Most Facebook users know that when they start using the social network, the company uses their data in a number of ways. Facebook users typically assume their numbers are being crunched for more effective advertising.
What Happened (In a Nutshell)?
It was recently revealed that political data firm, Cambridge Analytica, inappropriately harvested private data from millions of Facebook users. It did so by exploiting a Facebook website loophole. This has caused individuals and companies to take a second look at their relationship with the popular social network.
The backlash has been widespread. Furthermore, it has been broadly publicized. Headlines are filled with the latest strike against Facebook’s reputation.
Falling Stock Prices
The impact on Facebook stock prices was almost immediate. During the first week after the announcement of the scandal, shares fell by 13 percent. This dropped them below US$160.
That represents the worst week the company’s stock has experienced since 2012. At that time, the company had only gone public two months before. They were still working their way through a period of volatility.
Investors Call for Zuckerberg’s Resignation
Many investors view this scandal as a sign that founder and CEO Mark Zuckerberg to step down. They are saying that it is an indication that he has given the company as much as he can. It is time for new leadership, they say.
This call for Zuckerberg’s resignation hasn’t just started with this Facebook scandal. Investor voices have been getting louder in this direction. Several scandals have hurt the company’s reputation and growth. Among the most notable include accusations that the social network helped to spread misinformation that led to Donald Trump’s presidential election. Others have included accusations that the social network is deliberately designed to be addictive to users.
Top Tech Leaders Delete Facebook
Facebook was dealt an especially painful blow when the co-founder of WhatsApp, Brian Acton, tweeted that it was time to delete Facebook. In fact, he hopped onto a trending #DeleteFacebook hashtag to spread the message. Acton made billions from the sale of the popular messaging app to the social network.
More recently, Elon Musk, founder and CEO of Tesla joined the boycott of the social media company, having deleted both the Tesla and SpaceX pages.
Investors File Lawsuits
Investors seeking to protect themselves against the company’s current downward spiral have started filing lawsuits against the social media giant. Shareholders claim breach of company commitments in their filings.
Four primary suits were filed in federal courts last week. The first was filed in a Northern California court by Jeremy Hallisey, a Facebook shareholder. The filing accused the company of having “breached their fiduciary duties by failing to prevent the initial misappropriation [of user data by CA] and, after learning of it in 2015, failing to inform affected Facebook users or the public markets.”
Zuckerberg’s Response to the Crisis
At the time this article was written, Mark Zuckerberg’s response to the crisis his company is facing was limited.
His primary statement was made on his official Facebook account. This came quite late, not having been posted until March 21, 2018, well after other company execs faced a firestorm of criticism regarding their tweets on the matter. They were accused of failing to understand the importance of the matter and of focusing on semantics rather than the issue at hand.
In Zuckerberg’s Facebook post, he shared what he called an “update on the Cambridge Analytica situation.” He started by pointing out that “We have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you.” This is quite similar to the Zuckerberg’s message last year following the misinformation and “fake news” scandal. At that time, he talked about the company’s increased commitment to boosting security.
After underscoring the steps the company has already made throughout its history, Zuckerberg pointed to three new strategies Facebook intends to take to protect user privacy. The first involved an investigation of “apps that had access to large amounts of information before we changed our platform to dramatically reduce data access in 2014” in addition to an audit of any applications displaying suspicious activity.
The second would “restrict developers’ data access even further to prevent other kinds of abuse.” The third will be to “show everyone a tool at the top of your News Feed with the apps you’ve used and an easy way to revoke those apps’ permissions to your data.”
Whether or not this message and strategy will assuage public and investor ire has yet to be seen.