Zuckerberg faces fall from grace, just like Gates

Facebook is confronted with the same danger that knocked Microsoft off its perch, and left it spending years attempting to regain relevance— distraction

There are not many people in the world qualified to give Mark Zuckerberg advice at a time like this. But perhaps one of them is Bill Gates. Facebook’s boss has a close friendship with the Microsoft founder, who is three decades his senior and one of Zuckerberg’s heroes. His formative computing years, in the 1990s, came when Gates was on top of the world and when Microsoft was not only the world’ s most powerful technology company, but also the coolest.

Thereare a lot of similarities between the two: Bothare Harvard dropouts who left to form the companies that would make them among the richest men in the world. And both have pledged to give away almost all of their wealth to charitable causes.

Gates’ position two decades ago is also a lot like that facing Zuckerberg today. More than anybody else, the Microsoft founder was the technology industry personified, the genius computer programmer with a prescience that made him a marvellous businessman. And despite his disarmingly cuddly profile, Gates was ruthlessly competitive, eliminating competitors with little mercy.

Zuckerberg has cultivated the same warm public image, with a public profile that regularly shows off his familyman credentials ( his Facebook page has as many posts displaying him at home baking or playing with the family dog as it does mea culpas on the company’s recent privacy scandal).

Like Gates was, Zuckerberg is the most recognisable technology entrepreneur of this decade, and is the face of his company in away that Google and Amazon’s founders are not. This image has somewhat masked Zuckerberg’s calculated manoeuvring: The purchases of potential rivals such as Instagram and WhatsApp and the cloning of Snapchat’s key features, which have so remorselessly neutered perhaps its biggest competitor.

But if Zuckerberg and Facebook’s rise has mirrored that of Gates and Microsoft’s, so might its future. Almost exactly 20 years ago, the United States Department of Justice sued Microsoft for illegal ly hobbling rivals by using the monopoly enjoyed by Windows to promote its own web browser. Microsoft’s stock continued to enjoy a dot com bubble rise, but this moment was the point at which its empire began to crumble. Gates was forced to testify in front of US politicians and later give a disastrous videotaped deposition in which he appeared hostile and defensive, introducing the world to a different side of the lovable geek.

The case dragged on for years, and came to define Microsoft. Although the company eventually settled, and got off relatively lightly, only having to make minor changes to satisfy the US government, the damage was done elsewhere.

Battle with regulators

Partially as a result of its public flogging, Microsoft became perceived less as an innovator and more as a bully. Strategically, it was forced to dedicate more time and attention to protecting what it already had — a monopoly over computer software and the dominant web browser — than conquering new territory — the web itself, and then mobile phones. Soon after came Google, then the iPod, iPhone and Facebook itself. Microsoft’s existential crisis did not cause any of these, but the company would almost certainly have put up a better fight against them if it was not hobbled by its battle with regulators.

Facebook, like Microsoft, could well emerge from the current crisis without being directly punished by regulators. Those in the US have themost power to rein in the company, but have typically been friendly compared with more toothless counterparts in Europe ( current UK data laws allow for a maximum fine of £ 500,000 [ Dh2.57 million]— a sum smaller than the revenue Facebook generates in 10 minutes). The danger instead looming for Facebook is the same one that ultimately knocked Microsoft off its perch, and left it spending years attempting to regain its lost relevance— distraction. Part of the reason Facebook has been so successful is because it has been quick to spot potential dangers and deal with them, as Snapchat will attest. If its current crisis means it becomes more uncertain about such bold moves, itmay cede the future in a way it has refused to do so until now.

Signs of this are already emerging. Lastweek, Facebook reportedly delayed plans for a video calling device it planned to unveil in May, apparently because of growing privacy concerns around the Cambridge Analytica controversy.

Zuckerberg has imitated Gates’ rise to the top. Facebook may yet imitate Microsoft’s fall.