What killed Microsoft and why Facebook should be worried

Digital companies stake their success on their ability to predict social changes around the use of technology. Some have missed out on major opportunities by misjudging the social climate. Some years ago, Microsoft saw their popularity decrease dramatically because of their failure to protect users’ privacy. Facebook is now counting on changes in social norms to legitimate their data sharing practices. Public opinion would seem to indicate that they are missing the mark.

Senior corporate executives base their business strategies on predictions: of future needs and wants, of technological changes, of social trends. Sometimes they get it wrong. No major corporation has been exempt from these mistakes, but some of the most inaccurate predictions have been in the area of computing. Thomas Watson, president of IBM, said in 1943, “I think there is a world market for maybe five computers.” Ken Olsen, founder of the Digital Equipment Corporation, said in 1977, “There is no reason anyone would want a computer in their home.” Both of their companies suffered from their lack of vision, missing out on major opportunities in the emerging digital market.

Computer company executives do not only seek to predict public opinions and norms – they have often attempted to shape them.

Apple CEO Steve Jobs’ public criticism of Adobe Flash and refusal to support it on Apple devices stands out as an example of this. Many commentators condemned Jobs’ statements as reflecting his own business interests rather than technical considerations.

With regard to corporate attempts to shape social norms, a far more troubling current issue pertains to Facebook’s statements on privacy. It seems that Facebook is gambling their future success on the belief that privacy is no longer valued by the general population.

Is privacy still a social norm?

Facebook’s founder Mark Zuckerberg has been quoted saying that privacy is no longer a “social norm.”

Facebook’s default privacy settings have been gradually shifting towards making more and more personal information public or available to advertisers and applications. With status update prompts like, “How are you doing?”, “How are you feeling?”, and “What’s on your mind?”

it is not hard to imagine that Facebook could sell mood statistics to marketers or interest groups.

A research study published several months ago revealed that Facebook actually allowed a research team to manipulate nearly 700,000 users’ news feeds in order to observe the effects on their emotions by analyzing their status updates. Numerous Facebook users have since commented publicly that they find this sort of experiment unethical and invasive.

Facebook could argue, probably successfully, that its data sharing practices are legal. Its terms of use allow it to share data with advertisers and others. The study just described used aggregate rather than individual data, and so does not explicitly violate individual privacy. Nonetheless, this type of practice violates users’ reasonable expectation that their personal information will not be used to manipulate them. Zuckerberg’s public comments that privacy is no longer a social norm miss the mark.

How privacy nearly killed Microsoft

In the pre-social media digital world, Microsoft, IBM, and a few major companies dominated the software field. Microsoft, the largest player, was often criticized for numerous viruses, a lack of technology controls, and collaboration with secret agencies to create backdoors. People were uncomfortable with Microsoft’s business practices and, when the opportunity arose, migrated en masse to Google, then a young, secure, and transparent company. The emergence of an alternative provider that respected privacy nearly killed Microsoft’s online empire. People switched from applications to web interfaces, from MSN to Gmail. To this day, I believe that this switch was in some ways a step backward. Microsoft makes far better products and has always been a leader in the enterprise application space.

Privacy and trust

Experience and research indicate that privacy is a major pillar of trust for web users.  Published articles on how to build online trust emphasize a commitment to truthfulness, privacy, keeping promises, responding to issues, ethical integrity, ethical marketing, and transparency (Mark Smiciclas, intersectionconsulting.com). To earn the public’s trust, companies need to be able to show a consistent track record of operating in line with this commitment. Privacy laws demand much the same.

The internet’s current stage of evolution will probably be understood in the future as the dawn of social networks. There is no reason it cannot also be the dawn of secure and private networks. If Facebook wants to survive the emergence of new competitors, they are going to have to demonstrate their commitment to privacy, transparency and ethical integrity.


Adam D. I. Kramer, Jamie E. Guillory, and Jeffrey T. Hancock. Experimental evidence of massive-scale emotional contagion through social networks. PNAS 2014, 111(24), 87888790.

Bobbie Johnson, “Privacy no longer a social norm, says Facebook founder,” The Guardian, January 11, 2010.


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Senior Editor: Esther Townshend
Photo Credit: @liikennemerkki
Copyright: All rights reserved , © Waël Hassan

About the Author:

Waël Hassan, PhD, is the editor in chief and lead writer of Transigram an online monthly magazine. Transigram explores legislative and regulatory changes, new technologies, and the needs and challenges of data custodians. We provide insight into the development of our approaches to open data access strategies and models. Transigram offers summaries, analyses, insights, and commentaries on business transformation in the areas of Governance, Risk & Compliance, Project & Portfolio Management, IT Strategy & Operations, and Technological Tool Management.

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