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Facebook and Yahoo: Power to the People


Facebook's Mark Zuckerberg and Yahoo's Carol Bartz are pioneering a new era in business, one that puts you in charge.

In the space of a few hours, Facebook's CEO, Mark Zuckerberg, and Yahoo's new CEO, Carol Bartz, each announced new ways for their users to steer the policies and directions of their respective companies, treating customers not like passive consumers but active stakeholders. When did the people get so powerful?

Clearly, we've entered a new era of business and corporate policy. I'd call it the democratization of business. Zuckerberg took pains to make clear that his site's new rights and responsibilities document is "about policy and not product." Still, a big part of Facebook's plan includes putting terms of service (TOS) changes to a vote. This would not just be an internal vote. It would include any one of Facebook's 170 million members who took the time to comment on proposed changes.

At Yahoo, the inclusion of the consumer in corporate policy and direction is far less pronounced. The company's new Customer Advocacy group will be tasked with listening to and supporting customers. The fact that Bartz makes mention of it in her first blog post as Chief Executive is telling.

So what's going on here?

For his part, Facebook's Zuckerberg probably felt like he had little choice. The company faced a fusillade of criticism last week when the consumer advocacy blog Consumerist outlined controversial changes to Facebook's existing TOS. In the new version, Facebook indicated that it owned and could use your content, even after you left the site. I haven't read the TOS for every similar social network, but I will say that MySpace's TOS states clearly that it doesn't own or retain rights to anything you post, and once you leave, it gets rid of all your content as soon as possible. Twitter does the same. As you can imagine, the Consumerist's piece set off a firestorm. Facebook's social network did what it does best, and word of the change and outrage over it spread fast. The NYTimes.com reported that Zuckerberg and Facebook initially balked at making changes to the new TOS, but soon after, the company reinstated the original TOS.

Now, however, Facebook wants to run each and every TOS change by every Facebook user. No one has to respond, but everyone can. If enough people comment then Facebook puts the change to a vote. This isn't lip service and, if you believe Zuckerberg, the power afforded consumers is real. "This isn't just a contract we have with individuals on the site," said Zuckerberg, "this is the governing document for the site."

Facebook is a business, right? It has some big investors like Microsoft. How does it feel about this? I cannot imagine Microsoft putting anything it does to consumer vote. Most companies wouldn't consider it because they're businesses not democracies. There is also a fear, a legitimate one I think, that involving members/consumers in site policy making could slow Facebook down as a business. Zuckerberg's assertion that there's a clean separation between site business and the site's Terms of Service does not entirely assuage those concerns. In many meaningful ways, Terms of Service ARE the business.

When I saw Bartz's note, I realized that we're probably right at what author Malcolm Gladwell calls a "tipping point." This is the perfect moment for customers to seize control. Companies are scared, hurting, low on funds, and facing a very difficult 2009. They can no longer afford to tell customers what they should like or dictate the terms of the costumer-business relationship. They need consumers to feel engaged and committed to products and brands—like stakeholders. Membership to a site like Facebook or a destination like Yahoo means you get a seat at the table. It also means you have something to gain or lose if the company changes, succeeds, or fails.

I expect that what Zuckerberg and Facebook and, to a lesser extent, Bartz and Yahoo have started will be repeated in markets and at companies across the Internet and, eventually, around the world.

Power to the people.

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