If some of the big players of the web (see Google) are not shining bright at the moment, neither are people at Zuckerberg’s. To say it bluntly, Facebook is not doing well. And when figures are not the ones expected, investors start playing the De Profundis. Two weeks ago, their shares dove 20%, shedding $120 billion. And if until yesterday the Cambridge Analytica scandal had seemed not to have harmed the giant, today the social media has started showing some scars. Obviously, Menlo Park’s founder is not doomed to live a life in poverty, since, despite not having met expectations and going slower than forecast, the last quarter has been quite good. However, the issue has cost the guy 15 billion dollars and a few positions down in the ranking of the richest men on the planet ( from the 3rd to the 6th position ).
Basically, the untouchable monolith has started to creak. And many people are forecasting a change of course. The new scenario is based on a mix of causes. For instance, while Facebook was losing followers in Europe following the above mentioned scandal, the consequent #deleteFacebook protest campaign, and the introduction of the GDPR, expenses for infrastructures, contents and safety measures were increasing. And according to the group CFO, David Wehner, costs will increase by +60% in 2018 ( The seven reasons which are making Facebook shares value drop).
Among all the reasons put forward by experts, the main factors affecting Facebook status are two, in my opinion: users’ leakage – and the concomitant decreasing number of new subscribers – and the new European privacy policy.
I have already addressed the first issue many times: on the one hand youngsters and Millenials are not attracted by a social media which has become more and more adult-oriented, on the other hand, adults are more privacy conscious and often decide to adopt radical precautionary measures, including the fact of escaping from the social platform (see Facebook launches Home Service while young users are escaping ).
Therefore, either due to mistrust or a lack of appeal, users are not increasing and advertising revenues are decreasing, with a consequent reaction on the part of the Stock Exchange.
In addition, the European General Data Protection Regulation, setting new strict rules on data processing , has inevitably affected social media accounts due to both the new expenses it brought about and the limitations enforced (Facebook, privacy is expensive. Here is why its shares value is diving). Furthermore, since the enforcement of the new regulation, European users have been decreasing by three millions per day, or one million per day when it comes to unique users ( Cambridge Analytica-GDPR effect on Facebook has led to a massime leakage of users in Europe ).
Is Zuckerberg doomed? Definitely not. While Facebook is shedding tears, Instagram is laughing and it is bound to be Zuckerberg’s new frontier.
According to you, how much influence have the C.A. scandal and the enforcement of the GDPR had on FB results? Do you think there are any further causes? Tweet @agostinellialdo.
To find out more about the digital world, you may read my latest book: “People Are Media”
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