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Following public outrage about the 87 million Facebook accounts that Cambridge Analytica gained access to, some have suggested eliminating Facebook entirely. Why, they ask, should such a company even exist? Would not it be better to have a nonprofit, like Wikimedia Foundation, which runs the popular Wikipedia website, run the world’s most popular social network? While it is understandable that some tempers are running hot, this solution is a terrible idea that would decrease the security of consumers’ personal data, damage the digital ecosystem, and ultimately lead to less innovation in online services, leaving consumers worse off.
Arguing in the New York Times, Columbia law school professor and populist public intellectual Tim Wu does not mince any words when he declares, “Facebook, at its core, is a surveillance machine, and to expect that to change is misplaced optimism.” He argues that updating Facebook and its policies is not enough, because its business model fundamentally relies on the collection and sharing of personal information for ad-revenue.
Hyperbole aside, Wu argues that Facebook should be replaced. He offers two options for an ad-free social network. One would be a subscription-based service that would eliminate the need for ads, which Wu proposes would cost $0.99 per month. Indeed Facebook COO Sheryl Sandberg has floated the idea of charging users a fee to opt out of targeted ads. But time and again, studies show that while Ivy league professors might pay, most users are unwilling to pay to eliminate ads, and proposals to charge users would deepen the already problematic digital divide.
The second option he proposes is a nonprofit to build and run a social network. This nonprofit, he imagines, could eliminate all advertising, manage the network on a lower budget, and be funded by public entities, similar to how the Corporation for Public Broadcasting funds public television and radio.
There are several reasons replacing Facebook with a nonprofit would not be good for consumers.
First, a nonprofit would lack a for-profit’s ability to innovate. Large-scale innovation can be difficult and expensive, and the drive for profits creates the incentive and ability for private sector companies to take risks to develop new products and services. For example, last year Facebook spent $5.9 billion on R&D alone, whereas Wikimedia has a total annual budget of $70 million. This investment in innovation ultimately yields dividends for consumers who benefit from better interfaces, new features, and faster services. And if this new entity is dependent on government money, what happens if Congress decides to pull the plug one year?
Second, low-budget nonprofits—as Wu imagines a successor to Facebook to be—would struggle to keep up with the ever-expanding online threat environment. Indeed, the most notable attempt to create a nonprofit social network failed to keep personal information secure. In 2011 several NYU students crowdfunded and launched a nonprofit social network called the Diaspora* Project. This Facebook-competitor allows users to maintain control over all the personal data that they share with friends, including storing their data on their own personal servers. Unfortunately, when the project launched it had numerous bugs and security vulnerabilities, leading the CTO of one company to say, “Basically, the code is really, really bad.”
Third, a nonprofit would not have the same motivation to contribute to other parts of the economy. Facebook does not operate inside a vacuum. The platform enables a rich commercial ecosystem of apps and services, in addition to serving as the public online presence for countless businesses. Some developers use Facebook as a mechanism for users to conveniently sign in to their service, while others use information from Facebook to enable games, dating services, and much more. As a for-profit company, Facebook balances these commercial interests, enabling important downstream innovations for consumers.
Finally, the Wikipedia model might work for curating public information—indeed Facebook has partnered with the crowdsourced encyclopedia to combat fake news—but that does not mean it will be effective at managing private data. Although Wikipedia has cultivated a reputation as a peaceful digital space for open collaboration, the truth is that it is a conflict-ridden battlefield of petty tyrants who regularly engage in edit wars over esoteric topics. If you think your relationship status is complicated now, wait until the community has a say. Moreover, this nonprofit that Wu suggests could dedicate itself to “better practices” has a troubling history with sexism and a lack of openness and diversity.
There are no calls for creating non-profit automakers following a defective car design or non-profit airlines after bad customer service. Every industry has growing pains, and while capitalism is not an unalloyed good, the ability to make and reinvest profits is a strength, not a weakness, for a company like Facebook.
Sorry Tim—turning Facebook into a nonprofit is simply not the answer.