The One Reason Why Social Tech Is A Bubble

Remember the Health Insurance Portability and Accountability Act?  Congress enacted it into law in 1996.  Basically it meant the you health care records were your property and regardless of who your doctor or insurance company was, they had to enact measures to keep your health information both private and portable.

Remember mobile number portability.  It was implement in the U.S. in 2003.  Before that if you changed mobile carriers you would lose your phone number.  There were also a lot more mobile carriers than there are today, so the likelihood of changing carriers was probably more common than it is today in the duopoly world of Verizon vs. AT&T-mobile. 

Are you starting to see the trend.  When you first got your doctor or your health insurance, they weren’t required to protect your information.  When you first got your cell phone, they could hold you hostage… it was in the agreement.  When you look at how people are responding to Facebook and the fact that they are discovering that their profile information and online behavior is being monetized it’s only a matter of time before people start complaining in earnest.

Now, there is one thing that is different.  Bigger money is at stake with Facebook and Linked-in profiles than in the past.  Mega-banks such as Goldman Sachs investment in Facebook and J. P. Morgan’s likely investment in Twitter definitely change the landscape of lobbying and government regulations.  Add on top of that, the government’s indirect financial interests in Facebook and the value of confidential profile information to folks like the Central Intelligence Agency and there will be major forces at work to keep your profile information locked into Facebook forever. 

But don’t forget there are elections and since nearly everyone uses Facebook, it will be a populist vote-getting issue.  Former Federal Trade Commission member, Pamela Jones Harbour co-authored an article in this month’s Antitrust Law section of the American Bar Association and outlined in detail both the risks and interest as they relate to social networks and the users. 

If you want to see a good example of how people feel about having their data locked up and their only option for leaving Facebook is what has commonly become referred to as committing “Facebook suicide”, you may be interested in checking out a movement to convert MySpace.com into the first-ever user owned and managed social network.  It’s based on the same portability concept with the added bonus to the users of being the owners of the social equity within a growing website.  You can check out the idea and especially the comments at www.myspacecondos.com  . 

If there’s one thing you can count on 75% of the time in Washington, it’s that the politician will side with the lobbyists.  However 25% of the time, every election year, the voters have an opportunity to get their attention.  The next time someone tells you Facebook, Groupon, Twitter or Zynga are worth astronomical figures, ask them how much they would be worth if users were able to jailbreak their profile data and take it to another provider.

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