Consumer Internet

Facebook gives its users formal power over aspects of strategy

By April 17, 2009 One Comment

For some time now it has been apparent that social media companies have to make customers party to strategy decisions.  The best example of this is still the AACS encryption key controversy on Digg in May 2007 when Kevin Rose backed his users by defying cease and desist orders demanding that DVD decryption instructions be removed from the site.  In so doing he consciously exposed the company to a potentially terminal lawsuit, famously saying “If we lose, we die trying.

It has often seemed that this fact of life is lost on Facebook, and the company has taken a lot of stick over the years for not paying enough attention to its users.  Sometimes it was right to do so, e.g. over the introduction of news feeds, and other times it arguably got it wrong – e.g. over the introduction of Beacon and more recently changes to its terms of use.

Now they have launched a user poll which allows users to choose between two alternative sets of T&Cs for the site, with the results independently audited and binding on the company if certain conditions are met.  Further, there is a commitment that future changes will also be subject to ballot.

This is a first step towards formally empowering the users of Facebook as stakeholders in the company, and is something I expect we will see more of over time, both on Facebook and on other social media sites.

The significance is that it is the first formal step to empower customers – but it is only a small step.

It is not binding in law and if push comes to shove there is nothing to stop Facebook going against the ballot.  Moreover one of the conditions is that for the vote to be binding is that 30% of the active user base must vote in favour of the winning option – that is 60m people, a target that may well not be hit.  Further, this is a very dry subject presented in a dry way it is eminently possible that even if 60m people do vote many of them won’t bother to fully read the documents first.  Together this has caused many commentator to react to this development with a yawn, e.g. on Techcrunch Arrington asks to be “woken up when the ballot is over”.

If I’m right, and we do see more of this over time what we are witnessing here is the development of a new kind of stakeholder capitalism.  To be clear I’m not expecting for a second that social media sites should be run exclusively by or for their customers, simply that they will get more of a say over time.  It will be interesting to see how this pans out, particularly when the wishes of users come into clear conflict with other stakeholders, like the VC shareholders ;).