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Summary:

Has Facebook failed to evolve along with the core of its user base, and could that spell doom for the social network? In a blog post at the Harvard Business Review site, professor Bruce Nussbaum argues that it has, and it could. But is he right?

Updated: Has Facebook lost touch with the core of its user base, and could that spell doom for the social network? In a post at the Harvard Business Review site, Bruce Nussbaum argues that Facebook has, and it could spell doom. The former assistant managing editor for BusinessWeek, now a professor at the Parsons School of Design, says that Facebook has alienated the “millennials” who have been its primary users since its early days as a university-only network by pushing the boundaries of what they are willing to accept in terms of privacy as they have grown up and gotten jobs and started families. This, he says, is a fatal mistake — and even rolling out new privacy controls, which Facebook is currently explaining to legislators in Washington, won’t help in the long run.

In a nutshell, Nussbaum argues that Facebook has failed to adapt and evolve as its core user base has grown up. While millennials might have enjoyed a more open approach to privacy when they were younger and in university, as they have grown older and gotten jobs, formed relationships, etc. they are less interested in — and even hostile to — the social network’s attempts to get them to share more of their personal data. Nussbaum’s viewpoint is based on what he says are responses from his students at the Parsons School of Design to Facebook’s recent changes:

They live on Facebook and they are furious at it. This was the technology platform they were born into, built their friendships around, and expected to be with them as they grew up, got jobs, and had families. They just assumed Facebook would evolve as their lives shifted from adolescent to adult and their needs changed. Facebook’s failure to recognize this culture change deeply threatens its future profits.

Is Nussbaum right? I’m not sure that he is. Yes, Facebook has alienated some users with its privacy changes, and some have likely canceled or deleted their accounts, as some high-profile users have. And there’s no question that the social network could have implemented its new features in a more open way — including not opting people in by default — and communicated better. But this is not the first time, or even the second time, that Facebook has been through this kind of process. Nussbaum criticizes the network for not evolving, but the reality is that it has evolved considerably from what it once was, and has been testing the boundaries of what people want to share for years now.

That has involved a more or less continuous process of pushing to open things up, getting criticized for it, revising and changing, and so on. We can argue about whether Facebook is trying to change people’s expectations of privacy and sharing or whether it is trying to adapt to them (or likely both), and it’s clear from CEO Mark Zuckerberg’s recent op-ed in the Washington Post that the company plans to keep pushing, because it sees sharing information with others as a positive thing both for users and for society as a whole. But then so do lots of other people, judging by the speed with which Facebook continues to add users. And even some of its harshest critics, such as sociologist Danah Boyd, aren’t prepared to write the network off just yet.

The other flaw in Nussbaum’s argument is that he sees the millennials who have grown up now as the core of Facebook’s user base, and losing touch with them as a fatal flaw. Given that the network now has close to 500 million users, and their average age is somewhere in the mid-40s, that group of university students who have grown up with Facebook haven’t been the most important segment for the company for a long time now — not to mention the fact that every year millions of younger users have adopted the network as a social hub, and continue to do so regardless of the public outcry over privacy.

Does Facebook have issues around privacy? Of course it does, and it has to be careful not to let that snowball turn into an avalanche. But assuming it can continue to evolve and change its approach to adapt to what the bulk of its users want — and mollify legislators so that they don’t impose onerous regulations on the company — those mistakes don’t have to be fatal.

Update: Alan Patrick of Broadstuff agrees with Nussbaum’s take on Facebook and its fatal business model, saying the network is caught between its desire to expose more of users’ data for business reasons and the reluctance of users to do this. Patrick says this creates a vicious cycle in which the network has to continue to push the boundaries of privacy in order to attract advertisers, but the more it does this the more it reduces the likelihood that users will want to comply. What do you think? Let us know in the comments.

Related content from GigaOM Pro (sub req’d): Could Privacy Be Facebook’s Waterloo?

Post and thumbnail photos courtesy of Flickr user Crunchies 2009

  1. [...] read this article today from Matthew Ingram over at GigaOm about Facebook and their ongoing privacy foul up.  I think there is a great [...]

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  2. I’m not sure if I’m a “millennial” or not, but I’ve been on Facebook from two months after it launched in 2004, and I don’t see any desire from my peer group to leave.

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    1. Thanks, Liz — I’m pretty sure I’m not a millennial, so I can’t comment on the trend :-)

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    2. I don’t see any desire to leave FB among my friends either. But that’s only because everybody else they know is on FB. And some of us have certainly become more and more reluctant to post any more of our information on FB.

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  3. Bruce Nussbaum makes some valid arguments on privacy concerns as we grow but in reality this is not the case with Facebook. Though Facebook is making some rookie mistakes [they are not really rookies anymore, just my expression]as far as privacy is concerned by taking their user base for granted, we have to date not seen a massive fall out where users are deleting their accounts in big numbers and till that happens there will not be a doom scenario as he is predicting.
    My take is that Facebook users are willing to sacrifice some privacy issues in order to live on Facebook because Facebook is the face of social networking.

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    1. The problem is that none of the plausible competitors have offered a real alternative. We were all disappointed with how ham-fisted Google Buzz turned out, and Yahoo hasn’t been heard from on Social in ages, even though they had many of the pieces of the puzzle for a strong offering.

      Facebook has been winning by default. The question is, will that continue forever, or can the tide be turned with the next truly innovative social service?

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  4. One question that has never been asked during all of the privacy debates is how much the information posted is actually true and accurate, and is really useful for Facebook’s vision of sharing (with advertisers.)

    I created a GMail account that is only for use with Facebook. Any email not from Facebook will be automatically deleted. I have never clicked on an ad in Facebook. I log out of Facebook when I am done. I have hidden updates from several Pages.

    Some people don’t use their real names in spite of the policies. Some people do nothing but play games.

    Of the almost 500 million accounts, how many are checked hourly? Daily? Weekly? From the main site or a mobile app? How many have not been accessed at all in the past 30 days?

    Is the data in Facebook really useful to Facebook for any business purpose?

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  5. One thing I haven’t seen discussed is how the privacy changes are affecting user behavior. I am now hesitant to define additional Likes and Interests, because I don’t want all of that public. I’d be happy to share that info with a trusted group of friends, but not with the world. As a result, I expect that Facebook can’t target ads to me as effectively, which would be their loss. I expect I may in the minority, but I’m not sure.

    Secondly, as for people leaving Facebook in droves due to their frustration, I don’t think that’s how the change will occur. People will create accounts on new social networks as they pop up, and start sharing more and more within those services. They’ll still keep their Facebook account, but it will become less relevant to them over time. The total number of FB accounts may still go up, but avg page views will drop first if viable competitors emerge.

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    1. That’s a good point, Craig — by the time problems become obvious it could be too late. That’s more or less what happened to Friendster and what seems to be happening to MySpace as well.

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  6. @Mathew,

    Not sure whether or not I agree with anyone’s argument, however according to Google Trends traffic on Facebook.com has been in a MAJOR decline since the beginning of 2010.

    http://www.google.com/trends?q=facebook.com

    This makes me personally wonder if Facebook saw “inflated user growth” due to the Great Recession which brought about a strong focus on family and friends globally. This fact has been well documented in the media.

    My $.02,

    Best.

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    1. That’s an interesting point, Chris — thanks for the comment.

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  7. I don’t think they have a fatal culture but they do have an ethically-challenged CEO. There are just way too many privacy eruptions, along with court cases, lawsuits and large financial settlements to be coincidental.

    Facebook is NOT the only company to ever become successful. We’ve had others. But this is the first time I’ve ever really questioned the ethics of the founder. And it’s the first time we’ve ever seen a steady stream of lawsuits filed against a company for the “personal” behavior of the founder.

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    1. That’s a fair point, Vischameel — although I think it’s important to remember that much of what people are writing about in terms of Zuckerberg is about things he did or said years ago, when he was still a teenager.

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  8. In my home town in France, any new cool hang out bar or disco attracting most of the social life had a 6 to 9 months lifetime before being supplanted by the next cool place. SecondLife was the cool hang out, then replaced by MySpace, replaced by Facebook. I am pretty sure some new cool Internet hang-out will soon open and then it will be just a matter of time before it reaches its tipping point once it starts to attract some key people.

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  9. It is interesting because Facebook wasn’t built for the “millenials” It was built for college students. As it has evolved college students continue to be “Facebook Addicts” As well as High-school & Grad school users. It is still geared to the same demographic that it was built for. Also, it has attracted older users as well. Millenials may be upset but Facebook is still thriving.

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  10. In order for Facebook to suffer a loss of users/usage as a result of their privacy policy decisions, the public needs an example of the horror that might result.

    Urban legends like razor blades in apples at Halloween have tremendous impact over behavior. Abstract privacy changes do not. Users spend hours on Facebook. Without an apparent harm and/or better alternative, motivating change in the masses is nigh impossible.

    Government interference/interaction in policies will likely make users feel safer without awareness of the specific, if any, material changes to policy.

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