Daniel W. Drezner

Facebook’s exorbitant privilege

One of the purposes of this blog is to profess my deep, profound admiration for Salma Hayek take somewhat arcane concepts from the world of social science and make them more accessible to the general interest reader.  For example, there’s been a lot of talk in recent years about the end of the dollar’s status ...

One of the purposes of this blog is to profess my deep, profound admiration for Salma Hayek take somewhat arcane concepts from the world of social science and make them more accessible to the general interest reader.  For example, there’s been a lot of talk in recent years about the end of the dollar’s status as the world’s reserve currency.  I keep saying it’s not going to happen.  To undertstand why, let me put it this way:  the U.S. dollar is the Facebook of hard currencies. 

Social networking technologies, like reserve currencies, have  a peculiar quality — they are more useful when more people use them.  A social networking site is only worth something if everyone’s friends and contacts are on the site.  It doesn’t matter if there’s another site that’s superior, unless everyone is willing to simultaneously switch over. 

This gives the owner of the dominant social networking site an exorbitant privilege.  It can change the rules of the game in its favor with minimal risk of mass defections.  Indeed, it looks like Facebook is doing exactly that in an effort to increase its profit sources. 

Not surprisingly, this has alienated some Facebook users.  As Charli Carpenter points out, however, alienation does not necessarily lead to defection:

A lot of us can’t just decide to “leave” without having somewhere to go. That’s because Facebook has become not just an extension of our offline networks, but to some extent, a space in which our virtual identities live – our most important semi-imagined community. The decision to leave such sites is usually agonizing and isolating, because we are deeply committed to what Facebook has to offer, even as many of us abhor on principle what Facebook is becoming….

Plenty of us would choose such an exile from the dictatorship of Facebook were there a welcoming neighbor nearby to which we could escape with our friends and families. The latter is crucial: since the “space” of social networking sites is constituted both by the platform and by one’s social network, we need a way to convince people in our Facebook networks to join us in exodus. That requires a social networking utility as cool and functional as Facebook, with none of its privacy-violating nonsense. Not just any country, but a country where we and our friends would actually want to go.

There’s an additional requirement — everyone would need to agree that the new country is clearly cooler than Facebookland.  These are pretty imposing barriers to exit. 

Now, lest one despair too much, Facebook, like the U.S. Treasury Department or the Federal Reserve, does not have unlimited power — there is a limit pricing effect.  Too much abuse of the privilege will lead to increased search for alternatives, and give competitors an enhanced incentive to encroach on Facebook’s turf.  Indeed, in this way, Facebook’s status is more fragile than the dollar — because while there are viable alternatives to Facebook, the only plausible rival to the dollar right now is doing a lovely job of imploding right now. 

There is one warning, however — Facebook’s hegemony will seem impregnable right up to the moment it collapses.  Because the attraciveness of these sites depends on the number of other users, there’s always the possibility that an inflection point is reached in which everyone migrates from Facebook to Orkut or something else.  And when that does happen, the fall of Facebook will be fast and hard. 

And yes, this applies to the dollar as well. 

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