Facebook (FB) is mired in yet another major controversy. The social networking giant, and platform for your uncle to rant about how millennials don’t respect their elders, is facing scrutiny from lawmakers after the New York Times reported that data from 50 million Americans was used by a a third party group, Cambridge Analytica, to help target ads favoring Donald Trump in the 2016 presidential election.
At issue is the fact that the overwhelming majority of Facebook users involved didn’t provide permission to have their data harvested by Cambridge Analytica. Instead, the firm paid a consultant for the information who claimed to Facebook that he was using the data for academic purposes.
It’s a serious matter, one that could see CEO Mark Zuckerberg or COO Sheryl Sandberg called before Congress, but the average Facebook user likely couldn’t care less.
Despite its latest controversy, the average user is unlikely to leave Facebook. (image: Reuters/Stephen Lam)
Facebook is a utility
“We’ve reached a point in time where big companies like Google, Facebook, Apple, Amazon … we use them like utilities. They are just a fact of life now,” explained industry analyst Omar Akhtar with Altimeter.
Facebook currently has 2.13 billion monthly active users around the globe. 1.4 billion of those are daily active users, which means they log into the account at least once a day to see what’s happening with their friends and family. That’s a massive number of people using the social network.
What’s more, Facebook’s user base continues to grow. It’s daily active user number increased 2.18% quarter over quarter, according to its fourth quarter 2017 earnings report. But that included a 700,000 drop in the U.S. and Canada, which Facebook attributed to cleaning up the number of viral videos in users’ News Feeds.
Sheryl Sandberg, chief operating officer of Facebook Inc., could be called before Congress over the company’s latest scandal. (image: Bloomberg)
That was despite all of the noise surrounding fake news, Russian interference and the general acrimony surrounding the 2016 presidential election in the U.S. and the Brexit campaign in England.
In other words, these kinds of scandals don’t seem to trickle down as much to the average Facebook user. Sure, the stock was down 6.77% at the closing bell on Monday, but how many people actually saw the news and read it on Facebook? It seems as though revelations like the Cambridge Analytica scandal only spook advertisers and investors.
As Akhtar explained, Facebook has reached the point in its lifespan where the average person will stop using it because it no longer provides them enough utility instead of the scandals associated with the company.
The ultimate example of this is Uber, which, despite what seems like a near-endless parade of scandals ranging from the exit of founder Travis Kalanick to its legal battle with Google, still managed to increase its quarterly revenue by 61%. And that’s unlikely to change even with the news on Monday that it was suspending its self-driving car testing due to an accident that resulted in the death of a pedestrian.
Perhaps a bigger issue for Facebook, Akhtar explained, is whether people actually enjoy using the social network. “I think the number of people who enjoy Facebook for what it is, is at the least not growing.”
Facebook is clearly aware of its users’ satisfaction. The company has been working to improve its various feeds and ensure that they see more posts from people they care about. But that can also backfire, as they’ll end up reading the same kind of vapid updates from people showcasing their vacations, birth announcements and poorly-written political diatribes.
Teens are Facebook’s real problem
The social network also has one other creeping problem: teens. Younger users have been moving away from Facebook in favor of more visually stimulating apps like Snapchat (SNAP) and Instagram.
I’ve personally left much of Facebook behind in favor of Instagram, as the latter affords me a break from the day’s news and a chance to look at pictures and videos of puppies and kittens without having to see a high school friend’s latest take on the immigration debate.
Despite the fact that teens may be leaving Facebook, though, it’s unlikely that users, in general, will leave the service en mass.
“Facebook is so deeply enmeshed in our digital activity that it’s hard to be online and not have a login,” Akhtar said. “Think of how many apps use Facebook verification.”
So while the social network will have its name in headlines for weeks to come, chances are many people will continue to read those same stories on Facebook itself.
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