Facebook begins to make changes to help competing social networks
https://www.nytimes.com/2019/12/02/technology/facebook-photos-EU.html
Facebook is implementing a data portability tool in Ireland that allows users to easily move pictures and videos from Facebook to Google Photos. This comes in response to European privacy laws and criticism from regulators that its size hinders competition through the network effect. The goal of these changes is to make users feel less locked in to Facebook’s ecosystem. Critics are skeptical about how effectively this will hinder Facebooks competitive advantage, saying that these measures do not go far enough. Michael Veale, a lecturer in digital rights at the University College London, says Facebook should allow non-Facebook users to interact with Facebook users through messaging or event organizing.
In class, we talked about the network effect and cascades. As a social network, Facebook strongly benefits from the network effect. Individual users benefit from the total number of users and the number of friends they have on the site. Because Facebook is the largest online social network, it has a significant advantage over competing social networks. Facebook is implementing data portability tools in response to privacy laws and criticism to combat this. These data portability tools decrease the switching costs of joining a new platform. If switching costs are incorporated to the cascade model discussed in class, then a decrease in switching costs would lower the fraction q–the minimum fraction of neighbors following a different behavior (using a different social network in this case) where an individual would change behaviors. Critics who say these data portability tools do not go far enough would argue that this decrease in the fraction q is not significant. If Facebook allowed non-Facebook users to interact with Facebook users, then other social networks would benefit from Facebook’s network effect, greatly increasing the value of other social networks.