Lost amid a flurry of Facebook announcements about privacy settings and data access is a much more fundamental question: Is Facebook really changing its relationship with users, or just tinkering around the edges of a deeper problem — its insatiable appetite for the data it uses to sell ads?
CEO Mark Zuckerberg, who is scheduled to testify to Congress on Tuesday and Wednesday, long defined the company’s mission as making the world more open and connected. He’s now tweaking that high-minded goal to emphasize positive community-building, not just connectivity. But it’s not at all clear how much Facebook can shift without undermining what makes it one of the world’s most profitable companies.
“Why is connectivity a good thing? Once you begin to challenge that, you begin to question the business model, which is about mining our data,” said Richard John, a Columbia University professor of business history. Facebook is “extraordinarily reliant on the goodwill of users” who allow it to harvest what they share about themselves, he said — much more so than other tech companies.
Wall Street analysts are already counting on Facebook to survive a user revolt. Based on recent polling, GBH Insights analyst Daniel Ives expects roughly 15 percent of users to disengage somewhat from the social network following revelations that the political data-mining firm Cambridge Analytica improperly obtained personal information from 87 million users to try to influence elections. In a worst-case scenario, decreased engagement and what Ives terms a “negligible” number of deleted accounts could cost the company up to $2 billion in annual advertising, Ives said.
Facebook could likely survive a $2 billion cut in its bottom line. Its shares have rebounded after hitting their lowest price in nine months in late March. Since then, the stock has climbed about 4 percent to $158.61 at midday Monday.