Facebook is undergoing a major transformation—the likes of which haven’t been seen in Menlo Park since since the company reinvented itself for the mobile era.
The revamp centers on Facebook’s messenger apps. The tech giant is reportedly in talks with cryptocurrency exchanges to list a Facebook Coin, a messenger-compatible stablecoin pegged to a basket of traditional currencies, like the U.S. dollar and Euro, as The New York Times reported last week. This virtual coin would presumably roll out across Facebook’s to-be-consolidated messenger networks: WhatsApp, Facebook Messenger, and Instagram messages. With 2.7 billion people using Facebook products each month, as chief executive Mark Zuckerberg disclosed on the company’s last earnings call, this deployment would instantly make Facebook one of the most important payments companies in the world.
This is a bet-the-farm moment for Facebook. The overhaul is one that Zuckerberg deemed so necessary that he has pushed it in spite of opposition from—and the departures of—the leaders’ of his most prized fiefdoms. (See the recent torrent of executive exits.) Zuckerberg is no doubt eyeing the success of Tencent’s WeChat, the everything app of the east, and he views it, rightly, as his company’s arch-rival. When Zuckerberg claims that Facebook should not be broken up under U.S. anti-trust laws because it will clear the way for Chinese companies to dominate, he’s right. He has his eye on the global Risk board, and the brewing battle could very well be a game of winner-take-all.
But why should a Facebook Coin succeed where Facebook Credits and Facebook Gifts, the company’s earlier attempts at virtual payments, failed?
Please indulge a bit of speculation. Aside from the obvious utility of a social payments app in the vein of PayPal’s Venmo, consumers could be swayed by monetary incentives. Read: Cold hard virtual cash. Picture digital wallets made available to large swath of the global population, but also a concomitant rewards program in which users can share in the value their Facebook data generates. Use Facebook? Here’s a kickback for your loyalty. This is an idea that extends well beyond the market for remittances; it could redefine the company’s relationship with consumers and become the basis for a new economic model for the company.
I am not the first person to float the idea of a “data dividend,” of course. Chris Hughes, a Facebook cofounder, proposed the idea in a column for the Guardian last year, comparing it to a fund in Alaska that offers residents compensation for mineral and oil extraction in the state. Earlier this month, California Governor Gavin Newsom made the proposal a tenet of his first state address. The notion is gaining traction.
If regulators mandated that tech giants were to pay people a data dividend, the result could be a disaster. As former Facebooker Antonio García Martínez has pointed out for Wired, the system would likely end up being unimaginably, unmanageably complex. (How much is Nest temperature data worth? It’s unclear.) But Facebook could, reading the writing on the wall, preempt a bad regulatory decision and spin the mounting momentum against it into a positive attribute—priming the pump for a Facebook Coin market while simultaneously rebalancing its lopsided value exchange with consumers.
Facebook’s ultimate goal is to keep people using its products. That’s how the company makes money. That’s the endgame. What better way to entice people to stay than by offering a sort of Universal Basic Income?