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Sun 25 Mar 2018 05:11 PM

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Can Facebook survive the perfect storm?

It might have been unimaginable a month ago, but the world's biggest social media company is in the fight of its life

Can Facebook survive the perfect storm?
The social media giant revoked access to data from users’ friends in 2014, but not before GSR had sold the data to Cambridge Analytica – a violation of its policies relating to the transfer of data gained from the platform to third parties for any commercial use.

A tough year got much tougher for Facebook when a former employee of data analytics consultancy, Cambridge Analytica, revealed to The Guardian last week that the company had taken advantage of a flaw in Facebook’s privacy policy to harvest valuable psychographic information from around 50 million US users.

In a complicated scheme, Cambridge Analytica, backed by billionaire Republican Party donor Robert Mercer, partnered up with Steve Bannon, then editor of inflammatory news outlet Breitbart and later Donald Trump’s senior advisor, to influence the 2017 US elections in Trump’s favour.

Despite previously admitting it, Cambridge Analytica now denies the allegation and although the degree of the programme’s impact on the US elections is difficult to ascertain, the fact is that Donald Trump is now the country’s president.

Until March, the primary concern for the world’s biggest social media company’s were the year-end results for 2017. Though they revealed $40.65bn in revenue, compared to $26.89bn in 2016, CEO Mark Zuckerberg had noted that the company underwent a “tough” year.

“Last quarter, we made changes to show fewer viral videos to make sure people’s time is well spent,” he said in a release. “In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day.”

But if that was not troubling enough, the blowback from whistle-blower Chris Wylie’s revelations on a company whose penetration into our daily lives was rivalled only by Google, means it is now under fire from all sides.

Facebook, for instance, is now being investigated by the UK’s electoral commission for its role in the Brexit referendum; by the same country’s Information Commissioner on how data might have been used for political purposes; by the US Federal Trade Commission and half a dozen other congressional committees on violations of data use; and now by Robert Mueller, special counsel to the Department of Justice, into whether it may be involved in his Trump-Russia collusion probe.

British MPs and Congressional representatives are also demanding that Zuckerberg appear in person to provide evidence in defence of Facebook’s actions.

Steve Bannon oversaw Cambridge Analytica’s collection of Facebook data, according to a former employee

Facebook’s official response is to say that it isn’t complicit. And to be fair, if gathering data from users to determine their interests were a crime, all of the world’s advertising and marketing agencies, as well as news media outlets, would be guilty. However, Cambridge Analytica appears to have gone several steps too far.

A breach of trust?

Until 2014, when gaining permission from users with regards to their public profile data, Facebook also allowed apps to collect data from their friends. The original company that gathered that data, Global Science Research (GSR), did so from 275,000 users, resulting in data harvested from up to 50 million Facebook profiles.

The social media giant revoked access to data from users’ friends in 2014, but not before GSR had sold the data to Cambridge Analytica – a violation of its policies relating to the transfer of data gained from the platform to third parties for any commercial use.

Arabian Business reached out to the head of public policy at Facebook for comment.

The response was a reiteration of the global statement issued by vice president and deputy general counsel, Paul Grewal, who has said in a blog post that GSR, through its founder, a Cambridge University researcher named Aleksandr Kogan, “gained access to this information in a legitimate way and through the proper channels that governed all developers on Facebook at that time, he did not subsequently abide by our rules”.

“The claim that this is a data breach is completely false,” he added. “Aleksandr Kogan requested and gained access to information from users who chose to sign up to his app, and everyone involved gave their consent. People knowingly provided their information, no systems were infiltrated, and no passwords or sensitive pieces of information were stolen or hacked.”

However, that statement has only worsened a situation that is quickly spiralling out of Facebook’s control. The company is now facing a backlash from the public itself. WhatsApp co-founder Brian Acton, who famously sold his company to Facebook for $19bn, last week tweeted: “It is time. #deletefacebook”.

The hashtag was trending all over the world, was being covered by nearly every major outlet and was third on the list of trends on Twitter in Dubai until last Wednesday.

CEO Mark Zuckerberg  was criticised last week for not responding soon enough to the unfolding crisis

At the heart of it, the debate around whether any possible exodus from Facebook is justified can be summed up in one word: trust. Billions of people around the world use the service. It is understood, if not well enough, that Facebook offers a free platform by providing advertisers with all the data its users willingly serve up.

However, what began with complaints about objectionable content and then graduated into controversies about fake news and subterfuge advertising, now encompasses possibly compromised user data. It is a perfect storm that some predict could drive the platform’s two billion users away in droves because of questions around whether it is safe to use.

The market was certainly nervous about this outcome and Facebook’s share price fell by 10 percent in a single week.

How to gain more likes

Last month, Arabian Business spoke with the company’s vice president of public policy, Joel Kaplan, who admitted – as his CEO had done when announcing the 2017 results – that the company’s rapid growth had coincided with a number of developments that had impacted user time spent on the platform.

Those developments included negative user reaction to controversial content proliferating on the platform, as well as a business model that the company’s ex-president, Sean Parker, said relied on “consuming as much of your time and conscious attention as possible”, and which was having ill effects on mental health across society.

In a wide-ranging conversation on Facebook’s mission, Kaplan was upbeat, telling us that the company would always retain its core goal of connecting people.

“But last year, our CEO Mark [Zuckerberg] changed the mission of the company from giving people the power to share to giving them power to build communities.”

However, these were, he continued, “still early days”. But whether it is combatting false news, or “minimising the negatives that can happen on the platform”, Kaplan said it was something the company has been talking about for the previous couple of months, “to make sure that people come to Facebook as a place not just to have fun but where it’s actually good for them to spend their time as well.”

How Facebook responds to questions of how the platform can rebuild trust could determine its fate.

The company says it will hire a third-party forensics agency to look into the crisis, and has suspended Cambridge Analytica from using its platform following reports that it hadn’t deleted data it harvested.

WhatsApp co-founder Brian Acton has called for users to #deletefacebook

GSR’s Aleksandr Kogan, whom Facebook had hired in 2014 – a move that really didn’t go down well with the public once it was revealed – has also been removed, while Facebook’s chief security officer Alex Stamos has announced his intention to step down from the role.

But despite statements from a few of the company’s senior executives, CEO Zuckerberg and his number two, chief operating officer Sheryl Sandberg, went missing in action for almost a week after the story broke – only emerging on March 21 to write on his Facebook page: “We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you.” At the time of writing, the company had lost over $60bn on the US stock market, dragging other social media and tech stocks down with it.

“We are all responsible,” Kaplan told Arabian Business, when asked how much of a responsibility social media companies bear for the types of content on their platforms. “People have a responsibility and governments have a role to play. As a platform, we do too. And it’s about the kind of experience people have on Facebook,” he told us.

“There will always be people who are intending to use the platform for bad purposes in a two-billion-person community. Will it ever be perfect? No, but we are investing in tools to make detection easier and our commitment is to put all the resources and technology in place to make sure our efforts are as effective as possible.”

If an exodus from the platform does come to pass, the company’s chief architects might do a better job of stating their case. A cynic could argue that it took falling user numbers to make the company decide that it needed to make the world “a better place”.

How it reacts to this latest crisis could determine the value of the world’s sixth biggest company – and not only to its shareholders but the two billion users who put their trust, and their data, in its hands.

Facebook is still the biggest game in town

Alexander Rauser, CEO of Dubai-based digital agency Prototype

Once upon a time, Facebook wasn’t about advertising at all. It was about connecting people. Oddly, it seemed to have understood that fact. The current heat around Facebook, which revolves around the use of ill-gotten user data to better target ads, came at a time when the company was experimenting with changing its timeline to reduce exposure to branded content.

Now, though, Facebook will have to work even harder to bring back its original values and continue to move from a content swamp to something more emotionally relevant, otherwise it risks losing more of its user base. Ultimately, people have given the site vast amounts of personal data that they now know has been used to manipulate their opinions or change their behaviours.

The reality, though, is that any users it loses will simply start submitting their data to another platform and the cycle will continue. And that’s why marketers shouldn’t give up on Facebook just yet. Every other digital platform is essentially trying to follow Facebook’s pattern. The long-praised programmatic ad buying platforms, for example, have promised to give you more relevance and targeting options for your money, but did your conversions increase? Do you even know where your ads end up?

According to Rauser, every digital platfom harvests user data

Then there’s influencer marketing, but we are struggling to know if conversions go up or down based on some kid with 50,000 followers posing with your shampoo bottle. And no marketer can rely on traditional publishers to give you the best value for your money.

In reality, the measurement unit for most Facebook statistics is still in the billions, from daily log-ins to shared content, views or even its valuation as a public company. The platform simply cannot be neglected in your marketing mix. From social search to location-based content, reviews, groups and not to forget about Facebook Messenger, it still allows brands to reach their target audience in one way or another. And I can’t see that changing any time soon.

We must realise that Facebook isn’t fun anymore

Alex Malouf, corporate communications and reputations manager

The recent reporting on how in 2014 Cambridge Analytica harvested and manipulated the data of 50 million Facebook users to build a system to predict and influence choices at the ballot box reads like a piece of Hollywood fiction. It isn’t, and this story therefore has implications for all of us – every single person out there who uses not only Facebook but social media in general.

I’m not naïve; I’m aware that the personal data I share online can be used by advertisers to target me. However, what’s both frightening and appalling is that a third party can gain access to millions of user accounts, and then use psychological profiling to target these people with personalised political advertisements.

The Cambridge Analytica story isn’t new. What has come to light, however, are revelations about what Facebook did and didn’t do. Media reports revealed that in 2015 Facebook knew that user data had been harvested through a Facebook-based app, and yet the company failed to alert users and took only limited steps to recover and secure the private information of more than 50 million individuals. It has taken Facebook three years to ban Cambridge Analytica from its platform. Why? The company has also suspended the account of Christopher Wylie, the whistleblower who revealed full details of what went on.

Facebook has made, and continues to make, billions of dollars from us, the people who use the platform. Our data has value. As of 2017, Facebook had 2.2 billion monthly users, meaning that just under a third of the world is on the site. Organisations are using this data to target me, you and anyone else from all those people on the platform. What horrifies me is both that Facebook doesn’t seem to have any compunction in selling advertising to anyone who wants to target users, and also its inability or unwillingness to take any responsibility for what happens on the platform.

Alex Malouf says Facebook has shown an “utter lack of accountability”

Mark Zuckerberg, Facebook’s CEO, claims that the company isn’t a publisher; I’d argue that Facebook is the most powerful and persuasive publisher in the world, controlling what content we see and which advertisers can target us.

Unlike with traditional media, Facebook and other social media sites aren’t bound by stringent regulations covering advertising and content. If a bank handed over the profiles of 50 million users to a third party, they’d be facing fines running into the tens of millions of dollars.

For a host of reasons we seem to let Facebook and other social media platforms off the hook. “They’re learning and changing”, we tell ourselves. Others may say “it didn’t impact me”.

The truth is it affects us all. If user data can be manipulated in America, the same can be done in Britain (Cambridge Analytica offered its services to the Leave.EU team during the Brexit referendum), and the same can happen here.

Social media is a wonderful concept, which I’ve used to keep in touch with family and friends, and to make new friendships. But with the utter lack of accountability and responsibility shown by Facebook and others, it’s clear that I, you and everyone else out there have become a product to sell to any advertiser.

When it comes to advertising, I draw the line at political manipulation. Social media isn’t fun for me anymore, and that’s why I’m signing off Facebook.

Arabian Business digital magazine: read the latest edition online

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