03 May 2018

Om on Tech: “Dating with Facebook: What’s love got to do with it?”

It is hardly a surprise that they will attempt dating — it increases time spent on Facebook, it brings a new flavor of addiction. Take a step back and remind yourself of Facebook’s attempts to bring you news ended in fake news becoming the norm. Their algorithms created not friendship but hate bubbles. And now the same company will create an algorithm of love?

However scratch the surface, and you start to see that this is Facebook being Facebook. They are addicted to collecting personal data, and what better way to get people to share their intimate details wants and desires by creating a tool that promises the elusive love, or more realistically, a date. When you are in dating mode, you are more likely to reveal a lot more intimate details.

Om Malik

Pretty bold move for Facebook to announce this in the middle of one of their biggest privacy scandals. I guess they’re confident most people have a short memory – and they might be right! Still, it doesn’t guarantee success by any means; Facebook launched so many copycat products over the years that it’s hard to keep track of them all – and very few managed to break out. Facebook’s biggest success story in fact, Instagram, was the result of an acquisition.

CEO Mark Zuckerberg announces a dating layer for Facebook's main mobile app

Nevertheless, it’s mostly bad news for the competition, namely Match Group, owner of dating app Tinder. If I were them, I would immediately start looking for alternatives for the Facebook login currently used for creating Tinder accounts. I wouldn’t be surprised if Facebook cuts off data access for competing dating apps – all in the name of privacy, of course!

The reaction of the markets was very telling as well, with shares of Match Group down 20%. I was immediately reminded of the Amazon effect as presented by prof. Scott Galloway:

The Four’s unchecked power manifests most often as a restraint of competition. Consider: Amazon has become such a dominant force that it’s now able to perform Jedi mind tricks and inflict pain on potential competitors before it enters the market. Consumer stocks used to trade on two key signals: the underlying performance of the firm (Pottery Barn’s sales per square foot are up 10 percent) and the economic macro-climate (more housing starts). Now, however, private and public investors have added a third key signal: what Amazon may or may not do in the respective sector. Some recent examples:

The day Amazon announced it would enter the dental-supply business, dental-supply companies’ stock fell 4 to 5 percent. When Amazon reported it would sell prescription drugs, pharmacy stocks fell 3 to 5 percent. Within twenty-four hours of the Amazon–Whole Foods acquisition announcement, large national grocery stocks fell 5 to 9 percent.

Scott Galloway

We’re seeing the same dynamic at work here: Facebook announces it intends to enter a new market, and competitors are quickly losing stock value. It’s one of the best indications of Facebook’s near-monopoly power in social networks – along with Facebook’s lock-in effect – and it should not be left unchecked.

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