Benner on Tech: Facebook in Empire Mode

Katie Benner is a Bloomberg View columnist who writes about technology, innovation, and the cult and culture of Silicon Valley. She lives in San Francisco.
Read More.
a | A

People are Talking About…

Facebook is in the midst of putting two big initiatives into motion. Those plans have lately boosted the company’s stock price and ramped up the hype around F8, its annual developer conference that kicks off today in San Francisco. The first strategy is to create a robust, mobile first messaging platform that will put its Messenger app at the center of our mobile lives. The second is to raze the news business and destroy any distinction between cat videos and investigative stories about Boko Haram.

(Just kidding! That’s BuzzFeed’s big initiative.)

(Kidding again! That’s now the mandate of nearly every major media organization!)

Joking aside, Facebook’s second initiative is to partner with professional content makers, like media organizations, so that it can sell higher-priced ads on its platform against high-quality news and video.

These are smart moves. (More on that in a minute.) Whether they’ll be smartly executed is, of course, an entirely different matter, as evidenced by some of Facebook’s other platform and product flops. If past is prologue, we may someday read a Wired deep dive into how the achievement of building a truly mobile-first social network in the U.S. was Facebook’s to lose.

On the Messenger app front, messaging-based platforms already exist in Asia, where users can use Line or WeChat to make payments, request on-demand services, play games and, of course, chat with friends. Some of the F8 buzz is around the sorts of apps that people will be able to build for Messenger, which just rolled out a peer-to-peer payments function. (In theory, I like this function. I said so right here.)

On the media front, Facebook is trying to figure out how to combat what Ben Thompson at Stratechery describes as ad price deflation: “just as content has zero marginal cost, so does ad inventory.”

So getting premium, high-quality content onto the platform that draws a big audience -- the type of content that Madison Avenue is accustomed to from television and magazines, and for which it pays a lot of money to run ads against -- is a top priority for Facebook.

The Information reports that Facebook is in talks with media firms including Vice, The Onion and Vox Media to produce short-form, high-quality videos for the social network so that it can make more money from video ads. The company is also going to announce publishing partnerships with companies such as BuzzFeed and the New York Times.

Now’s a good time to re-read David Carr’s column from last October on why publishers have been wary about working with Facebook.

That kind of wholesale transfer of content sends a cold, dark chill down the collective spine of publishers, both traditional and digital insurgents alike. If Facebook’s mobile app hosted publishers’ pages, the relationship with customers, most of the data about what they did and the reading experience would all belong to the platform. Media companies would essentially be serfs in a kingdom that Facebook owns.

What’s interesting to me is that any media company that wants a presence on Facebook thinks that it can play by any rules but the ones that Facebook writes. The company is under no obligation to favor their content and, as Thompson points out, can just freeze out the stuff that they don’t favor. The media initiative, while designed to get better content on the platform, also makes plain the power dynamic that has always run quietly in the background.

Ventureland

Ellen Pao v. Kleiner Perkins: Yesterday saw both sides present closing arguments before a packed courtroom. The Wall Street Journal has a good recap, as well as a story that details why Kleiner will be deeply damaged by the trial, even if the firm wins. Angel investor Jason Calacanis opined on why venture capital firms can be a hotbed of sexism. He writes, "They are not really businesses -- they are partnerships. In my experience they operate more like social clubs, sports teams or, wait for it, fraternities."

Cyanogen, which makes an Android-based mobile operating system that competes with Android, has amassed more than $100 million from investors including Twitter, Qualcomm, Telefonica, Rupert Murdoch, India’s third-richest man Azim Premji, Benchmark, Andreessen Horowitz, Redpoint Ventures and Tencent. Forbes profiles the company that’s trying to derail Google’s dreams of a mobile monopoly.

FoundationDB, an NoSQL database startup, was acquired by Apple, TechCrunch reports.

Uber suspended a driver in France for sexually assaulting a passenger, Bloomberg reports.

Bitcoin is being taken seriously by U.S. stock exchanges, reports Bloomberg.

Y Combinator’s demo day is over. TechCrunch has a roundup of day two.

Mutual funds that invest in private companies tend to follow in the footsteps of a handful of venture firms, according to Quartz.

People and Personnel Moves

Jason Goldman, who has worked at Google, Medium and Twitter, will become the White House’s first-ever chief digital officer, reports Politico.

Rodney Williams,the founder of Lisnr, and Andre Walters, the founder of Yuno, talked to the Huffington Post about their lives as black entrepreneurs and why diversity in STEM matters.

Bubble Talk

Sequoia partner Mike Moritz says there’s a bubble in the private company world, Fortune reports.  Y Combinator’s Sam Altman says that Moritz is wrong and is willing to wager $100,000 (The loser donates the money to charity.)

Hedge funds are pushing private company valuations sky high, Bloomberg reports.

There’s a connection between the money that public companies give back to huge mutual funds and the money that huge mutual funds put into private companies, argues my Bloomberg colleague Matt Levine.

Companies

Amazon is openly criticizing the FAA’s slow drone regulation, Reuters reports.

Apple is training its store employees to focus on fashion advice as well as tech specs in order to sell the new Apple Watch, says 9to5Mac.

Google has made the most of its access to the White House, with representatives often visiting Washington during the FTC antitrust probe, reports the Wall Street Journal. The company will introduce a way for us to pay bills directly from our Gmail accounts, Re/code reports. YouTube is launching a live streaming service that will compete with Twitch, reports the Daily Dot. Ars Technica says Google Fiber is coming to Salt Lake City; and the New York Times says the service will experiment with targeted television ads.

Security Watch

A 'threat-sharing' cybersecurity bill has been introduced in the House of Representatives, reports Reuters. The legislation would "make it easier for companies to share information about cybersecurity threats with the government, without the fear of being sued."

Media Files

Netflix, Amazon and Hulu have flipped from upstarts to the establishment, and that fast-moving shift has raised the stakes for them, reports the New York Times.

Nielsen will measure Netflix viewing by the middle of this year, Bloomberg reports.

News and Notes

A former Tesla intern made a $60 kit that lets people hack into their connected car systems, reports Forbes. In related news, Fusion has the story of a smart car that caught a man’s mechanics driving his car without permission.

RadioShack is putting everything on the auction block in its bankruptcy proceeding, including user data, Bloomberg reports.

Being alone in real life while surrounded by people on the Internet is making us unhappy, and tech companies are trying to fix that problem, reports New York Magazine.

This column does not necessarily reflect the opinion of Bloomberg View's editorial board or Bloomberg LP, its owners and investors.

To contact the editor on this story:
Maria Lamagna at mlamagna@bloomberg.net