Facebook, The Social Dilemma, and the Potential for Exponential Decline
The decline in a network’s value can be steeper than its incline
Metcalfe’s Law asserts that a network’s value increases in proportion to the square of its nodes.
For social networks like Facebook, each additional user improves the overall experience of existing users, through adding relationship opportunities, idea sharing, interactions, etc.
As more people join, the network becomes more valuable, thereby attracting new members, which in turn adds value to the network. The network effect is self-reinforcing, and the reason why social networks such as Facebook, Twitter, YouTube, and Instagram have risen dramatically in terms of user growth.
To date, Facebook has amassed 2.7 billion monthly active users (MAU), up 12% from last year. In a world of 7.8 billion people, that is an impressive social network, to say the least.
With so many members, what more value is there for Facebook to create?
Netflix’s recent docu-drama “The Social Dilemma” takes a look at social media’s growing effects on society. Through interviews with former executives from major social media companies, The Social Dilemma builds a case that social media has grown into a damaging force for society.
Profit and growth incentives have led social media networks to design products that capture users’ attention and data, having deleterious effects on sensemaking, teen self-harm and suicide rates, political polarization, psychological well-being, and social cohesion.
The intrusive ads, privacy encroachment, and undesirable attention capture do not add value to the network or enhance the user experience, rather they are ways for social media companies to extract value from their networks. Extraction and enhancement are often at odds.
Jordan Hall wrote an insightful article, entitled “The Rise and Fall of Networks”, in which he argues that activities intended to extract value from a network can produce an “extractive repulsor force.” Showing ads and intruding in people’s lives reduces the network’s value to its users, thereby incentivizing them to abandon the network.
Metcalfe’s Law is often referenced to describe how adding members to a network increases its value exponentially, but Hall highlights how this is true for both directions. Just as adding a member to a network adds value exponentially, removing a member from a network reduces its value exponentially.
This decline potential of Metcalfe’s Law was coined as Hall’s Law.
The falling value of a network, he claims, can also be encumbered by the extractive repulsor forces that have been placed on the network, furthering the acceleration of member loss.
Essentially, the decline of a network’s value can be just as steep, or steeper, than its incline.
The balance between the network effect attractor forces of Metcalfe’s Law and the opposing repulsor forces of Hall’s Law creates a precariously fluctuating Metcalfe-Hall Equilibrium. Hall’s insight is that networks are incentivized to maximally extract value to the limit of network attractive forces, and no further.
Using Facebook as an example, we could see how Hall’s Law could take effect: when someone logs in to Facebook and finds fewer friends are active, their newsfeed becomes filled with the same old posts from the same few people, interspersed with ads. The value of the network to that user is diminished, causing them to spend their attention elsewhere. And the cycle repeats.
A social network’s value lies not in the number of registered accounts, but in the number of active users. Unlike a telephone network, in which each phone adds value to the network through its availability to be called, a social network’s value depends primarily on members using it to socialize.
You may still have an old MySpace account, but unless you are active in that network your node adds no value.
Facebook’s quarterly reports on monthly active users, or even daily active users, is effectively reporting on the exponential rising and falling of its value to its members.
The top sources for year-over-year user growth for Facebook have been from emerging markets like India, Indonesia, and the Philippines. If you are already a user in an established market, there is little more value to be created for you from Metcalfe’s Law, once you have added all your friends. A million new users in Indonesia will not add the same value to your part of the network.
What’s left for you is a fluctuating Metcalfe-Hall Equilibrium, as Facebook balances the value extraction of your membership with the value you receive from your active use.
For each user there is a point where the value they gain from the network is eclipsed by the costs it imposes on them, causing them to abandon it.
The Social Dilemma illustrates how social media’s extractor forces can also cause damage to users outside of the network. An app designed to maximally capture user attention extracts value from that user while imposing costs on their mental well-being, real-life activities, and relationships.
Whether you are a Facebook user or not, the rise in political polarization, depression, anxiety, suicide, and election tampering can directly affect you.
These negative externalities of social media’s extractive forces can magnify repulsive effects on the network. Non-users and ex-users can exert repulsive pressure on the network when they call for #deletefacebook, impose usage restrictions, or ban the use of a network outright. TikTok’s ban in the U.S. is meant to combat the “malicious collection of American citizens’ personal data,” which diminishes the network’s value globally.
Given the precariousness of a Metcalfe-Hall Equilibrium, any additional incentives to abandon a network could quickly cause active users numbers to plummet. Each user leaving the network could trigger a self-perpetuating cascade of abandonment and value decline.
The potential for exponential decline exists in any network that relies on network effects.
The next time you view your social media newsfeed, receive a notification, or check the time you’ve spent on the app, consider how much value you are receiving from the network and whether it is worth the cost to your attention.
Leaving a network could have an outsized effect on yourself and others.
