Is Facebook really changing? Or just trimming its data haul?
new york — Lost amid a flurry of Facebook announcements about privacy settings and data access is a much more fundamental question: Is Facebook really changing its relationship with users, or just tinkering around the edges of a deeper problem — its insatiable appetite for the data it uses to sell ads?
CEO Mark Zuckerberg, who was scheduled to testify to Congress on Tuesday and Wednesday, long defined the company’s mission as making the world more open and connected. He’s now tweaking that high-minded goal to emphasise positive community-building, not just connectivity. But it’s not at all clear how much Facebook can shift without undermining what makes it one of the world’s most profitable companies.
“Why is connectivity a good thing? Once you begin to challenge that, you begin to question the business model, which is about mining our data,” said Richard John, a Columbia University professor of business history. Facebook is “extraordinarily reliant on the goodwill of users” who allow it to harvest what they share about themselves, he said — much more so than other tech companies.
Wall Street analysts are already counting on Facebook to survive a user revolt. Based on recent polling, GBH Insights analyst Daniel Ives expects roughly 15 per cent of users to disengage somewhat from the social network following revelations that the political datamining firm Cambridge Analytica improperly obtained personal information from 87 million users to try to influence elections. In a worst-case scenario, decreased engagement and what Ives terms a “negligible” number of deleted accounts could cost the company up to $2 billion in annual advertising, Ives said.
Facebook could likely survive a $2 billion cut in its bottom line. Its shares have rebounded after hitting their lowest price in nine months in late March. Since then, the stock has climbed about 4 per cent to $158.61 at midday Monday. Less clear is how Facebook will handle the threat of increased regulation if Zuckerberg does not adequately resolve lawmakers’ concerns this week.
“Could Facebook still exist even though you have greater privacy protections? That’s the billion-dollar question,” said University of Tennessee law professor Maurice Stucke, who has argued against allowing a handful of tech companies to monopolise everyone’s personal data.
In the days leading up to Zuckerberg’s testimony, Facebook has implemented a series of changes. It took yet another stab at explaining what happens to user data on its service and rejiggered its confusing privacy controls for the seventh time in a decade.