Crunch point for Facebook
FACEBOOK is going to need all the skills of its newly hired communications chief, former deputy prime minister Sir Nick Clegg, if it is to have any chance of averting a fresh round of outrage when it reveals its latest multi-billion dollar sales tomorrow.
The timing of its results, which hargreaves Lansdown predicts will show profits of $5.8bn over the space of just three months, is unfortunate for the digital giant.
Mark Zuckerberg, the 34-year-old billionaire founder, will announce the figures a day after Philip hammond unveils his Budget.
Coming so soon after the Chancellor gets to his feet cannot help but remind everyone just how little Facebook contributes to the UK’s coffers – a piffling £16m last year.
And the results land on the same day that senior Facebook executives, along with colleagues from Google and Microsoft, will be grilled in the house of Lords over questionable corporate behaviour. Peers are gearing up to attack the US operators for their dominance of the internet market and their attempts to shirk responsibility for offensive or dangerous content posted by users.
Which makes it interesting for Sir Nick Clegg, who, in his former guise as Lib Dem leader, would have been the first to demand that the US digital titans behave as responsible corporate citizens in the UK.
Clegg’s main selling point to Facebook is not, however, his standing in this country. even his most ardent admirer would have to admit his star has waned since the runup to the 2010 election when Gordon Brown and David Cameron vied to tell the electorate how much they agreed with Nick.
Zuckerberg is actually paying for Clegg’s specialist knowledge of the european Union at a time when one of Facebook’s biggest fears is a clampdown from Brussels.
Like Amazon and Twitter, it is a Janus corporation. It is hugely popular with millions of users, but has a dark side: the harmless pastime of posting pictures of puppies co-exists with far more sinister activities, unseen and unknown to innocent users.
The company was this month fined a mere £500,000 over the Cambridge Analytica scandal, which revolved around the harvesting of up to 87m users’ data without their knowledge. That is the maximum fine the regulators could impose, even though to Zuckerberg, it is a laughably small amount that would take his company less than an hour to make in revenues.
But as Clegg and Zuckerberg both know, the penalties are only going to get bigger. Debacles like this one and last month’s huge hack of user accounts have taken a toll on the share price, which is down around 15pc in the past year. NOW
at a turning point, at root Facebook’s problems come down to a fight for its soul: an existential struggle between social and corporate values. On one side is ‘friendship’, the original motive for the site, versus profit, a powerful driver once the founders realised the billions to be made.
Zuckerberg’s solution is to try to return to its social networking roots and to dial down the prominence of advertising.
In the long-term, that must be right, because alienating users would be killing the goose that lays the golden egg, though in the short-term it risks a hit to revenues.
It may not be much consolation to Brits in the week of a sober Budget, but Sir Nick Clegg will have to work hard for those Silicon Valley millions.