Matthew Yglesias described Amazon as "a charitable organization being run by elements of the investment community for the benefit of consumers." [1]
There are many things Amazon could do to transfer cash from their customers to their shareholders. Bezos justifies not doing these things because he claims there is more value in long term customer loyalty and trust. Because it's a good faith business decision, I don't see Bezos being ousted or sued by shareholders.
Likewise, it would be easy for Facebook to say "we think there's long term value in delivering the best possible experience to users, and if for some users that means using an extension that's fine with us" - it's a good faith business decision, why would they get ousted or sued where Bezos hasn't?
it would be easy for Facebook to say "we think there's long term value in delivering the best possible experience to users, and if for some users that means using an extension that's fine with us"
It would be easy for them to say it, but first they would have to believe it, and second they would have to believe they could convince investors of it.
it's a good faith business decision, why would they get ousted or sued where Bezos hasn't?
It's not a question of being sued, it's a question of having the stock price go down. Investors don't have to sue to do that; they just have to sell.
> It would be easy for them to say it, but first they would have to believe it, and second they would have to believe they could convince investors of it
You're moving goalposts. That's a completely different statement. Whatever it is they truly believe is totally different than "they have to make decisions that benefit their stockholders or they will go bankrupt".
> It's not a question of being sued, it's a question of having the stock price go down. Investors don't have to sue to do that; they just have to sell.
Again, this has nothing to do with fiduciary duty, which was the topic that the original comment was responding to. The fact remains that for-profit companies do not have some kind of Sword of Damocles hanging over them, waiting for them to make a decision that costs stockholders value.
Whatever it is they truly believe is totally different than "they have to make decisions that benefit their stockholders or they will go bankrupt".
How is this relevant to what I said in the particular statement you were responding to here? I wasn't saying anything in that statement about what FB does believe; all I was saying is that, judging by their behavior, they don't believe that "there's long term value in delivering the best possible experience to users, and if for some users that means using an extension that's fine with us".
As for what I think they do believe, see below.
this has nothing to do with fiduciary duty
Which was exactly my point: saying that FB won't get sued if it lets third-party developers change its UI is not at all the same as saying that FB thinks its stockholders will benefit if it lets third-party developers change its UI.
for-profit companies do not have some kind of Sword of Damocles hanging over them, waiting for them to make a decision that costs stockholders value.
I wasn't saying they do; nothing in what I said requires that a single decision is all it takes. I didn't specify any time frame in which FB has to benefit stockholders or go bankrupt. If you read other posts of mine in this sub-thread, you'll see that the strategy I think FB is following is not one aimed at maximizing short-term return on capital, but that doesn't change the fact that they have to benefit stockholders on some time horizon that is relevant for the stockholders.
Since the extension blocks ads, which are the primary source of Facebook income, it doesn't seem totally ridiculous for them to claim the extension is reducing their long term value.
Well, yes, but you're still qualifying the actions building customer loyalty and trust as actions that're ultimately in shareholders' best long-term interest. So the meme in question is just trite, not inaccurate or invalid.
There are many things Amazon could do to transfer cash from their customers to their shareholders. Bezos justifies not doing these things because he claims there is more value in long term customer loyalty and trust. Because it's a good faith business decision, I don't see Bezos being ousted or sued by shareholders.
Likewise, it would be easy for Facebook to say "we think there's long term value in delivering the best possible experience to users, and if for some users that means using an extension that's fine with us" - it's a good faith business decision, why would they get ousted or sued where Bezos hasn't?
[1] http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...