Facebook cleanup: Hurt the stock, help the world?
It's been a rough year for Facebook and its investors. Questions of data privacy, fake news proliferation and user growth have dogged the company.
Now, it is investing heavily on fixing those problems. Not everyone is convinced of the solutions—but if you take Facebook at its word, the changes it plans will ultimately make the social media service better for its 2.2 billion users.
For Facebook, the investment is not just about catering to users; it's also an act of self-preservation.
If trust in the platform erodes, so too does the company's user base as well as the advertisers who pay big money to access eyeballs.
"If they did nothing, they would be more vulnerable to some kind of backlash," said Drew Margolin, communications professor at Cornell University.
The social media giant's shares tanked 19 percent on Thursday—its biggest one-day drop in Facebook history—the day after it revealed that user growth has slowed amid swirling questions about how Facebook's information is used. But CEO Mark Zuckerberg says it's all for a good cause, even at the expense of short-term profits and stock price.
"As I've said on past calls, we're investing so much in security that it will significantly impact our profitability. We're starting to see that this quarter," Zuckerberg said in a conference call with analysts.
So what exactly do these investments look like?
For one, the company is on track to hire 20,000 content moderators this year to clean up posts, photos and videos on its platform that violate the social network's rules. They go through everything from nude photos to violent videos and threats of violence to determine what can stay on Facebook and what needs to go.
Facebook is also investing in artificial intelligence and machine learning to automate its cleanup efforts, but experts say it could take decades before this effort fully pays off.
Bart Selman, a computer science professor at Cornell University and artificial intelligence expert, notes that while the company is "hiring great people" and building up fast to catch up to rivals like Google on this front, it might be too optimistic on how quickly AI will help them address big problems such as fake news and political manipulation.
The company already uses AI to automatically remove child pornography and terrorist propaganda, but with content in the gray areas, humans need to step in.
Facebook also must keep its service useful and fun for people while grappling with growing concerns about tech addiction and the effects of social media on people's well-being. For years, the company has been able to grow the way it has by using subtle and not-so-subtle tricks to keep as many people on Facebook for as long as possible, including endless notifications and prompts to log in, algorithms that show users what they want to see and an endless stream of friend suggestions under the heading "people you may know."
To fix this, Facebook says it is now prioritizing "meaningful" content in people's feeds, such as photos and notes from friends and family and posts that spark conversation rather than mindless scrolling. The company warned, however, that the changes might results in people spending less time on the site, which could cut into advertising revenue and daily user numbers.
Then there is user privacy. Prompted in part by European regulations that went into effect in May as well as broader privacy concerns, Facebook says it is giving people more choices around what ads they want to see, and how they are tracked on and off the service. In Europe, the company doesn't have much of a choice. But there is a broader backlash around how it handles users' private information and in an increasingly privacy-conscious world, its core business model could start to show some cracks.
Critics say there are plenty of reasons to be skeptical of Facebook's fixes. Despite Zuckerberg's missives about building community and making the world better, it is still a business.
"The biggest takeaway is that we still don't really know what's going on," said Michael Connor, whose Open Mic group helps investors push tech companies to address privacy, abuse and other issues. Sure, they have made changes, he added. But it's hard to tell whether they are meaningful shifts or just tinkering around the edges.
Rich Mogull CEO of the security firm Securosis, said the question of whether Facebook is taking the right approach now will depend on the degree of what larger cultural changes they're making, he said.
"As long as Facebook's business model relies on collecting massive amounts of user data and selling access to those users, they will always struggle to maintain a balance that favors privacy," he said. "They can be incredibly secure, but this will only equate to privacy when Facebook decides they want it to, and find a business model that supports it."
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