Could this clash among Facebook's billionaires end up changing the entire digital economy?

If Hollywood producers are hunting for dramatic subject matter to make a sequel to The Social Network - David Fincher's brilliant 2010 film about Mark Zuckerberg's founding of Facebook - they will find plenty of promising material in the social media giant's real life boardroom battles of the past few months.

It would seem Menlo Park has been the arena not only for a titanic clash of billionaire personalities but also a profound philosophical disagreement over privacy. And the fallout of this row could help shape the future of the internet and the entire global digital economy. Any screenwriter worth their salt should be able to make something out of that.

This week's resignation of the WhatsApp founder Jan Koum from Facebook's board was plainly a long time in the making. Indeed, one could argue that it was inevitable from the moment Facebook snapped up Koum's messaging app phenomenon for $ 19bn in 2014, netting Koum personally around $ 7bn.

Facebook's business model is essentially monetising the personal data of its 2.2 billion strong active user base. The site scrapes your data off your page in order to serve you up with targeted advertising. It's hard to overstate Facebook's reliance on selling adverts. Of the firm's $12bn of revenues in the first quarter of 2018, more than 98 per cent came from this source.

WhatsApp's business model was historically very different. There has never been any advertising on the ubiquitous app. Indeed, Koum once described online ads as an "insult to your intelligence" and "the interruption of your train of thought". When it was founded, WhatsApp's revenues came from a $1 a year subscription price. And, unlike Facebook, WhatsApp has always refused to gather any data on users except their phone number.

The app has also, unlike Facebook, traditionally put a high premium on users' privacy, with Koum claiming this was motivated by his upbringing in the repressive Soviet Union. In 2016 WhatsApp even introduced "end-to-end encryption" of messaging, something that once irritated our former home secretary Amber Rudd. But when WhatsApp was folded into the Facebook empire it also surrendered ultimate control. And in 2016 the WhatsApp subscription charge was scrapped.

So: no advertising, no subscription price, no personal data. Where was the profit from WhatsApp's 1.5 billion users, which Facebook needed to justify that lofty acquisition price, to come from? The answer came two years ago when Facebook updated WhatsApp's terms of service and privacy policy to include data sharing across the social network. And there seems to have been pressure from Zuckerberg for more.

We don't know precisely what - there are reports about a weakening of encryption - but it was plainly enough for Koum to walk.

WhatsApp's other founder, Brian Acton, left Facebook last November. And he seems to be even more disaffected than Koum. Acton recently suggested on Twitter that the Cambridge Analytica scandal - which has seen some 87 million Facebook users' data transferred to a political consulting firm - meant it was time for people to "delete Facebook". Pretty remarkable from someone who earned an estimated $3.8bn from Zuckerberg's buyout of his company.

Acton is investing some of that Facebook cash in something called the Signal Foundation whose mission is "to develop open source privacy technology that protects free expression and enables secure global communication". That sounds rather like a potential rival to WhatsApp, perhaps even to Facebook. Koum has said he now wants to spend more time playing "ultimate Frisbee". But perhaps he might be persuaded to lend a hand to his old partner.

We seem to be at a crossroads in the development of the digital economy. Privacy breaches, tax dodging, fake news and a host of other scandals mean the golden aura of media and political favour in which the technology leviathans once basked has faded. The age of indulgence for Silicon Valley is over. But now comes the money question. How much do users truly value their personal data, or even understand it? Has the penny dropped among the public that Facebook is not - and never was - a "free" service? Do enough people care to make a viable market for privacy-focused rivals? 

Perhaps the answer is no, in which case Facebook can, having done its penance and tightened up its data rules, return to delivering Zuckerberg's project of global digital domination. But if the answer is yes, then we might, just, be living through the beginning of the end for one of the fastest-growing and most highly valued companies the world has ever seen.

Facebook is a business. If you really want it to change the way it works, log off

It’s often said you should keep an eye on what politicians actually do, rather than fixating on what they say. That wisdom applies just as much to corporations.

Facebook’s community standards policy states it will remove any content that promotes sexual violence or exploitation. But when the BBC flagged various examples of this kind of content to the social media platform, most of the images were left untouched.

Facebook’s founder Mark Zuckerberg has insisted he is alive to widespread concerns about the dissemination of fake news via Facebook and that he takes misinformation seriously. But there has been no substantive action taken to eradicate obvious hoaxes from the platform, despite claims from the founder that progress is being made.

This is not a question of lack of resources. Facebook’s revenues last year were $27.5bn, up from just $3.7bn in 2011. Profits have risen from $1bn to $10bn over that same period. Money is not the problem for Facebook.

What we are dealing with here is a lack of will; or rather a strategic paralysis. Facebook is determined that it will not be bounced into becoming an active curator and editor of the content that appears on the platform; content that is posted and shared by its 1.86 billion active users.

Not only would that entail a considerable expansion of its cost base, but it could fundamentally change the relationship between the platform and the regulatory authorities across the many territories it operates. If Facebook is perceived to be “in charge” of what appears on the platform then it may also be held accountable for that content.

This is an expectation that traditional newspapers and online news organisations like The Independent have long been used to. But while Facebook is happy to collect the billions of dollars a year of advertising revenues that formerly flowed to the traditional news media it does not want the social responsibilities that come with being a media company.

This is not the only example of what we might generously call Zuckerberg’s cognitive dissonance. He talks grandly of his desire to spread “prosperity and freedom” through Facebook’s expansion and “making the world open”. Yet last year he was making overtures to the internet-censoring autocrats of Beijing, meeting with China’s propaganda chief Liu Yunshan. He also posted what looked alarmingly like a propaganda picture of himself jogging in the smog-blanketed Tiananmen Square, promoting some richly deserved online derision in China.

But we should be fair to Zuckerberg. Sensitively curating 1.86 billion users is no trivial task. Facebook has faced complaints in recent years for taking down images of breast-feeding mothers that it mistakenly identified as explicit. Facebook is different from a newspaper in that people feel that what they post is “their” content. There’s a tendency at times for people to demand a combination of the wisdom of Solomon and Papal infallibility from the company.We want them to interfere with the content of others, but to leave ours well alone.

And curating the news is an especially hazardous business. Zuckerberg raises valid points about the difficulty of distinguishing hoaxes from satire and the risk of sending people even further into their ideological bunkers through heavy-handed editing.

When it turned out that Facebook’s “trending” newsfeeds were operated by human editors, rather than algorithms, and there were allegations those editors were suppressing the output of right-wing news organisations, Facebook caught huge flak from conservatives. More active policing of the network involving human judgements, particularly in the news arena, is inevitably going to generate controversy and criticism.

Yet at the same time we shouldn’t be naïve. There is a tendency in the media to revere Zuckerberg as some sort of technological-seer-cum-freedom-fighter. But his primary goal is to continue building his business in order to justify the enormous valuation put on it by the financial markets since it floated on the stock market in 2012.

Investors have priced Facebook at a domination price – and that means Zuckerberg needs to deliver domination. Hence his desire to get into the vast China market, where Facebook is currently barred.The value of his own stake in the company, worth some $55bn, depends on success. If cleaning up the platform conflicts with its user growth, or allows a competitor to take market share, it’s not difficult to guess which way he will lean.

If we want reform of the pre-eminent online social network of our times we cannot rely on its founder to deliver it; that change will need to be driven by the demands of users, whose eyeballs attract those billions of advertising dollars. If people really want change, logging off may be the only way to achieve it. Actions speak louder than words.