ourEconomy

Facebook’s new currency is an attempt to create a platform we never leave

'GlobalCoin' will allow Facebook to harvest data about transactions that would previously have occurred outside its ever expanding walls.

David Beer
27 May 2019
Image: Anthony Quintano, CC BY 2.0

On the surface, the announcement that Facebook plans to launch a new ‘GlobalCoin’ currency in 2020 is just another milestone in the ongoing expansion of the social media behemoth. But beyond the obvious opportunities that it may offer, the announcement reveals something else about where these platforms are heading.

The aim of the new currency is not simply to give Facebook a stake in the troubled but expanding crypto-currencies market. It is much more likely that GlobalCoin will be part of what is sometimes referred to as ‘social commerce’. Social commerce seeks to enable purchasing to happen directly on a social media platform, without the need to actually leave that platform. As well as targeted advertising and other content, this means that we would also be presented with buying options and possibilities for immediate transactions.

According to the GlobalWebIndex report on social media trends, interest in being able to purchase directly through promoted content on social media stands at only around 12%. Privacy was inevitably raised as one key concern. Despite this survey result, global trends seem to indicate the expansion of social commerce. Further transformations in the technology are also likely to impact upon such reservations. Indeed, Facebook having its own currency is likely to smooth the expansion of social commerce by tackling issues around trust and also by making it more convenient for purchasing to stay within its realms.

In China the social media platform WeChat, which has over one billion active users, incorporates a range of functions including an online payment system, and already hosts widely-used social commerce facilities. Not only can you purchase directly from other retailers through the WeChat platform, it can also be used to make purchases offline. The social commerce model is much more established on WeChat, and you have to wonder if this is becoming an archetypal model for other social media platforms. WeChat’s variety of functions and purchasing options mean that while you don’t leave it when online, it is also becoming a much more active part of what we used to think of as being offline spaces. When it comes to creating a platform that comprehensively captures everyday life, including transactions as well as updates and interactions, WeChat has the edge.

With this global context in mind, I’d suggest that we should see the development of GlobalCoin in terms of the business model that underpins Facebook: its pursuit of ever more granular and expansive data about people and their lives, tastes, preferences, interactions and behaviours, with the overall objective of monetising that data. As well as generating revenues itself, if GlobalCoin becomes popular it will further Facebook’s ambitions in two respects.

First, the currency will allow Facebook to harvest data about transactions that would previously have occurred outside of its ever expanding walls, including those new transactions that will occur through social commerce. Second, it also means that people will step outside Facebook’s borders less often, and the result will be more and more trace data being captured.

In addition to this, as with WeChat, the possibilities will emerge for purchasing offline through the Facebook currency, opening up access to a whole ‘internet of things’ in Facebook’s ever growing data harvesting machine.

The ambition is to turn Facebook into a platform that people never need to leave, and to create the conditions under which Facebook is the internet for as many people as possible.

There is nothing more effective in data analytics than a platform which captures everything about us. It allows for numerous and varied data sources to be combined to create insights, make predictions, expand profiles and infer preferences. The announcement of Facebook's currency should be seen in these terms.

The question to ask ourselves is: do we want to allow Facebook’s walls to continue to expand?

Economics journalism that puts people and planet first. Get the weekly ourEconomy newsletter Join the conversation: subscribe below

Comments

We encourage anyone to comment, please consult the oD commenting guidelines if you have any questions.
Audio available Bookmark Check Language Close Comments Download Facebook Link Email Newsletter Newsletter Play Print Share Twitter Youtube Search Instagram