Federal Politics

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Brand wars

A phenomenon developed in the 1980s that became known as "The Cola Wars", as American icons Coca-Cola and Pepsi battled it out through increasingly elaborate advertising campaigns for brand dominance of the soft-drink market.

Despite the heat and vigour of the campaigns, neither participant lost market share in the United States. The Pepsi and Coca-Cola corporations were both enormous winners, at home and around the globe. The losers were any other manufacturer. Soft-drink makers independent of the big two found themselves out of business or subsumed en masse, and today it's hard to find a restaurant, cafe or bar that doesn't carry the products of one or the other.

In 2011, a new duopoly-based brand war has erupted. But the product this time around is social networking.

Facebook and Google+ would have us all believe they are engaged in an arms race to create the best social-networking site available, which is probably true, depending on your definition of "best". What is best for Facebook and Google+ does not necessarily equate to what is best for their users.

Users of Facebook and Google+ do not pay for the services. But nobody runs a multi-billion dollar website for free, so how do users compensate these companies? Namely with their time and their privacy, both valuable commodities in online (and offline) markets.

For handing over their time and privacy, users are rewarded with access to the time and privacy of other users. This is much more than a nil-sum game of "pass-the- personal-information". Facebook and Google+ leverage all that data and eye-balls into a product that can be sold on to advertisers, businesses and governments.


While users gain access to (certain) information about other users, Facebook and Google+ gain access to everything and are able convert that mass of data into very valuable products.

Individually, a user's likes, dislikes, eye colour, date of birth, hour-to-hour location, income, car model, music, television, book, computer game and film tastes, sexual orientation, family history of illness, drinking and smoking habits, and circle of close associates are of little interest to anyone, bar the odd employer, future employer, law enforcement agency or health insurer. Collectively, the information is of great interest to lots of people with deep pockets, which is partially why Facebook is currently valued at $US100 billion ($A103 billion).

Facebook and Google+ offer valuable services to their users, they must, or more than 850 million people would not value them.

The attractiveness of a one-stop, online communications shop is compelling. Old-school nerds, like me, might scoff at sites that bundle together a bunch of social features available elsewhere (with better functionality), but the genius of

sites like Facebook is the manner in which disparate online functions are streamlined, simplified and then walled off into a safe, happy playground.

Facebook copped some untimely flak last week when Australian Nik Cubrilovic uncovered it was tracking visitors' browsing habits, after they had left the site. While not particularly uncommon (many sites track user browser habits), the company promised to quickly correct the problem.

The bad news for unhappy users of either Google+ or Facebook is the companies do not care if you use their services - they care only if you use them in a financially beneficial manner. Tracking all your browsing habits is more valuable than not tracking your habits. This will always be true.

Perversely, as the market in personal information grows, it will be the information people try to conceal the most that will potentially become the most valuable. The so-called "Nymwars", attempts by both Facebook and Google+ to force users to log in under their real names, is not a

war on nicknames, it's a policy designed to maximise the financial usefulness of data collected. Nicknames do not appear on credit cards.

Users will no doubt face off over coming months and years, declaring their allegiance for Facebook or Google+, or both. Both will win. Brand wars are nothing new, only

in this version users' data is being dispensed from vending machines. Advertisers, governments and businesses are the ones lining up to drink this time around while paying billions for the privilege.