Boyden Executive Search

Having been pummelled by criticism over data privacy for the past year, Facebook this month announced plans for a new “privacy-focused platform.”

Facebook’s first big change came in 2012-14, when it shifted focus from its website to its mobile app, as more people were accessing the Internet on smartphones rather than desktops or laptops. As part of what turned out to be a highly successful strategy, Facebook acquired two popular social apps, WhatsApp and Instagram. Its market valuation grew from about $60 billion at the end of 2012 to more than $600 billion for a period in 2018.

That run ended in March 2018 when it came to light that British political consulting firm Cambridge Analytica had harvested data on an estimated 87 million Facebook users since 2014, allegedly misusing it to influence political campaigns. Amidst the scandal, Facebook’s market valuation plummeted by about $40 billion. The scandal also opened a Pandora’s Box of issues around data privacy in social media in general, and Facebook’s handling of it in particular.

A black cloud has lingered over the social media behemoth ever since. In the Axios Harris Poll 100, which ranks the reputations of America’s most visible companies, Facebook dropped from the 51st spot in 2018 down to 94th in 2019. The results of this year’s poll were released on March 6.

That same day, Zuckerberg announced Facebook’s next pivot, which centres on building a “privacy-focused platform” around WhatsApp, Instagram and Messenger. The apps will be integrated, and messages sent through them will be encrypted end-to-end, so that even Facebook cannot see them. This business model depends on businesses using Facebook’s messaging networks to deliver services and accept payments. The company claims it will keep messages private, make messaging more convenient, and enable new services.

Zuckerberg could be playing down the benefits of the new platform for his company. While the integrated messaging networks will be encrypted, Facebook will still be able to target advertising precisely using the metadata alone. Plus, end-to-end encryption will cut Facebook’s moderation costs, since encrypted messages cannot be moderated. This will also relieve the firm of some of the responsibility for the content on its apps.

Users may well benefit from a more integrated messaging on Facebook. But as The Economist points out, “Facebook has long been accused of misleading the public on privacy and security”, thus “caution is warranted.”

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