As controversies surrounding Facebook’s data sharing practices stack up, the spotlight continues to shine on chief executive Mark Zuckerberg, who has been busy recently with concerns from shareholders, as well as from US Congress and the European Parliament. Despite this, the number of Facebook users is still growing and the company’s share price, which dipped during the Cambridge Analytica scandal, has recovered.
Facebook’s founder faced no ordinary annual stakeholder meeting last Thursday, with one shareholder James McRitchie calling for a move away from the “corporate dictatorship” voting style to a more inclusive one. He said during the meeting: “Mr Zuckerberg, take a page from history. Emulate George Washington, not Vladimir Putin.”
Another stakeholder, Will Lana, said: “The proof of the current structure’s inadequacies is on display in the current headlines.”
Even though tensions were high, all eight members of the board were routinely re-elected and a proposal to give each member one vote and to remove Zuckerberg’s 60% voting power was turned down.
Latest controversies surrounding data sharing
Facebook has been hit with a number of controversies recently. It began with the Cambridge Analytica scandal in March, when the IT service management company was found to have improperly used data of up to 87 million Facebook users in an attempt to influence voters during the 2016 US Presidential Election and the UK’s EU referendum, among others.
Now, the New York Times (NYT) has publicised Facebook’s data sharing agreements with Apple, Amazon, Samsung, Microsoft, and 56 other mobile device makers, based on accusations that the company has been sharing users’ personal information over the last decade. Many of these agreements still exist today, although the company has begun to reduce the number of contracts since April.
According to the NYT, Facebook chose not to disclose its data-sharing agreements to investigators during the hearings.
Serge Egelman, a privacy researcher at the University of California–Berkeley, who studies the security of mobile apps, said: “You might think that Facebook or the device manufacturer is trustworthy. But the problem is that as more and more data is collected on the device – and if it can be accessed by apps on the device – it creates serious privacy and security risks.”
In response, Facebook vice-president of product partnerships Ime Archibong sought to defend the company’s actions, saying: “These partners signed agreements that prevented people’s Facebook information from being used for any other purpose than to recreate Facebook-like experiences. Partners could not integrate the user’s Facebook features with their devices without the user’s permission. And our partnership and engineering teams approved the Facebook experiences these companies built.”
Facebook has also recently been accused of using personal information to create tailored ads for jobs aimed specifically at certain types of young people. Large companies such as Verizon, Amazon, Goldman Sachs and Target all ran job adverts on Facebook aimed at users aged 25 to 36 years old who lived in (or recently visited) Washington, DC and had an interest in finance.
The concept of tailoring information, which Facebook does regularly, has raised issues regarding fairness to older workers and several experts have questioned whether Facebook is in direct violation of the federal Age Discrimination in Employment Act of 1967, which above all prohibits biased job advertising across the US.
Is Facebook untouchable?
During Zuckerberg’s five-hour US Senate interrogation, Facebook made $3bn. In the midst of Cambridge Analytica, the number of users increased, albeit steadily, to 2.2 billion. Even Facebook’s share price, which decreased temporarily from $185.20 on 2 March to $157.20 on 6 April reportedly losing the company around $100bn since February, currently stands at $194.00 as of 1 June. This is higher than pre-Cambridge Analytica levels.
The data suggests that the #DeleteFacebook campaign had little impact on the number of people interacting with Facebook, and Zuckerberg’s hearings did little to deter investors. According to the social media site, its daily active users grew in March by 13% to 1.45 billion on average, and monthly active users grew another 13% to 2.2 billion. This was a slightly slower pace than the last quarter of 2017 when both active and monthly users grew 14%.
Zuckerberg said in a conference call back in April: “This quarter, we’ve continued shifting from passive consumption to encouraging meaningful interaction. It’s still early but we’re starting to see some signs that this is working. Some types of sharing are increasing even as passive consumption of video is down.”
However, according to MarketWatch, the ultimate effects from the Cambridge Analytica scandal may not have been wholly felt in the last quarter, and any period of decline that Facebook is likely to experience will be due to a number of issues, including changes to the platform. The effect of the General Data Protection Regulation (GDPR) is likely to lead to user growth decline in Europe.
Facebook chief financial officer David Wehner said: “We expect that European monthly active users and daily active users may be flat to slightly down sequentially in Q2 as a result of the GDPR rollout. While we do not anticipate these changes will significantly impact advertising revenue, there is certainly the potential for some impact and we will be monitoring this closely.”