New Orleans There’s nothing so juicy in the world of the billionaires, high flyers, and masters of the universe for the rest of us peons and hoi polloi as when they overstep the boundaries of even standard arrogance. Not long ago Comcast and its chief lobbyist and bully boy, David Cohen, did so in a lengthy scold which gave everyone a sense of how they would wield their power as a full-on monopoly if the President and the FCC allowed it. The head of Uber, the ridesharing service and frequent lawbreaker, does so routinely to the degree they are getting pushed out of countries and having to do the “walk of shame” in a number of European cities. Now on the eve of the big whoops annual winter blowout in Davos, Switzerland, the Facebook folk led by their chief operating officer, Sheryl Sandberg, have leaned into a mess as they claim they are responsible for $227 billion in global economic impact and 4.5 million jobs last year or, as the Wall Street Journal reports, “roughly the gross domestic product of Portugal.” To risk a pun, even on its face, Facebook must have known this was preposterous.
They bought and paid for the study making such wild claims from the consulting firm Deloitte. They paid for a high number in assessing their own performance, so not surprisingly they got it, most of which was based on inflating the economic worth of each “like” on Facebook. Deloitte said that they “looked at how many people responded to events on Facebook and multiplied the estimated number of attendees by the average cost of a pub visit, then added an estimate of the ancillary economic benefits of the gatherings.” Wow, that just takes the breath way. Obviously, the Deloitte folks don’t actually use Facebook. There seems to be no discount value applied to the number of people who might “like” something and then never come back to the site again, which Facebook’s own analytics very accurately document. The percentages are often infinitely low. Furthermore on events the discount rate, as any organizer could have told them, can run up to 90% since many will “like” the event or say they will attend just to be supportive, even if it is in a foreign country for crying out loud. That’s the way Facebook works. I don’t want to even imagine what Deloitte thinks a so-called “pub visit” costs but given how they did this study, I have a feeling they have spent a lot of time in pubs!
Sandberg and the Facebook self-promo folks who claimed in her statement that they were doing all of this because of a “genuine desire…to understand the economic impact” they were having, and of course increase the ad dollars they could harvest by puffing themselves up. She thought the fake study might “help influence policies in favor of the tech industry.” This must be a modern version of Facebook hoping that we all will start saying “what’s good for Facebook is good for the world,” just like the old saying about “what’s good for GM is good for America” went.
Not surprisingly real economists are having a field day of fun with the study. One from Stanford in the Silicon Valley playpen was plain spoken saying, “The results are meaningless. Facebook is an effect, not a cause, of the growth of Internet access and use.” Another said they didn’t create “nearly as many jobs as the report suggests” and that the “study’s calculations” were “bad reasoning.”
The manager of Deloitte’s study cited a European survey saying that 16% of those asked said they “couldn’t live without social media.” I guess since Facebook claims so much of the world’s economy and employment is coming from their website, we should be glad they are not taking credit for preventing 16% of all Europeans from committing suicide as well.
Anytime you’re ready, Facebookers, take foot out of your mouth and leave “voodoo economics” to the politicians.