Facebook shares tumbled 7.5% Monday following a Wall Street Journal report that said the FTC will be able to examine the effect of Facebook's practices on digital competition.
Facebook's drop shaved more than $38 billion from its market cap, bringing it to about $469 billion. Facebook is already under investigation by the FTC over its handling of user data and has said it is expecting a fine of up to $5 billion.
Shares of other tech giants took a hit over similar concerns. Amazon's stock fell 4.6% Monday following a Washington Post report that the top U.S. antitrust enforcement agencies have a new agreement on tech oversight. The drop shaved more than $40 billion from its market cap, bringing it to $833 billion.
And shares of Google parent company Alphabet were down 6.1% after the Journal reported Friday that the Justice Department is readying an antitrust investigation of Google. The stock lost about $47 billion from its market cap, bringing it to about $721 billion.
Antitrust regulation has remained a distant threat in recent years as scandals like Cambridge Analytica brought the scale of tech power into focus for the public. In the lead-up to the 2020 presidential election, "break up big tech" has become a rallying cry for some, including Democratic presidential candidate Sen. Elizabeth Warren of Massachusetts.
But a new reported agreement between the Federal Trade Commission and the Department of Justice brings that threat a bit closer to reality. The FTC will take the lead on oversight of Amazon, while the DOJ will have greater jurisdiction over Google, according to the Post. The FTC previously closed an investigation of Google without taking action, but now the DOJ will take another look into Google's practices in search and other areas, according to the Journal.
Calls for Mark Zuckerberg's power to be reined in continue to grow louder – not that it matters.
That much was clear during Facebook's annual shareholders meeting on Thursday, where Zuckerberg faced numerous calls for his power to be checked. On the agenda were four shareholder proposals that called for new checks on Zuckerberg's power:
A proposal calling for more shareholder a power
A proposal calling for an independent board chair (not Zuck)
A proposal which compared Zuckerberg's control of the company to a "dictatorship," for shareholder input in elections to the board of directors
A proposal to explore "strategic alternatives," including breaking up Facebook into separate companies
But going over these initiatives were mostly a symbolic gesture as Facebook's board, once again, easily voted down all shareholder proposals. As Bloomberg pointed out earlier this week, such proposals are all essentially dead on arrival, since Zuckerberg controls the vast majority of the company's most powerful shares.
Zuckerberg seemed mostly unfazed by all this. He said addressing the "social issues" facing the company is one of his top priorities.
"This is an important period for the company...we're fighting to do the right thing every day," he said.
Still, shareholders in attendance made it clear they want to see Facebook change.
During the meeting's Q&A period, one questioner asked Facebook's lead independent director, Susan Desmond-Hellmann, if she was willing to exercise her authority to call a board meeting without Zuckerberg in order to oust the CEO.
She said no. "That's not the direction we want to take the company or the board," she said.
Another attendee posed a similar question to Zuckerberg, asking if he would respond to people who want him to give up some of his power. Facebook's founder sidestepped the question by repeating his calls for increased regulation.
"I do acknowledge there are limits to what an individual company should deciding," he said.
That wasn't really an answer to the question that was asked, but it was a deft move that allowed the CEO to avoid addressing calls for him to step down or relinquish his control directly.
Most of all, it was a powerful reminder to Zuckerberg's critics that he's not going away any time soon.
Social media giants, Facebook said it could face a fine of up to $5 billion as the result of an investigation by the Federal Trade Commission, US Today reports.
The agency has been investigating Facebook for possible privacy violations but has not announced any findings yet.
The company set aside $3 billion in its quarterly earnings report Wednesday as a contingency against the possible penalty.
The one-time charge slashed Facebook’s first-quarter net income considerably, although revenue grew by 25% in the period.
The FTC has been looking into whether Facebook broke its own 2011 agreement promising to protect user privacy.
Investors shrugged off the charge and sent the company’s stock up nearly 5% to $190.89 in after-hours trading.
Facebook has had several high-profile privacy lapses in the past couple of years.
The FTC has been looking into Facebook’s involvement with the data-mining firm Cambridge Analytica scandal since last March.
That company accessed the data of as many as 87 million Facebook users without their consent.
Facebook has dominated the tech news for months with a variety of privacy issues, from hacked accounts to user data stolen to Russian bots spying on us. But now the social media giant is making headlines for a different reason.
Facebook officials say they want to install a massive underwater fiber optic cable, just not for the U.S.
The multi-stage project is reportedly named "Simba" - yes, like "Simba" from The Lion King. Its goal is to connect the entire continent of Africa to the internet, increasing accessibility while also driving down bandwidth prices significantly, which could make it easier to sign up new users. And it could be a major disruption to the current service provider model. For the most part, internet service connects continents by way of underwater fiber optic cables capable of carrying massive amounts of data. There are a dozen such cables between the Northeastern United States and Europe alone, and many more connecting the hubs of Asia and the Mideast.
But getting into the fiber optic business would be a big jump for Facebook - one already made by some of their rivals. Google has a major investment in running fiber optic cables through its subsidiary, Google Fiber. But Google's plan is to provide far more connectivity than is needed at the moment, hoping to avoid costly upgrades; it's a way of future-proofing what is expected to be an expensive and labor-intensive process. In contrast, Amazon has announced they want to blanket the globe with high-speed internet service using thousands of small satellites, not fiber-optics.
As for when the ring of fiber will be placed around Africa, it's hard to say. The details of the project are still being worked out and there's an obvious lack of infrastructure in many areas at the moment. But Facebook's 'Whatsapp' messenger program is already popular in the region, providing a potential blueprint for how to proceed with the "Simba" project.
- Fox News
Facebook on Friday said it had removed 200 pages, groups and accounts from its social media platforms in the Philippines, citing misleading behaviour to boost messages favouring some politicians in the country.
The move was made ahead of mid-term elections in the Philippines on May 13, when half of the 24-member Senate seats, all House of Representatives seats and tens of thousands of local postings will be up for grabs.
The social media giant said about 3.6 million people were following the 67 pages, 68 accounts and 40 groups on Facebook and 25 Instagram accounts that were taken down following an investigation.
The removed pages, accounts and groups were found to be engaged in “coordinated inauthentic behaviour,” said Nathaniel Gleicher, head of Facebook’s cybersecurity policy unit.
“What we saw is this cluster of pages groups and accounts, a combination of authentic and fake accounts that were basically being used to drive messaging on behalf of, and related to, local candidates,” he said.
Gleicher said the accounts were made to appear as normal and legitimate to boost messages in favour of certain political candidates.
“They were designed to look independent, but in fact, we can see that they were coordinated on the back,” he said in Manila.
“They would post about local news, they would post things about the upcoming elections, local candidates.”
“A lot of messaging was pro, sort of supporting the candidates they were working on behalf of, some would be attacking political opponents of those candidates,” he added.
Facebook users have continued to rise despite a series of data privacy scandals and criticism over its attempt to stem toxic content.
The social media giant said the number of people who logged into its site at least once a month jumped 9% last year to 2.32 billion people.
Fears the firm's scandals could put off advertisers also proved unfounded with annual revenues up 30% on last year.
The rise came despite campaigns which urged people to shun the tech giant.
Founder Mark Zuckerberg said the firm had "fundamentally changed how we run the company to focus on the biggest social issues".
The strong financial performance comes amid continuing concerns over how the social media firm handles users' personal data and privacy after the Cambridge Analytica data sharing scandal and fears the network has been used as a political tool.
Facebook paid teens to mine device data
Facebook 'less popular with UK children'
The company's shares have lost almost a third of their value since July when it warned about slowing revenue growth and they remain near a two-year low.
But they jumped over 9% in after-hours trading after profit and revenue beat analyst forecasts.
Facebook's total profit for 2018 was $22.1bn (£16.9bn), up 39% on 2017.
User growth was particularly strong in India, Indonesia and the Philippines, but flat in the US and Canada.
The mind boggles. In 2018 Facebook saw the Cambridge Analytica scandal, political manipulation, fake news, data breaches and accusations of deeply unethical behaviour.
Despite this, profits are up by almost 40%. Facebook isn't just surviving, it's thriving.
In the face of severe turbulence, Mark Zuckerberg's company has proven to be resilient.
But while users appear to be turning a blind eye, the same won't be said for regulators - Facebook knows huge fines are likely coming its way.
The question is how damaging those fines will be, and what other measures might be put in place that might clip the wings of a company that many lawmakers feel is too powerful.
George Salmon, analyst at Hargreaves Lansdown, said Facebook's revenue growth in the final three months of the year was its weakest since the firm listed on the Nasdaq stock exchange in 2012, but said the figures were still "reassuring".
"Only time will tell if Mark Zuckerberg's ambitious plans to revolutionise Facebook pay off, but these results will go a long way towards regaining the trust of Wall Street - analysts had been jittery after a tumultuous 2018 which included the trials and tribulations of the Cambridge Analytica scandal and a reset on strategy," he added.
Facebook's secretive research lab, where the company developed new hardware like its Portal speakers and researched moonshot projects like brain computer interfaces, is no more.
Building 8, the division Facebook created in 2016 to house some of its most ambitious projects, has been disbanded and the projects have been redistributed to other groups within the social media company.
The change, which was first reported by Business Insider, marks the end of the "Building 8" brand, though the group's work will continue on.
Facebook created Building 8 in 2016, with CEO Mark Zuckerberg committing to pour "hundreds of millions of dollars into this effort over the next few years" in order to "to advance our mission of connecting the world." To lead the new Building 8 work, the company poached former DARPA head Regina Dugan from Google, where she oversaw the company Advanced Technology and Projects (ATAP) group.
The following year, Dugan wowed crowds at the company's F8 developer conference where she showed off some of the company's research, including a brain computer interface and tech that would let people "hear" through their skin.
Dugan left Facebook at the start of this year, saying "the timing feels right to step away and be purposeful about what's next."
Work at Building 8 continued on, most prominently on Portal, the company's first non-VR hardware product. The Facebook-connected speakers were the first consumer products to come out of Building 8. The company is also reportedly working on a camera-equipped TV set-top box that would use the same software as Portal.
Now, thanks to BI, we know that behind the scenes Facebook has separated the Portal team into its own group, which oversees Facebook's other "unannounced hardware projects." Meanwhile, Building 8's researchers have been shuffled to Facebook Reality Labs (FRL), another new group at Facebook lead by Facebook's top VR researcher, Michael Abrash. The FRL group was created in May, around the same time Facebook announced a bigger reorganization among its top executives.
A Facebook spokesperson confirmed to BI that the Building 8 brand was no more, but said it continues to work on the same projects and hasn't laid off any employees as a result of the re-structuring.
Building 8 was the early name of the team building consumer hardware at Facebook. Building 8 is part of Facebook's AR/VR organization. Now that we're shipping, it's the Portal team. And Rafa Camargo is still leading the team; that has not changed. We also unified research looking at longer terms projects under one team, which became Facebook Reality Labs, which is also part of our AR/VR organization. This includes research projects like the Brain Computer Interface.
The bitter truth buried in recent headlines about how the political consulting company – Cambridge Analytica – used social media and messaging, primarily Facebook and WhatsApp, to try to sway voters in presidential elections in the US and Kenya is simply this: Facebook is the reason why fake news is here to stay.
Various news outlets, and former Cambridge Analytica executives themselves, confirmed that the company used campaign speeches, surveys, and, of course, social media and social messaging to influence Kenyans in both 2013 and 2017.
The media reports also revealed that, working on behalf of US President Donald Trump’s campaign, Cambridge Analytica had got hold of data from 50 million Facebook users, which they sliced and diced to come up with “psychometric” profiles of American voters.
The political data company’s tactics have drawn scrutiny in the past, so the surprise of these revelations came more from the “how” than the “what.” The real stunner was learning how complicit Facebook and WhatsApp, which is owned by the social media behemoth, had been in aiding Cambridge Analytica in its work.
The Cambridge Analytica scandal appears to be symptomatic of much deeper challenges that Facebook must confront if it’s to become a force for good in the global fight against false narratives.
These hard truths include the fact that Facebook’s business model is built upon an inherent conflict of interest. The others are the company’s refusal to take responsibility for the power it wields and its inability to come up with a coherent strategy to tackle fake news.
Facebook’s biggest challenges
Facebook’s first issue is its business model. It has mushroomed into a multibillion-dollar corporation because its revenue comes from gathering and using the data shared by its audience of 2.2 billion monthly users.
Data shapes the ads that dominate our news feeds. Facebook retrieves information from what we like, comment on and share; the posts we hide and delete; the videos we watch; the ads we click on; the quizzes we take. It was, in fact, data sifted from one of these quizzes that Cambridge Analytica bought in 2014. Facebook executives knew of this massive data breach back then but chose to handle the mess internally. They shared nothing with the public.
This makes sense if the data from that public is what fuels your company’s revenues. It doesn’t make sense, however, if your mission is to make the world a more open and connected place, one built in transparency and trust. A corporation that says it protects privacy while also making billions of dollars from data, sets itself up for scandal.
This brings us to Facebook’s second challenge: its myopic vision of its own power. As repeated scandals and controversies have washed over the social network in the last couple of years, CEO Mark Zuckerberg’s response generally has been one of studied naivete. He seems to be in denial about his corporation’s singular influence and position.
Case in point: When it became clear in 2016 that fake news had affected American elections, Zuckerberg first dismissed that reality as “a pretty crazy idea.” In this latest scandal, he simply said nothing for days.
Throughout the world, news publishers report that 50% to 80% of their digital traffic comes from Facebook. No wonder Google and Facebook control 53% of the world’s digital and mobile advertising revenue. Yet Zuckerberg still struggles to accept that Facebook’s vast audience and its role as a purveyor of news and information combine to give it extraordinary power over what people consume, and by extension, how they behave.
All of this leads us to Facebook’s other challenge: its inability to articulate, and act on, a cogent strategy to attack fake news.
The fake news phenomenon
When Zuckerberg finally surfaced last month, he said out loud what a lot of people were already were thinking: there may be other Cambridge Analyticas out there.
This is very bad news for anyone worried about truth and democracy. For in America, fake news helped to propel into power a man whose presidential campaign may have been a branding exercise gone awry. But in countries like Kenya, fake news can kill.
Zuckerberg and his Facebook colleagues must face this truth. Fake news may not create tribal or regional mistrust, but inflammatory videos and posts shared on social media certainly feed those tensions.
And false narratives spread deep and wide: In 2016, BuzzFeed News found that in some cases, a fake news story was liked, commented and shared almost 500,000 times. A legitimate political news story might attract 75,000 likes, comments and shares.
After Zuckerberg was flogged for his initial statements about fake news, Facebook reached out to the Poynter Institute’s International Fact-checking Network in an effort to attack this scourge. Then in January 2018, the social network said that it was going to be more discriminating about how much news it would allow to find its way into the feeds of its users. In other words, more videos on cats and cooking, less news of any kind.
The policy sowed a lot of confusion and showed that Facebook is still groping for how to respond to fake news. It was also evidence that the social network does not understand that fake news endangers its own existence as well as the safety and security of citizens worldwide –- especially in young democracies such as Kenya.
Angry lawmakers in the US and Europe, along with a burgeoning rebellion among its vast audience, may finally grab Facebook’s attention. But we will only hear platitudes and see superficial change unless Facebook faces hard truths about its reliance on data, accepts its preeminent place in today’s media ecosystem and embraces its role in fighting fake news.
Until then, we should brace ourselves for more Cambridge Analyticas.