Facebook’s recent controversy about its past policies (which ended in 2014) have ignited conversations which I believe are mostly “horse left the barn, after the door was left open” type of arguments. Or perhaps I long ago accepted that nothing is free and yes, I know that if I use technology someone else knows about it. Does anyone really believe this not to be the case? Didn’t the media praise Barack Obama’s media savvy in the 2012 elections? When we collect loyalty rewards or swipe our Air Miles card after buying all of our groceries, do we think those points we earn are free? When we use our Visa card, do we think that Visa doesn’t collect that data and use it somehow? How many of us answer questions of pollsters? If we tell a friend that we know “someone” and they then use that information for some kind of benefit, have we broken a trust? Should that “someone” delete us as a friend?
Facebook does what many others do, just better and on a far larger scale. I’m not advocating that it is good; I’m just saying that to condemn one and ignore everyone else doing the same thing is like saying the crook who steals only once is better (or less bad) than the one who steals twice. Fifty shades of grey indeed.
Elon Musk deleted Tesla’s and SpaceX’s Facebook pages and that made headlines. What should be making headlines is that Musk continues to make wild promises about how many Tesla cars he can build and not ONCE has he accomplished that target. Yet, he just got approved for a $2.6 billion pay package, and the company has collectively lost $4.45 billion dollars over the last ten years. I don’t blame Musk for taking the money and running. Next year, there will be so many competing electric cars offered that Tesla has lost whatever advantage they had. Musk can’t sell his stock, so he did the next best thing—stripped money out of the company.
If we are honest with ourselves, we all know that everything we do is being monitored by someone and often with good reason and good outcomes. A well written comment from Dave Pell on the internet:
“Getting recorded by a surveillance camera at an Austin FedEx, ordering “exotic” batteries online, and turning on his cellphone: those were all breaks that helped authorities to quickly identify and track the Austin Bomber. These factors are a reminder that our lives are increasingly under various forms of surveillance. Sometimes that leads to anger and resentment. Sometimes that leads to relief. And those reactions are probably being tracked too.”
I think the below from Loup Ventures accurately sums up the real issues about Facebook:
“Attrition. People are upset that FB abused their trust, although it doesn’t seem that users are upset about social media in aggregate. The trend is #deletefacebook not #deletesocialmedia. The risk to Facebook is that user growth slows or even declines. At the end of Dec-17 quarter, the company had 1.4B DAUs, up 15% y/y. For 2018, the Street expects about 10% DAU growth. If Facebook misses those numbers, shares will likely be negatively impacted. While it’s still early to tell how serious this bout of outrage against Facebook will ultimately be, Twitter and Snap may have an opportunity to benefit if users do leave Facebook.
Regulation. The Cambridge Analytica news of the past week has extended the privacy topic beyond Facebook. Given the political nature of the scandal, it currently seems more likely than less likely that some sort of restrictions get placed on the use of online consumer data. Mark Zuckerberg’s comments yesterday on CNN suggested that Facebook will take additional steps to assure user privacy as well as being open to some level of government oversight. If the government does decide to regulate the use of online consumer data, it could negatively impact all companies that rely heavily on monetizing that data including Facebook, Google, Twitter, and Snap.”
In the end, our judgement is that this controversy will be overshadowed by some new controversy in the media and we will move from one headline to the next, likely brought to you from your friends at Google and yes, Facebook. We had reduced our exposure prior to this “old news”. However, the initial indications from surveys of people who pay to use Facebook (advertisers) are that they have no plans to stop using the best advertising platform in the world. That is the final analysis as to why we still own Facebook.
Thank you for reading,
John O’Connell and the Davis Rea Team