Eight Reasons Why Facebook Has Peaked

Facebook has been ordered by a Belgian court to stop collecting data on users or face daily fines of €250,000 a day, or up to €100m.

The court ruled that Facebook had broken privacy laws by tracking people on third-party sites in the latest salvo in a long-running battle between the Belgian commission for the protection of privacy (CPP) and the social network.

Facebook has also been ordered to delete all data it had gathered illegally on Belgian citizens, including people who were not users of the social network.

This is just one of many battles Facebook is fighting in Europe as the political winds have turned against the big US technology firms. The EU and European nations continually criticise Facebook for failing to do enough to tackle the rise of Fake News and to deal with extremist content. However, Facebook is one of the most successful commercial propositions in the history of business. Its market capitalisation is today over half a trillion dollars. Shares are six times more valuable today than five years ago. 

Though they trade at a lower price to its forward earnings multiple than at any time since Facebook went public, in 2012, the overall picture is one of astonishing growth and wealth.

Yet the medium and longer-term picture look very different. In fact, Facebook is accumulating enemies and challenges at such a rate that its horizons have suddenly become somewhat clouded.

It may seem madness, or voguishly contrarian, to argue that Facebook is a declining power. But here are eight reasons to think that, in terms of influence if not wealth, Facebook has indeed peaked.

1. A drop in users
In its latest earnings call, Facebook revealed that - for the first time - the number of active daily users in the US and Canada (its biggest market) dropped. This is remarkable. 
The drop was small: 184 million rather than 185 million. But it was a drop, and the first time there has been a drop, and the drop preceded the changes Mark Zuckerberg announced about making the news feed prioritise "meaningful interactions" and de-prioritise content from news publishers.

2. A drop in engagement 
Perhaps even more worryingly for the social media giant, it wasn't just the absolute number of users that dropped in that key market. It was also the amount of time they spent - in other words, engagement dropped too. 
Facebook reported that the amount of time users spent on Facebook had fallen by 50 million hours every day. That is a whopping drop. It suggests that the experience of the news feed had become less sticky, or addictive. But that would also make it less attractive to the advertisers who fund Facebook.

3. Advertiser enmity 
Talking of which, Facebook's greatest vulnerability could be a massive retreat from advertisers. Unilever's chief marketing officer, Keith Weed, said that consumer trust in social media has plummeted. He threatened to pull money out of not just Facebook but Google too. What if other big advertisers followed? 
There is already a remarkable enmity between some advertisers and big tech firms, over the latter's alleged secrecy about the users being targeted by ads. Many senior figures in advertising who I have spoken to say they despise what they see as a lack of transparency from the big firms. 

On top of all this, Facebook has been forced to admit in the past that it wildly over-estimated how much time viewers spend watching videos on its platform. All this adds up to a potential flight of advertisers from Facebook, which could eventually be terrible for its business model.

4. Disinformation and Fake News
Justifying his position, Keith Weed said "people are becoming increasingly concerned about the impact of digital on wellbeing, on democracy - and on truth itself".  It is very clear that the investigation into Russian involvement in the election of Donald Trump will look at the use of the platform by those around the Kremlin. Moreover, Hillary Clinton argued last year that Facebook had been a fundamental cause of her narrow defeat. If Facebook, which sets itself up as a mission-driven company that wants to make the world more open and connected, becomes known as the bad guy whose disinformation undermined the will of the American people, well, that's bad for its reputation.

5. Former executives speak out
Also terrible for the company's reputation is the sustained attack it has come under from former senior executives. In recent months, they have really turned against it. Chamath Palihapitaya, former vice-president of user growth, said: "The short-term, dopamine-driven feedback loops that we have created are destroying how society works. No civil discourse, no co-operation, misinformation, mistruth." He followed many others doing the same, including Sean Parker, founding president. The reason this matters isn't just the bad headlines it leads to. If Facebook's reputation in Silicon Valley takes a hammering, it may be a barrier to the acquisitions (Instagram, WhatsApp etc) that can power future growth.

6. Regulatory mood is hardening
In both Europe and America, regulators are waging a kind of war of attrition against Facebook, which could become much more explosive very quickly. There is a lot of talk of using current competition law better to break up Big Tech, in just the way Teddy Roosevelt took on Big Oil. In Brussels, competition commissioner Margrethe Vestager has tech firms in her sights. 
In Germany, hate speech laws are being used to impose very heavy fines against Facebook, as the claim that it is a platform rather than a publisher is given short shrift. Everywhere the mood is hardening, and that's before we get onto the subject of data…

7. GDPR
The new superpowers in the world of business are a new kind of media-technology giant who monetise personal data. And with the evolution of the data economy comes the evolution of data regulation. 
GDPR, the European Union's incoming data protection regulation, is due to come into force on 25 May and will have a massive impact on companies such as Facebook, who could face huge fines for breaches. 
Facebook COO Sheryl Sandberg has said the company has already adjusted privacy settings in anticipation. At its recent earnings call, Facebook specifically warned that GDPR could be an impediment to future growth.

8. Antagonism with the News Industry
The news industry has been turning against Facebook for some time, partly - though of course not entirely - because of disgust at the rate at which Facebook and Google are gobbling up advertising dollars. The dominance of these two companies limits the ability of traditional publishers to make money online and, as such, could be fatal to their prospects. 
But for many senior news industry figures, Facebook's recent changes to its news feed add insult to injury: they could radically reduce the amount of traffic to websites producing shareable content. The likes of BuzzFeed, which depend heavily on journalism being shared on social media, have announced job cuts recently. 

This double hit to the news industry, gobbling up advertising dollars, and then tightening the taps on traffic from its news feed, ensures an antagonistic relationship with headline writers across the world.

Aside from all the above, there are other worries for Facebook too, such as: whether it is reaching capacity in the English-speaking world; whether its mobile platform is equipped well enough to take advantage of the forthcoming doubling of the Internet population; whether Chinese tech giants will beat it to the growth markets of Africa; and whether the culture at the company is healthy enough to withstand all these pressures.

But those are future or emerging threats, as opposed to the ones highlighted which (GDPR included) are having a very serious current impact on the company.

Still, Facebook is one of the most innovative companies in all history, has amassed astonishing wealth through immense hard work, has probably added to the total sum of human happiness, and provides a service which is enjoyable and free (if you discount paying with your personal data). 

Nevertheless, suspicions are growing that Mark Zuckerberg and his team have unleashed something that they cannot control, and that after a dizzying 14-year rise, their influence on our global, public domain may just have peaked.

BBC:                  Guardian:       

You Might Also Read: 

Facebook Personal Data Use & Privacy Settings Ruled Illegal:

Facebook & Google Are ‘A Menace to Society’:

You Probably Don’t Know All the Ways Facebook Tracks You:

 

« Cybercrime Costs Over $600 Billion Annually
Millions Of Compromised Accounts Discovered On The Dark Web »

CyberSecurity Jobsite
Check Point

Directory of Suppliers

Jooble

Jooble

Jooble is a job search aggregator operating in 71 countries worldwide. We simplify the job search process by displaying active job ads from major job boards and career sites across the internet.

CSI Consulting Services

CSI Consulting Services

Get Advice From The Experts: * Training * Penetration Testing * Data Governance * GDPR Compliance. Connecting you to the best in the business.

Tines

Tines

The Tines security automation platform helps security teams automate manual tasks, making them more effective and efficient.

ManageEngine

ManageEngine

As the IT management division of Zoho Corporation, ManageEngine prioritizes flexible solutions that work for all businesses, regardless of size or budget.

LockLizard

LockLizard

Locklizard provides PDF DRM software that protects PDF documents from unauthorized access and misuse. Share and sell documents securely - prevent document leakage, sharing and piracy.

ISO Quality Services Ltd

ISO Quality Services Ltd

ISO Quality Services is an independent organisation that specialises in the implementation, certification and continued auditing of ISO and BS EN Management Standards including ISO 27001..

Nimbusec

Nimbusec

Nimbusec scans your website around the clock and informs immediately if it has been hacked or manipulated

Cyber Security Network

Cyber Security Network

Cyber Security Network provide specialist cyber security recruitment services.

Conceptivity +360 Cybersecurity

Conceptivity +360 Cybersecurity

Conceptivity +360 Security addresses advanced cybersecurity and supply chain security issues in policy, regulatory, legislation, standardisation, compliance and project management areas.

DXC Technology

DXC Technology

DXC Technology helps global companies run their mission critical systems and operations while modernizing IT, optimizing data architectures, and ensuring security and scalability.

IDpendant

IDpendant

IDpendant offers a wide range of services, including authentication technology, client security products, single sign on systems, encryption solutions, card and mobile device management systems.

Codified Security

Codified Security

Codified is a testing platform for mobile application software. We make it easier than ever for companies to detect and fix security vulnerabilities and ensure their applications are compliant.

Microland

Microland

Microland’s delivery of digital is all about making technology do more and intrude less for global enterprises. Our services include Cloud & Data Center, Networks, Cybersecurity and more.

Association of anti Virus Asia Researchers (AVAR)

Association of anti Virus Asia Researchers (AVAR)

AVAR's mission is to prevent the spread of and damage caused by malicious software, and to develop cooperative relationships among anti-malware experts in Asia.

Pristine InfoSolutions

Pristine InfoSolutions

Pristine InfoSolutions is a global IT services and Information Security Company focused on delivering smart, next-generation business solutions.

BCyber

BCyber

BCyber is a Swiss Cyber Security company that provides security products, training, and managed services to protect diverse IT and OT environments against cyber, physical, and cyber-physical threats.

Zilla Security

Zilla Security

Zilla combines identity governance with cloud security to deliver comprehensive access visibility, reviews, lifecycle management, and policy-based security remediation.

Tsaaro Academy

Tsaaro Academy

Tsaaro Academy is a unique privacy certification training platform and here you earn a privacy certification CEH, CISM and DPO from India’s No.1 Privacy training platform.

Denodo

Denodo

Denodo transforms the way organizations operate by unifying their data assets in real time and making data ubiquitous and secure to all users and business applications.

ThreatView by Turaco Labs

ThreatView by Turaco Labs

ThreatView combines extensive experience in digital forensics with advanced analytics and threat detection capabilities to protect eCommerce websites.

Sage IT

Sage IT

Sage IT offer a wide range of professional and consulting services to help organizations overcome the challenges of today's ever-changing business environment.