Investors tend to focus on the most likely outcome. As a risk manager, I spend time focusing on the unlikely, on the bad things that might possibly happen. Where T.S. Eliot writes, “This is the way the world ends, Not with a bang but a whimper” I would write, “This is one possible way the world might end….”

So, with that as the starting point, how might the world end for Facebook? And, by extension, for Apple and Google, because Google faces similar, but not so dire, business risk, and because much of Apple’s raison d’être is to provide the hardware for Facebook and related applications.

Regulatory Backlash

As a start, there is a crescendo of regulatory backlash to the power that Facebook and Google wield. It is most manifest in recent action in Europe and has been given some headline coverage from a speech a few days ago by George Soros at the World Economic Forum. If you want a sense of where he is coming from, the Washington Post headlined it as “Facebook and Google are doomed, George Soros says.”

The current controversy on net neutrality applies to Google and Facebook. One concern is that without net neutrality there will be a stifling of the small start-ups, and increased power for the larger players. Point the rifle three clicks to the left from the net neutrality debate, and you have them in the line of fire.

A Self-destructive Business Model

Facebook and Google have a business model that is at war with itself. On the one hand, they link like-minded people together, so they can share their views, interests, and product suggestions. On the other hand, they depend on advertisers for their revenue. But if their business model is perfected in the first case, there is no need for the second.  People will know what they want without the advertisers that are outside their social circle chiming in.

Social Norms

Obviously, a social network only works if people want to share on the social network. And the bulk of those who do so are acutely sensitive to the cool thing to do. If it becomes uncool, that is the end of that. Put another way, the fever pitch of social media is of the same flavor as any fad. It has no purpose other than being the thing of the moment. For social media, that moment might last another two years or another ten. But at some point, there is the risk people will find it so last year, or so “what my parents used to do.”

As a measure of it being a fad, what other $500 billion company could disappear from the face of the earth tomorrow and have no real impact — except on advertisers?

And there are signs of change. When Cook states that he wouldn’t want his nephew on social media, that is not a good sign. Closer to home, a month ago my fourteen-year-old daughter decided to get off of social media.

A recent meme is social media as cigarettes. Think of cigarettes in the Mad Men era.  People were addicted, but also it was part of being social, and it was the way you kept yourself busy. If you didn’t have a cigarette out, what were you going to do with your hands? Social media is addictive, social, and keeps you feeling like you are doing something with your hands.

How Does Apple Fit Into the Mix?