Facebook's High-Stakes Poker Game | TechCrunch

Editor?s note:?Antone Johnson is?a startup?lawyer specializing in?early-stage?consumer Internet and location-based?businesses, with particular emphasis on?social and digital media. Before founding his own firm, he served?as eHarmony?s first VP?of Legal Affairs and was one of the original in-house lawyers?at Myspace. Follow him on Twitter @antonejohnson.

?Ma?am, we at the FBI do not have a sense of humor?that?we?re aware of.??? Tommy Lee Jones, Men In Black

Is it juvenile to snicker at the obvious double entendre of Facebook?s new ephemeral messaging app, Poke, given its utility for sexting? If so, send me back to repeat sophomore year, but the powers-that-be are unlikely to crack a grin.

Facebook has rightly been accused of creating a slavish copy of Snapchat, a viral sensation that surpassed one billion shared photos last month. ?The speed with which Facebook was able to emulate and release a competing app ??12 days in the making, according to Facebook?s Blake Ross?? is cited as an example of the competitive threat Facebook and other giants pose to new social startups. Yet Poke may turn out to be a poster child for why most multi-billion-dollar public companies try not to break things, and as a consequence, are often precluded from moving fast like startups.

It would be foolish for most companies to build a clone and expect it to succeed at all, let alone approach Snapchat?s massive usage, but Facebook isn?t your ordinary competitor. With its billion active users, trove of personal data and immediate access to their social graphs, the network effects are unparalleled. Facebook also has unique competitive disadvantages on multiple fronts that could render Poke a crippling liability for the company; paradoxically, the more successful Poke becomes, the more it may hurt the company as a whole.

Facebook has grappled with the consequences of its market dominance for years. The recent ruckus over Terms of Use changes for Instagram under its ownership is only the latest example of Facebook?s uneasy relationship with the public on privacy issues. The company?s governing philosophy of stretching the boundaries of personal transparency while simultaneously insisting on the use of real-world identities ??coupled with its tendency to ask for forgiveness rather than permission ??has drawn the ire of regulators and advocacy groups.

More than any other company, Facebook surely appreciates the extent to which massive use of a social service draws massive abuse, as predators ?go fishing where the fish are.? The sheer volume of tragic incidents involving teens at Myspace and Facebook forced the companies to come to the table and strike a ?voluntary? deal in 2008 with attorney generals nationwide to address vexing, persistent child-safety issues.? The thousands of smaller sites were largely ignored. Scale can make all the difference between benign obscurity and CEOs being hauled into Congressional committee hearings.

Setting aside the debate over what proportion of usage and growth is driven by sexting, the ability to send images that disappear after no more than 10 seconds using an app that alerts the sender if the recipient takes a screen shot, removes some psychological barriers. The percentage of total ?snaps? involving nudity may be low, but the possibility that interactions could take that turn at any moment undoubtedly adds a charge to the hormone-flooded young brain. Speaking from experience at Myspace, a site that banned outright nudity from inception, our young user base had seemingly infinite desire to push the boundaries and circumvent those rules at every opportunity. They also knew that to freely exchange nude images they had to go elsewhere: From ImageShack or Photobucket to Kik or MMS. Today, Snapchat is that elsewhere; tomorrow it may be Poke.

There?s nothing inherently problematic or illegal about sexting between consenting adults, but minors are another story. Law enforcement is currently grappling with a head-on conflict between the realities of teen behavior and the legal status of sexting images: Possession and distribution of child pornography is a serious felony ? one of the FBI?s highest enforcement priorities ? punishable by lengthy prison sentences and registration as a sex offender. Authorities often use discretion not to prosecute peer sexting incidents among teens, rightly viewing those laws as disproportionately harsh for the context. Yet that doesn?t mitigate the fact that a service such as Snapchat (and now Poke) at any given time is guaranteed to be in possession of thousands or millions of images the FBI considers to be ?contraband.?

If there is one existential threat to Snapchat, assuming its continued popularity and eventual revenue model, this is it. Even if we instantly became comfortable as a society with sexting among teens as relatively benign (fat chance), there will still be interactions between adults and minors. As it scales to tens of millions of users and ugly headlines begin to appear about creepy use by sexual predators, it?s a certainty that law enforcement will come knocking with search warrants in hand for records in cases of suspected underage porn and solicitation of minors.

Encryption keys be damned; under the right kind of court order or warrant, services will be compelled to retain and produce some images and data for specific users. (Privacy advocates may be outraged at the concept that ?ephemeral messaging? isn?t completely ephemeral, but consider how you would react if a 35-year-old man were sending pictures of his genitalia, however ephemeral, to your 13-year-old daughter.)? This is why Snapchat, like most social media services, includes ?CYA? language in its privacy policy:? ?We may share your personal information with third parties? [to] comply with laws or to respond to lawful requests and legal process.?

These issues aren?t new, of course. Myspace at its peak received hundreds of law enforcement subpoenas and warrants each month. We also employed and ultimately outsourced an army of image reviewers. Age and identity verification have been thorny challenges throughout the age of social media. That didn?t stop state attorney generals from ganging up on MySpace and Facebook in 2007 to demand action on child online safety.? The pressure to ?do something? was intense, and companies resist such demands at their peril.

At scale, the gravest threats are political and reputational. When asked, ?What are you going to do about this?? the acceptable CEO answer is not ?nothing.? Snapchat and its investors may have thought a few moves ahead in this chess game, but if they have a brilliant solution to prevent the kind of abuses that come with scale, I?d love to hear about it.

Returning to Poke, Facebook faces a unique competitive disadvantage from its long history dealing with child-safety issues, its ubiquity, and unparalleled scale. Simply put, Facebook will be held to a higher standard than startups from day one. Unlike Snapchat and others, Facebook can?t plead ignorance or lack of resources to address abuse issues that accompany explosive growth. In fact, no other company in the world has access to the same range of resources and depth of knowledge in the area of online social interaction among teens and adults.

This is not a technical problem that can be solved by engineering or sheer resources. It?s a byproduct of a legal regime that makes the same interaction perfectly legal between two adults; not-really-legal-but-essentially-unstoppable between two minors; and a felony involving prison time and sex offender registration between an adult and a minor. Anything Facebook does to make the product cleaner or safer is likely to degrade the user experience, add friction to new user registration, and so on. These tradeoffs could well keep Poke a ?PG-rated? product with the accountability of real-name, real-identity culture, while the more adventurous remain over at Snapchat ??at least until it too gets called on the carpet.

Wilson Sonsini Goodrich & Rosati, Silicon Arabia, Bottom Line Law Group, ideakick, Gust, Kibin, AHHHA , eHarmony, MySpace, Intermix Media, Excite@Home, Stroock & Stroock & Lavan LLP, Fox Interactive Media, Gemstar-TV Guide, Wilson Sonsini Goodrich & Rosati

Antone Johnson is a California business lawyer and executive advising technology and media companies, entrepreneurs and investors in corporate, commercial and intellectual property matters. His area of focus is the intersection between technology, media, finance, law and public policy, with particular emphasis on lean startups and growth companies in social media, Web 2.0, digital media, location-based services, and other IP-intensive, consumer-facing businesses. Johnson is Founding Principal of Bottom Line Law Group, a business and IP law firm in San...

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Source: http://techcrunch.com/2012/12/29/facebooks-high-stakes-poker-game/

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