To that first point, yes, Facebook's rich. Even at these prices, Facebook's still big and its millionaires are still millionaires. But, as we've noted, that doesn't help anyone but Facebook. Or, really, anyone but Mark Zuckerberg, as James Surowiecki explains in his New Yorker column this week. This is a selfish social media bubble. TechCrunch's Alexander Haislip reiterated this point quite well over the weekend. "Facebook’s rise is great for Zuck, but unless you’re among a privileged few, it isn’t good for you," he wrote, explaining that the social network doesn't add much to the economy -- a point we've made before. From Haislip:
The wealth created by Facebook gets concentrated into the hands of a few—some of whom have refused to pay taxes on their gains—instead of being recycled into the greater economy. And the computer makers that supply Facebook rely on components imported from other countries, sending capital abroad and weakening our balance of trade.
And with the stock going the way it is, not only will the rest of the economy miss out on the benefits of a bubble, but other social media companies will miss out, too. Facebook's big IPO debut was supposed to further hype social media as a thing in which to invest. When Facebook got its big valuation, the stock market was supposed to eat up anything "social media." Facebook's thud just ruined those chances for everyone else. We saw how Facebook's stock effected Zynga on Friday. Even if Facebook recovers and goes on to be the next Apple of the stock market, the rest of the social media world won't.
But, it's not even clear Facebook will recover. See, there's another selfish thing about the social network: It doesn't add much of anything to the world. Facebook claims its mission is to connect people. But, as Haislip notes (and as The Atlantic's Alexis Madrigal noted before him), boiled down, it just sells advertising.
Facebook sells advertising—it may be the most effective advertising platform since Google, or not—but that’s not the best use of the brightest minds of our generation. Advertising doesn’t improve our balance of trade. It doesn’t lift people out of poverty. It doesn’t employ the modestly skilled. It doesn’t extend life expectancies or take away pain. It doesn’t improve our standard of living.
And, that one thing it's good at, it doesn't do very well. "The problem with Facebook and other social media is that they were not designed to carry advertising," writes Ad Age's Rance Crain, explaining that businesses don't see Facebook's utility in ad buys. General Motors, for example, pulled its $10 million ad campaign because it didn't really see Facebook as an advertising platform. "We've found Facebook ads to be very effective when strategically combined with engagement, great content and innovative ways of storytelling, rather than treating them as a straight advertising buy," Ford said in a statement. Advertising is Facebook's business model, according to its S1, that's how it plans on growing and making money.