02/07/2019
In late December I was watching one of those year-end wrap-up shows about the biggest news stories of 2018, in this case concentrating on financial news. As you would expect, the trade war with China, turmoil in the stock markets, and the bankruptcy of major retailers such as Sears and Toys “R” Us were all prominently featured.
The biggest financial story, though, was the controversy over Facebook. I was astonished by that assessment, but I don’t doubt the judgment of the financial press, and I readily acknowledge that my avoidance of social media has created a blind spot in my view of what’s going on these days in business and culture.
I knew a little bit about Facebook’s travails, of course, just from occasionally watching cable news in the evening, which takes a few moments out from its wall-to-wall Trump analysis now and then to cover other events. I’ve seen Mark Zuckerberg testifying to Congressional committees about the company’s efforts to protect its customers’ data, prevent immoral or illegal use of the platform, and generally become a good corporate citizen.
I’ve also heard customers and investors railing about Facebook’s failure to do any of those things, in spite of hiring thousands of people to address safety and security problems. The growing payroll will cut into profits, which caused the stock price to drop by 20 percent, or $120 billion, in July.
Still, Facebook was not something I had lost any sleep over last year, so after I watched that program in December I googled “Facebook scandals of 2018,” and hit the jackpot.
It’s important to include “2018” in the search, because Facebook has had continuous controversies since it was founded 15 years ago in Zuckerberg’s Harvard dormitory room. The first time he was accused of deceit and unethical behavior was about six days after he set up the website, which was then called FaceMash.
The 2018 scandals generally grew out of the 2017 scandals, which related to the presidential election of November 2016. Facebook was accused of disseminating fake news, and allowing Russian trolls to mislead voters leading up to the election. The Russians spread a variety of untruths that were intended to hurt Hillary Clinton and help Donald Trump, and may have helped tip the election.
Zuckerberg declared that his goal for 2018 was to fix the problems at Facebook, but through the year it seemed as though the extent of those problems continued to grow. In February, special counsel Robert Mueller indicted 13 employees of Russia’s Internet Research Agency (IRA) who had created false personas on Facebook and Instagram, which Facebook owns. The operatives placed ads, posts and videos on the site which were designed to cause resentment and enmity between those on the left and right.
To be fair, Facebook was not alone. Twitter announced that it had more than 3,800 accounts that belonged to Russian trolls, and that around 678,000 of its users had unknowingly followed or responded to content that was generated by the trolls. It also acknowledged that Russian bots had re-tweeted Donald Trump a half-million times in the weeks leading up to the election, or 10 times as often as Hillary Clinton.
Other social media platforms had been manipulated as well, and they might have all shared the blame in roughly equal measure had it not been for a bombshell that exploded last March. The New York Times and the British Guardian/Observer published simultaneous reports that linked Facebook to the political data firm Cambridge Analytica, which provided voter data to the Trump campaign.
The details are complicated, but basically here is what happened as I understand it. Cambridge Analytica was founded several years back by conservative Republicans, including mega-donor Robert Mercer and then Breitbart chief Steve Bannon. In 2014, the company approached Cambridge University’s psychometrics center to gain expertise on profiling voters.
The university declined to cooperate but one of its professors was interested. A Russian-born psychologist named Aleksandr Kogan went to work for Cambridge Analytica to design an app for gathering personal data.
Dr. Kogan took his app to Facebook, which at that time had a policy of working with researchers, provided the results were to be used for academic purposes. The Cambridge Analytica app was added to Facebook, and about 300,000 users agreed to share their data, with the understanding that it would be used for academic research.
Well, it didn’t quite work out that way. The data was shared with political campaigns, first for Ted Cruz and then for Donald Trump. Oh, and it was slightly more than those 300,000 users. The number that Facebook finally disclosed was 87 million.
So Congress hauled Mark Zuckerberg in for questioning in April of last year. It accomplished very little because most of our elected representatives have no idea what Zuckerberg is talking about, and seem more interested in scoring political points off the other side. Mostly, he just strung together a lot of platitudes about how much harder everyone at Facebook was going to work.
That was reassuring, and perhaps the public would have accepted the mea culpa and moved on, but the drip, drip, drip of damaging revelations kept coming throughout the year. In June, The New York Times reported that Facebook had also shared the personal data of its users with hardware developers, including Apple, Amazon, Microsoft and Blackberry.
It got still worse a couple of weeks later. In response to written follow-up questions stemming from Zuckerberg’s Congressional testimony, Facebook revealed that it had data-sharing agreements with dozens of private firms, including a major Russian internet company which has ties to Vladimir Putin.
That’s about when Facebook’s stock fell out of bed. To give you an idea how serious a problem that was, the lost equity in the company was greater than the entire market value of Ford and General Motors combined.
The list of Facebook’s problems goes on, but I think you get the point. Taken as a whole, the issues are so large that I heard a discussion on NPR this week about the viability of the company going forward. Some people have wondered aloud whether Facebook could shrivel up like its old rival Myspace, or previous internet giants like AOL.
I understand that Facebook is important to your business, whether it’s part of a formal strategy or not, and it may also be important to you personally. Even if it were to go away, however, I don’t think it would ultimately do any real damage to our industry. There are plenty of social media platforms in the sea.
I’ve got 99 things to worry about in 2019, but Facebook isn’t one of them.
You can e-mail Kevin at kfahy@fwpi.com.
