The Facebook I.P.O. and Lanier’s Paradox


There is much schadenfreude to be had from the drop-off in the price of the Facebook’s Initial Public Stock offering. It is important,however, to realize that the belief that Facebook could be monetized comes from a set of beliefs that one author has described as “Digital Maoism.” That author is Jaron Lanier -computer scientist and virtual reality pioneer, and he has had quite a few criticisms about the direction the Internet has been moving towards.

The bulk of his techniques can be found in his book, “You Are Not a Gadget“, which I will be reviewing soon. But there is a very important point hat he makes about information aggregating platforms such as Facebook and Google. He cites a paradox; if these services were as good at retrieving information as they claimed they were, they would not be able to advertise! After all. the very first result would the best answer, making whatever advertisement being offered elsewhere on the page redundant.

The paradox is explained in more detail at 26:30

The implication is that any Internet service that offers information for free, yet expects to make money off of advertisement can expect its stock price to drop to much lower than when it started out.


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