Must-Read: Ordinarily, buyers and sellers in a marketplace have a partial harmony of interests. All want to make a win-win deal. But all also want to, conditional on the deal being made, reduce the amount of surplus received by their counterparty by as much as they can. The interest vectors have a positive dot product. But they are not aligned.
However, when what is being sold is not the service to the user but rather the user’s eyeballs to an advertiser who may want to inform the user and may want to distort the user’s cognition and worsen his or her judgment, even the partial harmony of interest goes up for grabs. And now Henry Farrell is annoyed at Alex Tabarrok’s transfer of what was originally a valid intuition outside of its proper sphere:
Facebook’s Algorithms Are Not Your Friend: “Alex’s more fundamental claim–like very many of Alex’s claims…:
…rests on the magic of markets and consumer sovereignty. Hence all of the stuff about billions of dollars ‘making its algorithm more and more attuned to our wants and needs’ and so on. But we know that the algorithm isn’t supposed to be attuned to our wants and needs. It’s supposed to be attuned to Facebook’s wants and needs, which are in fact rather different. Facebook’s profit model doesn’t involve selling commercial services to its consumers, but rather selling its consumers to commercial services. This surely gives it some incentive to make its website attractive (so that people come to it) and sticky (so that they keep on using it). But it also provides it with incentives to keep its actual customers happy–the businesses who use it to advertise…