What Everyone Seems to Miss In Facebook’s Private or Public Debate…

…is the core reason it makes sense for Facebook to be public: Accountability to its customers. The rest of this debate is simply financial folks arguing amongst themselves. Facebook is the greatest repository of data about people's intentions, relationships, and utterances that ever has been created. Period. And a…

No FBook Filings.png

…is the core reason it makes sense for Facebook to be public: Accountability to its customers. The rest of this debate is simply financial folks arguing amongst themselves.

Facebook is the greatest repository of data about people’s intentions, relationships, and utterances that ever has been created. Period. And a company that owns that much private data should be accountable to the public. The public should be able to review its practices, its financials, and question its intentions in a manner backed by our collective and legally codified will. That’s the point of a public company – accountability, transparency, and thorough reporting.

If Facebook wants to stay private and not be part of the social mores which we’ve built that govern major corporations (flawed though they may be), well I think that would be a major strategic blunder, one that would ultimately doom the company. It’s fine for all sorts of companies to stay private, for all sorts of reasons. But a company like Facebook, with its unprecedented grasp of our social data, should be accountable to the public. If it isn’t, we’ll migrate our “social graphs” to a company that is.

If Zuckerberg doesn’t want to be a public CEO and deal with the realities of that, as this Reuters piece argues, well, he should find a CEO who is willing to do the job.

(If you’re not up on the debate, here’s a primer.)

90 thoughts on “What Everyone Seems to Miss In Facebook’s Private or Public Debate…”

  1. You are absolutely right, but I think it goes much deeper than just changing a CEO and going public. Because accountability is key, Facebook remains private. Its business model does not stem directly from users as a data bank model but caters for 3rd party revenue streams, the situation cannot be reconciled. Only when a paradigm shift reverses relations between providers and users will take place and technologies and mindset will allow for pull based permission and data exchange context based food chains, proactively managed by users who become equal partners in the food chains created about them, will Zuckerbergs relinquish their power ,acknowledge and act with humility and accountability that comes with assuming the culture of reciprocity and respect of truly catering for individuals.

  2. You are absolutely right, but I think it goes much deeper than just changing a CEO and going public. Because accountability is key, Facebook remains private. Its business model does not stem directly from users as a data bank model but caters for 3rd party revenue streams, the situation cannot be reconciled. Only when a paradigm shift reverses relations between providers and users will take place and technologies and mindset will allow for pull based permission and data exchange context based food chains, proactively managed by users who become equal partners in the food chains created about them, will Zuckerbergs relinquish their power ,acknowledge and act with humility and accountability that comes with assuming the culture of reciprocity and respect of truly catering for individuals.

  3. This is dead on. Of course, FB is within its legal rights to stay (semi-)privately held. But, it does risk user backlash at some point. It won’t always be a darling. Very soon, it will be seen as some evil empire. It’s inevitable. But, at least being publicly traded will aid in their PR efforts.

  4. This is dead on. Of course, FB is within its legal rights to stay (semi-)privately held. But, it does risk user backlash at some point. It won’t always be a darling. Very soon, it will be seen as some evil empire. It’s inevitable. But, at least being publicly traded will aid in their PR efforts.

  5. The Goldman deal will not hold up if the SEC is anything but sleeping (again!). The creation of a partnership for the some purpose of investing in a specific pre-identified company at pre-identified terms is a fundamentally different animal than a VC partnership deciding to invest into a company after the LPs committed capital — and therefore clearly violates the SEC’s 499 shareholder guidance. Anyone not seeing this got carried away a bit… So the SEC, if it is up to it’s job, will soon require FB to file statements in which case they nay as well trade public.

  6. The Goldman deal will not hold up if the SEC is anything but sleeping (again!). The creation of a partnership for the some purpose of investing in a specific pre-identified company at pre-identified terms is a fundamentally different animal than a VC partnership deciding to invest into a company after the LPs committed capital — and therefore clearly violates the SEC’s 499 shareholder guidance. Anyone not seeing this got carried away a bit… So the SEC, if it is up to it’s job, will soon require FB to file statements in which case they nay as well trade public.

  7. “social mores which we’ve built that govern major corporations”

    Oh Brother. I don’t think “flawed as they may be” quite cuts it.

    I appreciate your point, but implying that going public will somehow make our data safer from moral transgressions, or Facebook more accountable is laughable, no?

    You are one of the smartest guys I read, but a Facebook IPO does nothing for the users.

  8. “social mores which we’ve built that govern major corporations”

    Oh Brother. I don’t think “flawed as they may be” quite cuts it.

    I appreciate your point, but implying that going public will somehow make our data safer from moral transgressions, or Facebook more accountable is laughable, no?

    You are one of the smartest guys I read, but a Facebook IPO does nothing for the users.

  9. “Facebook is the greatest repository of data about people’s intentions, relationships, and utterances that ever has been created. Period.”

    Are you seriously considering “the public” Facebook’s “customers?”

    Well at least you threw in “Period.” so we’d know you were… “serious.” (ha)

    “And a company that owns that much private data should be accountable to the public.”

    “Should be,” “that much,” huh? Based on what? Can you cite any examples that set a precedent for this imaginary, less than poetic, far from specific principle you are so certain of? Apparently not since your argument went circular instead. (double ha)

    Let me help you sleep better at night. Your entire (2 minute) thesis is based on a supremely flawed premise. When 580,000,000+ users render information to Facebook (and their only real customers aka advertisers) it ceases to be private. When you check-in, it ain’t private. When you “like” and “poke” and “friend” and whine that Suzy wouldn’t kiss you after the dance, it ain’t private.

    If it’s a principle to modernize you seek, I suggest this one:

    “Knucklehead beware.”
    (Latin translation pending šŸ˜‰

    Dan

  10. “Facebook is the greatest repository of data about people’s intentions, relationships, and utterances that ever has been created. Period.”

    Are you seriously considering “the public” Facebook’s “customers?”

    Well at least you threw in “Period.” so we’d know you were… “serious.” (ha)

    “And a company that owns that much private data should be accountable to the public.”

    “Should be,” “that much,” huh? Based on what? Can you cite any examples that set a precedent for this imaginary, less than poetic, far from specific principle you are so certain of? Apparently not since your argument went circular instead. (double ha)

    Let me help you sleep better at night. Your entire (2 minute) thesis is based on a supremely flawed premise. When 580,000,000+ users render information to Facebook (and their only real customers aka advertisers) it ceases to be private. When you check-in, it ain’t private. When you “like” and “poke” and “friend” and whine that Suzy wouldn’t kiss you after the dance, it ain’t private.

    If it’s a principle to modernize you seek, I suggest this one:

    “Knucklehead beware.”
    (Latin translation pending šŸ˜‰

    Dan

  11. Looks like Mark is a computer freak not a bussinessman. And i can relate to that. But Facebook is to big of a deal to just let it be. It became an important thing in our lives, where Mark likes it or not.

  12. Looks like Mark is a computer freak not a bussinessman. And i can relate to that. But Facebook is to big of a deal to just let it be. It became an important thing in our lives, where Mark likes it or not.

  13. flaw: being responsible to your shareholders as a public company is NOT the same as being accountable to your registered users in how you use their private personal info. your larger more powerful shareholders will mostly be large business entities who care about user privacy only in so far as it affects the bottom line. ‘shareholder value’ will not much equal accountable privacy management.

    think zuck has thot it thru now and is aware of this. hope he promises to ‘not be evil’.

  14. flaw: being responsible to your shareholders as a public company is NOT the same as being accountable to your registered users in how you use their private personal info. your larger more powerful shareholders will mostly be large business entities who care about user privacy only in so far as it affects the bottom line. ‘shareholder value’ will not much equal accountable privacy management.

    think zuck has thot it thru now and is aware of this. hope he promises to ‘not be evil’.

  15. John has been reading Atlas Shrugged over the weekend.

    Completely support and feel compelled for Congress to pass Social Network Accountability Act for Betterment of World Citizens.

    Zuckerberg should be stripped off his powers, and a people-elected Committee on Social Networks can make qualified and unbiased decisions.

  16. John has been reading Atlas Shrugged over the weekend.

    Completely support and feel compelled for Congress to pass Social Network Accountability Act for Betterment of World Citizens.

    Zuckerberg should be stripped off his powers, and a people-elected Committee on Social Networks can make qualified and unbiased decisions.

  17. Why should FB be penalised for it’s success.

    Legally it doesn’t need to be a PLC as far as I’m concerned – end of story.

  18. Why should FB be penalised for it’s success.

    Legally it doesn’t need to be a PLC as far as I’m concerned – end of story.

  19. I think you are confusing financial accountability with accountability to the public. A public company has no more obligation to the public than a private one. Philip Morris was a public company when it was doing nothing but sell cigarettes. All the additional rules applied to a public company have to do with financial reporting. Zuckerberg would go to jail if he misrepresent the company’s earnings but not for misusing the data that was gathered on facebook.

  20. I think you are confusing financial accountability with accountability to the public. A public company has no more obligation to the public than a private one. Philip Morris was a public company when it was doing nothing but sell cigarettes. All the additional rules applied to a public company have to do with financial reporting. Zuckerberg would go to jail if he misrepresent the company’s earnings but not for misusing the data that was gathered on facebook.

  21. Can you please cite examples of and explain why you think publicly-owned companies are necessarily more responsible and transparent with their non-financial data?

  22. Can you please cite examples of and explain why you think publicly-owned companies are necessarily more responsible and transparent with their non-financial data?

  23. This is an amazingly flawed argument. Public companies are NOT accountable to their customers (by securities rules and regs), only their shareholders. Securities laws in the US (as they’re intended to be enforced) aim to insure that the market skews towards being a level playing field and that, in the case of public companies, all information is known to all participants at the same time.

    Your only rights as a Facebook customer are spelled out in their terms of service and other agreements you agree to by using the service. You have NO right to review its practices, its financials, or question its intentions beyond canceling your account. By all means, vote with your dollar, or your mouse click, but get off your high horse, please.

    Where the deal with Goldman stinks has been spelled out in numerous other articles, and its more than “financial folks arguing amongst themselves. A specific class of investor (those with $2MM to invest in the fund) are being given special treatment, thus skewing the market towards a less level playing field. And that skew, is ultimately detrimental to the principles of liberty and a free market. Its the SEC’s responsibility to regulate this though, not Facebook’s.

  24. This is an amazingly flawed argument. Public companies are NOT accountable to their customers (by securities rules and regs), only their shareholders. Securities laws in the US (as they’re intended to be enforced) aim to insure that the market skews towards being a level playing field and that, in the case of public companies, all information is known to all participants at the same time.

    Your only rights as a Facebook customer are spelled out in their terms of service and other agreements you agree to by using the service. You have NO right to review its practices, its financials, or question its intentions beyond canceling your account. By all means, vote with your dollar, or your mouse click, but get off your high horse, please.

    Where the deal with Goldman stinks has been spelled out in numerous other articles, and its more than “financial folks arguing amongst themselves. A specific class of investor (those with $2MM to invest in the fund) are being given special treatment, thus skewing the market towards a less level playing field. And that skew, is ultimately detrimental to the principles of liberty and a free market. Its the SEC’s responsibility to regulate this though, not Facebook’s.

  25. It is publicly controlled, the day everyone deletes their account is the day FB dissolves. They’re valueless without their users.

    And your “rights” don’t extend beyond your initial choice to use FB or not.

  26. It is publicly controlled, the day everyone deletes their account is the day FB dissolves. They’re valueless without their users.

    And your “rights” don’t extend beyond your initial choice to use FB or not.

  27. What about being a publicly traded company makes the company accountable to the public? Rather, they’re accountable to their shareholders.

    And even if they were, which public? The US public? The Germany public? Perhaps, eventually, a Chinese public?

    This seems to be be a very thin argument.

  28. What about being a publicly traded company makes the company accountable to the public? Rather, they’re accountable to their shareholders.

    And even if they were, which public? The US public? The Germany public? Perhaps, eventually, a Chinese public?

    This seems to be be a very thin argument.

  29. Going off of what commenters are saying about publicly traded companies being accountable to shareholders, not the public:

    Would a board of shareholders actually further endanger our information? Shareholders seek dollars, and would need to distribute our information in mass quantities to achieve.

    Maybe this is already happening, but either way I can’t see the business men in suits with cigars refusing to “abuse” our information when they see how much value it holds when sold.

    Great conversation piece!

  30. Going off of what commenters are saying about publicly traded companies being accountable to shareholders, not the public:

    Would a board of shareholders actually further endanger our information? Shareholders seek dollars, and would need to distribute our information in mass quantities to achieve.

    Maybe this is already happening, but either way I can’t see the business men in suits with cigars refusing to “abuse” our information when they see how much value it holds when sold.

    Great conversation piece!

  31. You are incredibly misinformed. Maybe do some research before posting or write about what you know. Clearly this topic is not it.

    1. Users are not FB’s customers. Their advertisers are. At most, the users are content providers.

    2. Users can protect themselves against FB by deleting their account. How does FB being mismanaged or going bankrupt affect the user financially? Maybe for companies like Zynga, but not the users. So if there is no financial protection needed for the user (who gets the service for free) why does FB need to disclose how it runs it’s business?

  32. You are incredibly misinformed. Maybe do some research before posting or write about what you know. Clearly this topic is not it.

    1. Users are not FB’s customers. Their advertisers are. At most, the users are content providers.

    2. Users can protect themselves against FB by deleting their account. How does FB being mismanaged or going bankrupt affect the user financially? Maybe for companies like Zynga, but not the users. So if there is no financial protection needed for the user (who gets the service for free) why does FB need to disclose how it runs it’s business?

  33. Wow, a lot of comments saying “you don’t know what you’re talking about.” OK, I’m not a public company analyst, but I do know that shareholders own Facebook, not its customers. However, a public company is way easier to “own” as a customer – but one share and you have some rights. Truth is, a public company discloses a lot more information about its business than a private one. And that provides journalists and private citizens a lot more accountability, is my point.
    I’d argue that Facebook views its customers as its users, but I’ll let someone from Facebook confirm that.

  34. Wow, a lot of comments saying “you don’t know what you’re talking about.” OK, I’m not a public company analyst, but I do know that shareholders own Facebook, not its customers. However, a public company is way easier to “own” as a customer – but one share and you have some rights. Truth is, a public company discloses a lot more information about its business than a private one. And that provides journalists and private citizens a lot more accountability, is my point.
    I’d argue that Facebook views its customers as its users, but I’ll let someone from Facebook confirm that.

  35. My comment for NYT article re Goldman ‘investment’:

    There are certain ‘inventions’ that will inevitably arise in some form or another given the development of the ‘landscape’ that makes that possible. They can almost be considered forgone conclusions… they are emergent properties of the technologies that make them possible.

    And some of them (especially in NEW landscapes) have a tendency towards concentration (a natural total or near monopoly).

    The peer-to-peer networking offered by Facebook is one such form.

    Like with search before… where Google wasn’t the first to enter the field… once a certain tipover point is reached… dominance becomes self-reinforcing.

    So it is with Facebook… there were (and are) others… but a tipover point may have been reached. Though I wouldn’t count on it… (and believe its not the case, at least without some missing needed capabilities and broader focus than data collection for advertisers and governments and as a marketing tool).

    Because while Facebook has many wonderful features… (Yes, I do have a Facebook account)…

    I don’t think it gets to the heart of the requirements for peer-to-peer association and empowerment in an absolutely critical new landscape. Sometimes missed potentials are not regained.

    Examples from the past:
    Telephone and television… and reaching even farther back… the creation of money and the mechanisms of ‘credit creation’… (which many of us here see as a very troubled technology.)

    Because of cultural inertia and a natural need for stability… patterns laid down by the first players to gain dominance in such new landscapes become extremely difficult to dislodge.

    Sometimes this can be for the best… usually not.

    Many of televisions initial potentials for civic engagement and localization of political participation were lost… and in fact turned upside down… by its solidification in community unfriendly ways (in this country at least). The INERTIA of certain technology implementations becomes extremely difficult to dislodge even when obviously faulty.

    (I’m 61 and for my whole life people have been pointing out… and its scarcely disputable… that the public airwaves could make campaigning a whole lot cheaper… and candidacy available to more than just the ‘pre-approved’ candidates. Yet media costs and the money quest continues to be a thorn in the side of honest politics and good governance… hmmm… I wonder who’s interest THAT serves?)

    In a way, Facebook and other such sites are trying to address… and/or even bridge a very difficult gap mankind has to address as ICT quickly goes global. In evolutionary terms its essentially instantaneous.

    THERE IS A FUNDAMENTAL SCALING ISSUE IN HUMAN SOCIETIES ASSOCIATED WITH NATURAL HUMAN COMMUNITY SIZE (Dunbarā€™s Number), THE ALTRUISM PROBLEM (thereā€™s an unavoidable discontinuity between biological and intellectual altruism) AND COGNITIVE LIMITS (the ā€œattention economyā€).
    In short… our personal networks are smaller than the social organism of which we are a part. This is both unavoidable and problematic.

    Social Networks & The Social Organism: Healing the Breach
    http://culturalengineer.blogspot.com/2009/05/social-networks-social-organism-healing.html

    THE DEVELOPMENT OF THE WEB IS THE MOST FUNDAMENTAL CHANGE IN PEER-TO-PEER RELATIONSHIP SINCE THE MOVE TO SETTLED EXISTENCE!

    The Internet landscape is being rapidly carved up into private fiefdoms.

    I strongly, even urgently (at considerable personal sacrifice; Iā€™m without support or connections) have been pointing out that at least one corner (a critical corner in my opinion) should be reserved to the Commonsā€¦ to ALL of humanity.

    The Commons-dedicated Account System:

    A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contributionā€¦ which for fundamental reasons of scale must allow a viable micro-transaction. Such a network ideally should maintain its own cloud and bank. Accounts may be created and/or maintained with zero balances and/or only momentary balances during a pass-through transfer (I believe the monetization model requires no burden on the actual transaction.)

    Gov 2.0 and New Economies – Designing the Social Contract
    http://culturalengineer.blogspot.com/2009/09/gov-20-and-new-economies-designing.html

    Political Fundraising: Act Blue, Facebook and the Missing Network Imperative
    http://culturalengineer.blogspot.com/2010/08/political-fundraising-act-blue-facebook.html

  36. My comment for NYT article re Goldman ‘investment’:

    There are certain ‘inventions’ that will inevitably arise in some form or another given the development of the ‘landscape’ that makes that possible. They can almost be considered forgone conclusions… they are emergent properties of the technologies that make them possible.

    And some of them (especially in NEW landscapes) have a tendency towards concentration (a natural total or near monopoly).

    The peer-to-peer networking offered by Facebook is one such form.

    Like with search before… where Google wasn’t the first to enter the field… once a certain tipover point is reached… dominance becomes self-reinforcing.

    So it is with Facebook… there were (and are) others… but a tipover point may have been reached. Though I wouldn’t count on it… (and believe its not the case, at least without some missing needed capabilities and broader focus than data collection for advertisers and governments and as a marketing tool).

    Because while Facebook has many wonderful features… (Yes, I do have a Facebook account)…

    I don’t think it gets to the heart of the requirements for peer-to-peer association and empowerment in an absolutely critical new landscape. Sometimes missed potentials are not regained.

    Examples from the past:
    Telephone and television… and reaching even farther back… the creation of money and the mechanisms of ‘credit creation’… (which many of us here see as a very troubled technology.)

    Because of cultural inertia and a natural need for stability… patterns laid down by the first players to gain dominance in such new landscapes become extremely difficult to dislodge.

    Sometimes this can be for the best… usually not.

    Many of televisions initial potentials for civic engagement and localization of political participation were lost… and in fact turned upside down… by its solidification in community unfriendly ways (in this country at least). The INERTIA of certain technology implementations becomes extremely difficult to dislodge even when obviously faulty.

    (I’m 61 and for my whole life people have been pointing out… and its scarcely disputable… that the public airwaves could make campaigning a whole lot cheaper… and candidacy available to more than just the ‘pre-approved’ candidates. Yet media costs and the money quest continues to be a thorn in the side of honest politics and good governance… hmmm… I wonder who’s interest THAT serves?)

    In a way, Facebook and other such sites are trying to address… and/or even bridge a very difficult gap mankind has to address as ICT quickly goes global. In evolutionary terms its essentially instantaneous.

    THERE IS A FUNDAMENTAL SCALING ISSUE IN HUMAN SOCIETIES ASSOCIATED WITH NATURAL HUMAN COMMUNITY SIZE (Dunbarā€™s Number), THE ALTRUISM PROBLEM (thereā€™s an unavoidable discontinuity between biological and intellectual altruism) AND COGNITIVE LIMITS (the ā€œattention economyā€).
    In short… our personal networks are smaller than the social organism of which we are a part. This is both unavoidable and problematic.

    Social Networks & The Social Organism: Healing the Breach
    http://culturalengineer.blogspot.com/2009/05/social-networks-social-organism-healing.html

    THE DEVELOPMENT OF THE WEB IS THE MOST FUNDAMENTAL CHANGE IN PEER-TO-PEER RELATIONSHIP SINCE THE MOVE TO SETTLED EXISTENCE!

    The Internet landscape is being rapidly carved up into private fiefdoms.

    I strongly, even urgently (at considerable personal sacrifice; Iā€™m without support or connections) have been pointing out that at least one corner (a critical corner in my opinion) should be reserved to the Commonsā€¦ to ALL of humanity.

    The Commons-dedicated Account System:

    A self-supporting , Commons-owned neutral network of accounts for both political and charitable monetary contributionā€¦ which for fundamental reasons of scale must allow a viable micro-transaction. Such a network ideally should maintain its own cloud and bank. Accounts may be created and/or maintained with zero balances and/or only momentary balances during a pass-through transfer (I believe the monetization model requires no burden on the actual transaction.)

    Gov 2.0 and New Economies – Designing the Social Contract
    http://culturalengineer.blogspot.com/2009/09/gov-20-and-new-economies-designing.html

    Political Fundraising: Act Blue, Facebook and the Missing Network Imperative
    http://culturalengineer.blogspot.com/2010/08/political-fundraising-act-blue-facebook.html

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