Everybody talking to their pockets, 10

29 09 2014

Monopolies don’t care about you, and damned near every corporation aspires to be a monopoly—precisely because it wouldn’t have to care about you.

Facebook is, in the US, a monopoly (you don’t really think Google+ is a competitor, do you?), and thus indifferent to its users.

It doesn’t have to care if its consumers don’t like its privacy or transparency policies, nor does it pay much mind to journalists or bloggers who are outraged—OUTRAGED!—at yet another change which inconveniences the end-user.

That’s because the end-user doesn’t matter, or at least not in the way she thinks she matters.

We in the US are used to hearing the customer is always right, which in addition to not being even remotely true, only works as a check on corporate behavior when the customer has other options.

When the corporation is a monopolist, it has all of the options, which can vary from ignoring the complaints, issuing anodyne statements about the complaints while doing nothing, or inviting its customers to go elsewhere—all the while knowing there is no place else to go.

It may also, of course, take account of those complaints and make changes in a way pleasing to its customers, but it will only do so if those changes are in its own interests (profit, market reach). “Pleasing its customers” is a mere pleasant and unnecessary side effect to its real aims.

And thus back to the customer and the end-user: The customer believes that the product is for her use, that she is the reason for the product’s existence. But she’s not the end, but the means to the end, because the real end-user is the corporation itself. The customer exists to serve the corporation.

If the corporation is not a monopolist, it might respond to customer complaints as a way to gain competitive advantage, which may help to explain why Google+ dropped its real-names policy. It’s not at all clear that this change did help Google+, however, precisely because it is operating as a competitor in a monopolized field, i.e., one in which there is no competition.

Albert O. Hirschman noted that customers, workers, and citizens have three options in expressing their dissatisfaction with a product, employer, or government, exit, voice, and loyalty. These options are thin in the case of monopoly, Hirschman noted, but he also assumed the monopolist in competitive economy would not be “tight” but “flabby” or “lazy”, such that non-responsiveness would lead to the rise of competitors.

If the monopolist is tight, however, then Hirschman’s optimism is unwarranted: in the case of a tight monopoly, they could simply use the voice option—feedback—to further their monopoly. As the monopoly is extended, options for exit decrease, and in any case, present little threat to the monopolist, largely because those who exit don’t defect to a competitor (because there is none) but drop out of the market altogether. At worst, they remain marginalized by the monopolist; at best, they could join the monopoly service later, that is, they serve as a kind of customer-reserve potential.

None of this is to say that monopolies are forever, especially when it comes to cyberspace. This whole area of the economy is too new to determine  how dynamics which apply to the material sphere work over the long-term in the cyber-sphere, and whether traffic in data is different from traffic in, say, refrigerators.

And, of course, the possibility of mass exit remains, which can cripple a monopoly. Facebook could come up with a policy which so offends such a large mass of its users, and which they persist on implementing, that that large mass quits. They might then alter the offensive policy in order to woo the customers back, but if they take too long or their behavior is seen as too boorish to forgive, the monopoly crumples.

Absent such mass action, however, Facebook or any other monopolist can do what they want. They can handle a few dropouts here and there if the benefits of the policy change outweighs the costs of those few dropouts. Furthermore, by monitoring social media complaints—which Facebook almost certainly does—they can compare the number of the complaints to the number of dropouts.

And I’d bet dollars to donuts that far more complain than do anything about it—which only reinforces Facebook’s ability to do anything its wants.

In this way, even the complainers are serving Facebook’s needs.