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Illustration: Sarah Grillo/Axios

Facebook's decision to shift gears to focus on encrypted private messaging will either cement the social network's global dominance or end it. Either way, it will change the way more than one-third of the world's population engages with the internet.

Driving the news: Zuckerberg's Wednesday announcement is a clear response to public outcry over Facebook's flawed custody of users' data. But the shift, if it actually happens, could go a lot further than privacy principles.

Think big: If the move from desktop to mobile brought us Facebook 2.0, a pivot from open networks to private ones would usher in Facebook 3.0.

The big picture: Transforming any product the size of Facebook is daunting. Dominant tech companies that pull it off extend their sway into new eras. Otherwise, they fade.

  • Microsoft pulled this off when it scrambled its jets to build a web browser two decades ago.
  • Apple deftly transitioned from a computer-centric to a phone-oriented company over the past decade.
  • Both Google and Facebook (after some missteps) made the leap from desktop-focused services to mobile, too.
  • Zuckerberg is painting Facebook's next shift on the same scale.

Driving cryptocurrency adoption: Facebook is reportedly working on making a cryptocurrency that will let users transfer money in WhatsApp, using what's being dubbed "Facebook coin."

  • If Facebook successfully deployed that system to the combined messaging platform it plans to build from WhatsApp, Instagram and Messenger, it could become a dominant cryptocurrency overnight — building an onramp to the new technology for millions the way AOL populated the internet in the '90s.

Changing data storage: In his note, Mark Zuckerberg conceded that these changes would make it difficult for Facebook to operate in some countries that are increasingly demanding platforms store users' data locally.

  • Zuckerberg said Facebook would protect user information by keeping data centers out of "countries that have a track record of violating human rights like privacy or freedom of expression."
  • That might lock Facebook out of some countries altogether (it's already banned in China). But since Facebook is synonymous with the internet in many places, it's plausible to imagine that this change could force some governments to think differently about those policies.

Tougher misinformation tracking: Encryption makes it even harder for researchers to track and study misinformation, and for platforms to limit it.

  • Many of the worst cases of misinformation globally have been on messaging platforms, not Facebook or Instagram, because it was nearly impossible to catch and stop in real time.
  • Facebook has 30,000 people moderating content today and faces a barrage of criticism for how it handles content. The encrypted-messaging world may look more attractive to it right now.

Redefining small business and micropayments: Facebook sees business as a prime market for the unified messaging service that it's building.

  • Consumers may not care about Messenger, WhatsApp and Instagram integration, but it's attractive for businesses — particularly small businesses — trying to reach customers.
  • Zuckerberg said on last quarter's earnings call that creating a new buying experience, where users have a more direct relationship with sellers, is a "very big" opportunity for Facebook.

Be smart: The more information users exchange behind encrypted doors, the less data Facebook has to target ads.

  • Facebook's efforts to increase commerce and payment interactions on its platform could suggest the company is looking to replace ad revenue it might lose in the future.
  • But the company has said that it doesn't want to become a payment processor, since that imposes a lot of red tape. (This position could change, of course.)
  • Facebook's $40 billion advertising business today centers around targeted ads next to News Feed posts. That business isn't going anywhere any time soon, and it's hard to imagine Facebook has any long-term interest in ditching the open social network that has been its cash cow for so long.

Go deeper

FAA clears more planes after 5G fears

Photo: David McNew/Getty Images

The Federal Aviation Administration said Thursday it had approved nearly 80% of the U.S. commercial fleet to perform low-visibility landings at airports with new 5G services after fears of signal interference limited 5G rollout.

Why it matters: The FAA approvals will help provide more certainty after the agency raised fears that 5G signals could reduce the accuracy of certain equipment, known as radio altimeters, that helps planes land and take off in inclement weather.

Dan Primack, author of Pro Rata
3 hours ago - Economy & Business

Peloton stock tanks on report of production halt

Illustration: Aïda Amer/Axios

Peloton stock fell by as much as 25% on Thursday, following a CNBC report that the connected fitness company will temporarily halt production on its bikes and treadmills.

Why it matters: Peloton is viewed by many as a proxy for consumer behavior in the pandemic era, as its popularity surged when gyms closed and people wanted to exercise at home.

Updated 3 hours ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: No evidence that healthy children, teens need boosters, WHO says — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older.
  5. Variant tracker