Facebook’s Quadruple Play

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Stan Chudnovsky doesn’t remember when CEO Mark Zuckerberg and other top Facebook executives began talking about treating the company’s portfolio of services more like, well, a  portfolio. The current VP for Facebook’s Messenger service simply recalls that the company’s original tendency to keep Facebook, Messenger, Instagram, and WhatsApp pretty much separate started to feel increasingly unwieldy as user numbers for each surged well past the billion mark.

Instead of continuing to silo off each app, execs concluded that “we can serve people better if the experiences we are building are a little bit more interconnected,” Chudnovsky says. “That truth [had] been ringing in our ears for a long time. What was never obvious is how would we exactly go about it, and how would we prioritize it.”

To kick-start the process, Zuckerberg did what he often does: He posted about it on Facebook. On March 6, 2019, he shared a 3,219-word manifesto titled “A Privacy-Focused Vision for Social Networking.” He drew a contrast between social networking’s “town squares”—the largely public meeting areas offered by Facebook and Instagram feeds—and its more intimate “living rooms,” as exemplified by private group chats and messages exchanged through Messenger or WhatsApp.

“Today we already see that private messaging, ephemeral stories, and small groups are by far the fastest growing areas of online communication,” Zuckerberg wrote. He detailed a wildly ambitious, years-long plan to move Facebook’s portfolio of services aggressively in that direction—and all together. Facebook, Instagram, WhatsApp, and Messenger would follow a unified strategy to get there.

While Zuckerberg, whom Facebook did not make available for this story, often makes proclamations about Facebook’s future, real life doesn’t always cooperate. In 2014, for example, he boldly predicted that user-generated video would dominate the site within five years. It’s now been six years, and our News Feeds are still driven by text. However, it’s easy to understand why he would be looking beyond the vast (and still vastly profitable) town squares he presides over. And it’s not just because the more private apps are gaining in popularity.

Though private messaging has problems of its own—WhatsApp and Messenger have both placed limits on message forwarding to slow the spread of misinformation—much of the controversy that dogs Facebook stems from its publicness. The fact that any disinformation, hoaxes, and hateful rhetoric shared on the site can be disseminated to millions of people in an instant has made the company a target for politicians and watchdogs.
Even some Facebook employees—-historically, true believers in the company they work for—have pushed back, tweeting their discontent and staging a virtual walkout in June.

Zuckerberg did what he often does: He posted about it on Facebook.

After Instagram Stories had become a blockbuster, in 2017, Facebook, Messenger, and WhatsApp rolled out their own takes on the idea—pretty darn similar, but not identical. That’s an inefficient way to build new functionality.

The spotlight has only grown hotter for Zuckerberg since he published his post, as 2020’s grinding real-world turmoil—including the COVID-19 pandemic, protests sparked by the police killing of George Floyd, and threats to the U.S. presidential election’s integrity—flowed onto Facebook and then back into the real world. The company’s handling of the chaos drew its own opposition, especially its refusal to suppress a post in which President Donald Trump warned that “when the looting starts, the shooting starts.” Nervous about their association with the social network, 1,200 brands paused their Facebook advertising—–at least for the month of July—as part of a move called Stop Hate for Profit. The company’s revenues took a negligible hit.

Concern about Facebook’s power isn’t new, but the push to do something about it has grown and intensified. Two months after Zuckerberg disclosed his new vision for the company, his Harvard classmate and Facebook cofounder Chris Hughes published an incendiary op-ed in The New York Times, titled “It’s Time to Break Up Facebook.” This past July, Rep. David Cicilline (D-RI) grilled Zuckerberg at the U.S. House Judiciary Antitrust Subcommittee hearings, saying, “Your platform is so big, even with the right policies in place, you can’t contain deadly content. Frankly, I believe it strikes at the very heart of American democracy.” Shoshanna Zuboff, author of The Age of Surveillance Capitalism, says that “there is increasing mobilization within the society at the grassroots, the sense that [tech giants], which we once thought of as the solution, have now become the problem. In my view, it’s this shifting sense of public malaise, of public fear, that has finally mobilized lawmakers.”

There’s no way to square this kind of take with Facebook’s self-image. VP of product and social good Naomi Gleit, one of the longest-tenured employees after Zuckerberg, still laments “the gap between what people think that our intentions are and what our intentions are.” But the fact remains that Facebook is combining its apps into one even bigger, formidable network at the same time that many are questioning whether it should exist at all in its current form.

Indeed, Facebook’s massive reengineering effort coincides with several external threats at once: to its size, its primary revenue source (targeted advertising), and its liability protections for what’s published on the platform. All of which makes this an unprecedented moment for the company, and—since this is Facebook we’re talking about—society itself.

There was a time when Facebook’s strategy for its component parts was to treat them more like entities unto themselves. “I love when people come to the Instagram campus, because not everyone realizes how autonomous we actually are,” Instagram co-founder and then CEO Kevin Systrom told me in 2017. That was soon after his company had decamped from Facebook’s sprawling Menlo Park, California, digs, which felt like the world’s largest dorm room, to its own gleaming headquarters a mile and a half away—decorated, inevitably, with blown-up photos depicting Instagram users’ best lives.

At the time, Systrom described his relationship with Zuckerberg and Facebook COO Sheryl Sandberg as being like that between a CEO and trusted board members. “You get input and you get guidance,” he explained. “But you also get pure autonomy, and you get to push your vision forward—which also happens to push the larger company’s vision forward as well.”

Letting Instagram be Instagram was good business. When Facebook bought the photo-sharing phenom for $1 billion, in 2012, it had racked up an impressive 30 million users in just 18 months.

Years later, Instagram played a decisive role in Facebook’s strategy for staving off Snapchat, which had twice spurned Zuckerberg’s acquisition proposals. When Snapchat’s playful, ephemeral “Stories” feature took off, Systrom’s team adroitly co-opted it in 2016, creating a wildly popular clone that still felt like it belonged inside Instagram.

Did Facebook ever pressure Instagram to make changes that felt un-Instagrammy? Absolutely. But Systrom was able to fend off such intrusions as cross-promotions with Facebook that would have bespoiled the app’s tasteful aesthetic. “I’d see things like that, and then they’d just disappear,” remembers one former staffer. “We won those fights.”

If anything, WhatsApp remained even more of a principality unto itself. In 2014, after Facebook’s $19 billion acquisition bid had been announced but before it had cleared its final regulatory hurdles, CEO Jan Koum told me that his company had “no plans to change anything about how we execute” once the deal was done, and it didn’t.

In startup days, Koum and partner Brian Acton had been ardently opposed to collecting unnecessary data about users and larding their app with ads. “Remember, when advertising is involved, you the user are the product,” they warned in a 2012 blog post, not needing to mention Facebook by name to make their point. Post-acquisition, as WhatsApp grew to a billion users by early 2016, it continued to spurn ads and champion privacy. In April of that year, it switched on end-to-end encryption that prevented even Whats-App from deciphering messages as they traveled between users.

The freedom that Instagram’s and WhatsApp’s founders enjoyed within Facebook was remarkable for its longevity. But as recounted this year in Steven Levy’s Facebook: The Inside Story and Sarah Frier’s No Filter: The Inside Story of Instagram, it wouldn’t last forever. Systrom and Instagram co-founder Mike Krieger came to feel that Zuckerberg was willfully starving them of resources. Koum and Acton found themselves under pressure from Sandberg to incorporate the targeted ads they despised. Acton resigned in September 2017, later tweeting a defiant “It is time. #deletefacebook.” Koum quit the following April. Systrom and Krieger left five months later.

After the founder exodus, longtime Facebook executives Adam Mosseri and Will Cathcart took over Instagram and WhatsApp, respectively. Both were trusted Zuckerberg lieutenants and had previously overseen Facebook’s News Feed—setting the stage for the unification plan to come.

For years, surveys have shown that most peo­ple don’t know that Facebook owns Instagram and WhatsApp.That often seemed to redound to the company’s favour.

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For years, surveys have shown that most peo­ple don’t know that Facebook owns Instagram and WhatsApp. That often seemed to redound to the company’s favour. Folks who fled Facebook—-teenagers who deem it insufficiently cool or older users concerned about privacy—often ended up spending more time in something else owned by Facebook Inc.

However, such ignorance became tougher to maintain in August 2019, when Instagram’s and WhatsApp’s startup screens began declaring that the apps were “From Facebook.” Tying beloved products to the embattled Facebook brand was a gutsy act of transparency, says Ivan Kayser, CEO of strategy and design consultancy Redscout, who calls Facebook’s willingness to do so “weirdly positive.”

Confusion about the relationship between Facebook and the other services under its umbrella was “long-term, not a good thing for us,” says Instagram VP of product Vishal Shah. He points out that the company’s apps have always benefited from certain logical integrations and consolidations. For example, Instagram users have been able to cross-post photos to Facebook with one click. Businesses also have unified tools, such as a single dashboard for wrangling communications with customers on both Facebook and Instagram.

But in many cases, Facebook had been willing to double up on its efforts, if not triple or quadruple. After Instagram Stories had become a blockbuster, in 2017, Facebook, Messenger, and Whats-App rolled out their own takes on the idea—pretty darn similar, but not identical. That’s an inefficient way to build new functionality. “Right now, every time we innovate on something in Facebook Stories, Instagram takes three months to implement that same feature inside Instagram Stories, and vice versa,” sighs Fidji Simo, who, as VP of the Facebook app, is responsible for the company’s flagship product.

Contrast that with last spring’s rollout of Rooms, a Zoom-esque video conferencing service that the company pushed out months ahead of schedule when the COVID-19 pandemic hit. Though officially part of Messenger, Rooms can also be launched from Facebook, Instagram, and WhatsApp. Other recent launches, such as Facebook Pay and Facebook Shops, follow a similar one-service-everywhere strategy. (In August, the company folded all of its payments-related initiatives into a new group called Facebook Financial, led by former Messenger chief David Marcus—who was once president of PayPal.)

Also in the works at press time is Accounts Center, a one-stop hub where users can view and change settings across Facebook’s apps, including the ability to automatically cross-post among services. That might sound mundane. But given an app like Instagram’s historic independence and cultural quirks, the project faces some definite challenges.

On Facebook, for example, people are limited—at least in theory—to a single, real-identity account. On Instagram, having a pseudonym is fine, and some young people maintain a “fake Instagram,” or “finsta”: a second, secret account meant only for close friends. The last thing anyone would want is their finsta posts popping up on Facebook. “Users need to decide that [Facebook and Insta-gram accounts] can be interrelated,” says George Lee, a Facebook director of product and former Instagram head of growth.

The braiding together of sites has required adjustment on everyone’s part. Shah joined Instagram in 2015, when it was a more self-contained operation. Today, he says, “I tell people, ‘If you’re here because you miss the old days of how we used to build and experiment in a vacuum, maybe this isn’t the right place for you now.’ ” (That didn’t stop Instagram from recently unveiling Reels, a TikTok doppelgänger that’s only available inside Insta-gram; Facebook says it has no current plans to spread it to other apps.)

But the trickiest part of Zuckerberg’s plan is the intensified emphasis on private messaging. Without setting a deadline, he said in his 2019 post that users of Messenger, Whats-App, and Instagram’s messaging feature—each historically a walled garden—would be able to communicate across all three services in a project referred to within the company as “interop.” In September, the company took a first step by allowing users in a few countries to exchange messages between Messenger and Instagram. (See sidebar, “End-to-End Encryption.”)

Still to come: adding WhatsApp to the mix and implementing encryption across all three services. Messenger VP Chudnovsky won’t say when the interop project will be completed other than that it won’t be this year. “I assumed it was going to be very complicated,” he says. “I think it’s somewhat more complicated than we originally thought.”

The challenges aren’t merely technical. Facebook’s history is pockmarked with examples of its playing fast and loose with its users’ data in service of its behemoth advertising business. The likelihood that Zuckerberg would face widespread cynicism about his vision of a more private future was so high that even he had to acknowledge it. “I understand that many people don’t think Facebook can or would even want to build this kind of privacy-focused platform—-because frankly we don’t currently have a strong reputation for building privacy protective services, and we’ve historically focused on tools for more open sharing,” he wrote.

At least Zuckerberg could point to Whats-App as a model. Long after its disaffected founders quit, the service’s end-to-end encryption and general reputation for privacy remain intact. “They haven’t screwed it up, which is kind of neat,” says technologist and author Bruce Schneier, though he quickly adds that Facebook “is not going to do too much that doesn’t let them spy on you, because their business model depends on it.”

If Facebook follows through with its promise to bring WhatsApp-level privacy to the rest of its services, a long-simmering tension over the tech industry’s relationship with the law is likely to boil over. Governments hate end-to-end encryption, because it makes messages impervious to standard monitoring techniques, even with the assistance of the tech company. Last October, U.S. Attorney General William Barr and officials from the U.K. and Australia signed an open letter to Zuckerberg opposing his plans to spread end-to-end encryption throughout Facebook’s services, calling it a calamitous hindrance to investigations of “child sexual exploitation and abuse, terrorism, and foreign adversaries’ attempts to undermine democratic values and institutions.”

Law enforcement officials often propose adding a “back door” to encryption schemes that would allow them access to data in appropriate circumstances. But that idea is fiercely rejected by privacy advocates, who say that any sort of bypass would be an irresistibly juicy target for hackers and others who would abuse it. “The moment you provide a back door to an end-to-end encrypted product, it’s no longer an end-to-end encrypted product,” Jan Koum told me in 2017, when he was still CEO of WhatsApp. “Anybody can find that back door.”

Chudnovsky and WhatsApp’s Cathcart told Barr that Facebook wouldn’t implement a back door, calling it a “gift to criminals, hackers, and repressive regimes.” The debate is likely to continue regardless of the results of November’s election.

Facebook watchers also wonder what pervasive encryption would mean for the company’s ad business, which still delivers 98% of company revenue. How can Facebook target ads toward users if it can’t scan the contents of those users’ messages?

Yuval Ben-Itzhak, CEO of marketing platform Socialbakers, thinks that Facebook’s scale alone makes it essential to marketers. Encryption wouldn’t stop the company from acquiring other information about users that makes them valuable, such as who they communicate with and for how long.

“Messaging can be a very good channel for monetization—it’s just that the experience is going to be different,” he says.

Besides, Facebook may finally be on the cusp of succeeding at tapping into a source of revenue that doesn’t involve ads—and messaging is at the heart of it. Last April, Facebook invested $5.7 billion in India’s Jio Platforms, a wireless carrier launched by industrial giant Reliance Industries in 2016. Thanks to radically low pricing—as little as 7 cents a day for voice and data—Jio reached consumers who’d never had a cellphone and rapidly became the country’s largest wireless carrier.

Facebook’s investment gives it the opportunity to participate in Jio’s ambitious plans to further unlock the Indian market through new services. For instance, the company intends to help millions of kirana—-neighborhood mom-and-pop stores—-finally shift from cash to digital payments. Already, many such shops accept grocery orders via Whats-App, making them prospects for something like Facebook Pay (not yet available in India) or even Novi (Facebook’s still-under-development cryptocurrency, formerly known as Calibra).

Over time, in India and elsewhere, Whats-App could evolve into something resembling Tencent’s WeChat. In China, that app leveraged its preeminence in messaging to become an all-encompassing platform that lets hundreds of millions of people do everything from hail a ride to schedule a dentist appointment or buy insurance—often facilitated by Tencent’s WePay.

A bonus for Facebook: India implemented

a ban on Chinese apps in July, eliminating local competition from WeChat itself as well as ByteDance’s TikTok. And even better, the future of Facebook in India isn’t just about one market, enormous as it is. “If you can scale up something in India, then the chances are higher that you will end up scaling really fast in other parts of the world,” says Tarun Pathak, an analyst at Counterpart Research. (Facebook has been banned in mainland China—another market of potentially game-changing proportions—for more than a decade.)

As Zuckerberg predicted in his 2019 post, skepticism about Facebook’s promises is running high. Some critics see Facebook’s efforts to stitch together its properties as a preemptive gambit to make itself tougher to disentangle, should current spikes of antitrust fever on Capitol Hill turn into government action to break it up or impose new restrictions on its behavior. “The fact that they’re continuing to race to do that is really irresponsible,” says Sarah Miller, executive director of the American Economic Liberties Project, which has called for the breakup of both Facebook and Google on the grounds that their dominance of major internet services harms society and democracy and makes them too big to regulate in their current form. “It’s also disrespectful to policy makers and to our democratic institutions that have raised clear and obvious concerns with their acquisition strategy over the years.”

In some form, at some point, “regulation is coming, and if [Facebook] doesn’t figure out a better approach to policy questions more generally, then it’s going to get subverted by governments,” says Dipayan Ghosh, codirector of the Digital Platforms and Democracy Project at the Harvard Kennedy School and a former member of Facebook’s policy team.

Any endgame is likely to take years to play out. (AT&T’s forced breakup, in 1984, followed more than seven decades of controversy, three antitrust suits, and eight years of litigation.) But even if Facebook remains intact and recognizable, the era of it taking out rivals by gobbling them up is over. Acquisitions on the scale of Instagram or WhatsApp are unlikely to pass regulatory muster in today’s climate; when TikTok’s U.S. operations hit the market as a result of geopolitical drama, pundits didn’t even pause to take Facebook seriously as a potential buyer. Its $400 million acquisition of meme search engine Giphy, in May—not a seismic transaction by historical standards—is under scrutiny from both the Federal Trade Commission and U.K. antitrust regulators.

All of this only intensifies pressure on the company to ensure that its new vision works—especially since Facebook has been famously bad at generating new hits in-house. “There’s just this whole slew of really crappy apps that Facebook tried to develop on its own,” snarks one former Instagram business–side executive. “The acquisitions were much more successful.”

Facebook faces another hurdle: The tighter integration on which so much of the plan rests might simply not excite the masses. “I literally cannot imagine somebody who’s using WhatsApp thinking, ‘Hey, I really wish I could message this person on Facebook, too,’ ” says one Silicon Valley veteran, whose résumé includes time at Facebook. “I would love to hear a more compelling value proposition.”

Facebook acknowledges that it doesn’t yet have all the answers. “I think the main thing is really figuring out all of the experiences along the spectrum,” says Facebook app chief Simo. “If you go from a completely public space to a completely private space like Messenger, that’s not something that people understand well.” It’s critical that upcoming changes be both comprehensible and enticing.

Writing a manifesto, after all, is easy. Figuring out how to go through fundamental change—when your company is being challenged from every direction—is hard. As so much of Facebook’s history has shown, what happens next could be as unpredictable as it is profound.

hmccracken@fastcompany.com

For years, surveys have shown that most peo­ple don’t know that Facebook owns Instagram and WhatsApp.

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