ON TUESDAY FACEBOOK reorganized the duties of its product executives, in the process creating an unusual new division: David Marcus, formerly head of Facebook’s Messenger app, will now lead a team of fewer than a dozen people dedicated to blockchain technology, according to Recode. He’ll be joined by notable executives including Kevin Weil, former VP of product at Instagram, and James Everingham, VP of engineering at Instagram.
It’s not clear what the company is up to here. Facebook representatives did not immediately respond to questions from WIRED. In the absence of any specifics, WIRED’s Erin Griffith and Sandra Upson, who write about blockchain technology, offered to speculate:
Erin: We knew Facebook would at least dabble in this area. The risk of missing out—just in case the crypto evangelists are correct and blockchain technology turns out to be bigger than the internet revolution—is too great to ignore. Facebook made this mistake with one big tech wave—mobile. For the past year, Facebook has been sniffing around blockchains in “exploratory mode,” with corporate development staffer Morgan Beller learning about the tech and reporting back to top execs.
Sandra: So do you think they’re mostly covering their butts? I’m wondering about the biggest, most audacious thing Facebook could do in this space.
Erin: It’s in their playbook! The $2 billion they spent on Oculus VR and the $19 billion they spent on WhatsApp were essentially butt-covering moves. There aren’t really any blockchain acquisitions that make a ton of sense, and I doubt the company would be eager to make an acquisition while cryptocurrencies are under regulatory scrutiny and the big tech is under antitrust scrutiny.
Sandra: It seems too early in the blockchain lifecycle for a company like Facebook to make a major acquisition. I could see them scouting out the landscape and deciding that no one is established enough—or threatening enough—to be worth snapping up.
Erin: Even before today’s news, there’s been plenty of speculation about what Facebook could do here. One example that bubbled up after the Cambridge Analytica scandal is to use blockchain technology to give Facebook users more control of their personal data. But, like a lot of blockchain-related ideas, it seems more speculative than a legitimate use case.
Sandra: Let’s play that out for a second. A personal data blockchain would have to be private, otherwise everything you posted could be read by everyone on the internet. So maybe a user “owns” her data, but in practice I don’t see how that translates into anything meaningful within the walls of Facebook. The company would surely still use the data to sell and target ads, and if a user decided to leave the platform, the data would still be written into Facebook’s blockchain.
Erin: Recode’s report suggests Facebook might use blockchain technology for encrypted data storage, though I’m not sure why that requires, or would even benefit from, a distributed ledger. Already companies that dove head-first into blockchain projects are learning that they could get the same results more cheaply using current technology.
Sandra: At least one cryptoblogger speculated that Facebook might launch its own tokens and distribute them to shareholders and users. Users whose posts hit some kind of engagement metric would earn tokens. If users held FaceBucks, or whatever they're called, they’d have a personal financial stake in the platform’s success. But this argument seems weak to me. Attaching money to user performance creates the wrong incentives. The point of being active on the platform is to have “meaningful social interactions,” Facebook tells us, so turning it into a side hustle distorts that social goal.
Erin: Lots of startups that have “pivoted to blockchain” have taken this tack, but it can definitely create bad incentives, a danger Facebook is familiar with. Facebook essentially demoted Zynga from its platform for using the kind of spammy “growth hacking” tactics that engagement-based rewards incentivize back in 2011. (Not to mention—issuing Facebucks would not sit well with other crypto startups selling tokens, considering Facebook banned initial coin offerings from advertising on its platform earlier this year!)
Sandra: So, then we have Messenger and payments. There’s a natural synergy there—I guess. In 2009 Facebook introduced its own virtual currency, called Credits, that it killed off in 2012. Credits were supposed to be used to buy virtual goods in Facebook games. If only they’d just used bitcoin back then, Facebook users would be rich! So rich.
Erin: It’s worth noting that David Marcus’ prior role at Messenger included payments and, before that, he ran PayPal. In December Marcus joined the board of Coinbase, so I’d be surprised if Facebook launched a competing exchange or wallet. The problem here is that using bitcoin or other cryptocurrencies for transactions and purchases is still not as efficient, fast, or cheap as the old-fashioned way.
Sandra: But it’s within the realm of possibility that cryptocurrency transactions could become more efficient/fast/cheap—particularly if Facebook implemented them within its messaging products.
Erin: True—maybe we’re not thinking big enough. After all, Facebook has 2.2 billion users; including Instagram, WhatsApp, and others, its products have a cumulative 5 billion users (though some of those use more than one product). In theory, Facebook could create a new global currency!
Sandra: I find it astonishing that these big names—David Marcus, James Everingham, Kevin Weil—are abandoning leadership roles at Messenger and Instagram to helm something as speculative as a blockchain project. I would have guessed it was a demotion. Is this the Facebook equivalent of the Rubber Room?
Erin: It's either that, or they are planning something really big.
Jessi Hempel: This is David Marcus’s MO. He rises up to sit in a big chair and then abandons it for a tiny startup. He was CEO of PayPal and then left to run a product for Facebook. That product was Messenger and it became The Product. So it suggests to me there is a larger plan afoot.
Sandra: We also know that figuring out blockchain tech was one of Zuckerberg’s personal challenges for 2018. Gone are the days when he committed to exercising or learning Mandarin. Now he wants to restore at least the impression that Facebook’s users have some power over their experience. And the blockchain fits into that narrative perfectly. As he wrote on January 4 about decentralizing technologies, including cryptocurrencies, “I'm interested to go deeper and study the positive and negative aspects of these technologies, and how best to use them in our services.”
Erin: At the time, I cynically thought Zuckerberg threw in that mention of crypto for employee morale. It’s not very cool in Silicon Valley to work on ad tech, especially at a company that’s been under constant criticism for the past two years. But crypto is very cool at the moment. I understand Facebook has a very active internal group of crypto-enthusiasts at the company. The subject has even come up on the company’s internal Q&A board. Staying on the cutting edge of hot tech trends goes a long way with employees.
Sandra: One benefit that Google derives from its sprawling structure is that employees who get burned out working on, say, ads can go work on a wildly different project—medicine, internet balloons—without leaving the company. Maybe blockchain is a similar employee retention tool for Facebook.
Erin: Google employees can also go work on blockchain tech for Google’s cloud business!
Sandra: It’s almost like the big tech companies are playing catch-up to Wall Street, which powered up its blockchain skunkworks years ago. Amazon has a blockchain product—an IBM competitor, of all things—and Apple is also up to some blockchain shenanigans, with a December patent application on using the blockchain to certify timestamps.
Erin: Yep, even though some Wall Street CEOs have been dismissive, we’re now seeing serious moves into crypto trading from the likes of NYSE and Goldman Sachs. Of course, blockchain and crypto purists say the entrance of big corporations goes against the very spirit of decentralized currencies. But plenty of others are cheering on the moves, because they help the nascent, overhyped crypto sector with the one thing it needs most: credibility.
Sandra: And these days Facebook could use some more of that, too. Credibility + blockchain; what’s not to like?
Source: Wired.com
