses anywhere, any time for a little free Wi-Fi (hence giving away our travel patterns for free)? Will we keep using apps that are designed to harvest our bank accounts for the details of what we buy and when, aggregate them and sell them on (the spending data from 200,000 people is a much better and faster real-time economic indicator than almost anything else!)?

I can’t see it. All this has been little discussed until now. But this latest Facebook saga may come to be seen as the day the real national conversation about platforms, data and us really began. Good.