If you’ve been following the news, even slightly, the chances are you’ve heard something about Facebook lately. Facebook has been plagued by scandal and speculation in the past few weeks, and this has lead to high profile users such as: SpaceX, Tesla and Will Ferrell, deleting their Facebook profiles all due to the accusations of Facebook spreading propaganda and the Cambridge Analytica scandal, in which millions of Facebook users information was used to create software in which would help influence voters opinions. This scandal has hit Facebook hard, and more information is being uncovered, such as Facebook being aware of this in Late 2015 and yet not alerting users or authorities about this. While the Cambridge Analytica scandal comes from an innocent and approved personality test, in which participants gave consent and where paid a small fee in order to complete, users where not aware that subsequently, any friends profile data was also being harvested by the app ‘thisisyourdigitallife’.
As this scandal continues to be in the limelight, Zuckerberg has presented himself in front of congress for questioning, to explain why this scandal, that affected up to 87 million people, was able to happen and why it was not reported when it was discovered by Facebook years ago. He has already admitted his part in this scandal and taken responsibility for the mistakes he may have made. While I believe it’s important for everyone to understand how this happened, watching Zuckerberg in congress shows us how uninformed and clueless these law makers are. With many struggling to grasp what the internet actually is, and almost all of them not understanding the processes of Facebook and recommending features that Facebook already has in place. In many cases, while the initial questions asked may have been good, the members of congress where unable to get any detailed response as they did not know how to follow up the questions, this shows that these questions where prepared for them by someone else, and that many of them did none to very little research on Facebook before the questioning. In my opinion this lead to a potentially, extremely beneficial event being wasted.
While Facebook has abided by Europe’s far more stringent data protection laws, these where not rolled out internationally and are part of the reason why these users private information was so easily harvested. Facebook has announced that this will be changed and all users will have the same data protection at this higher level, and Facebook will take more steps to ensure its users privacy in the future.
However this is not the first scandal Facebook has even had to endure this year, from age-specific job advertisements, which where found to break age discrimination laws, to some questionable political ties, and coaching certain political parties worldwide on how to use the social media platform more to their advantage, from Germany’s anti-immigration party, to the US election in 2016.
While Facebook has been under heavy fire recently there is no sign that Facebook will disappear anytime soon, its user base and value is just too big. With 2.2 billion active monthly users and 79% of Americans using Facebook, and no other peer getting anywhere near its size and reputation (Instagram the closest with 32%). The use of Facebook Messenger alone is enough for people to stay with Facebook with many people not having an alternative way to connect with others. While people may be leaving Facebook, it will be interesting to see if this will be permanent or whether they will come crawling back after all this is done and forgotten, after all Facebook gets up to 400 new users a minute and the ability to find people a connect with those, who you would otherwise never really be able too, is a strong pull factor to come back. As well as this most events are now published and people are invited to them on Facebook, without Facebook it is possible you will become not just a social-media outcast but a real life hermit as you become left out from events and conversations within your friendship groups.
Financially, it was always obvious that Facebook was going to be hit hard on the stock exchange when news of this scandal broke. Facebook’s shares fell 5% which roughly translates to it’s value falling by $25 Billion. While this was a massive hit for Facebook, it is worth remembering that last year it’s share price rose by an unprecedented 60% and this initial crash was well prepared for and had little affect on the day to day finances of Facebook. While this fall in share price was fairly significant, there was little speculation about whether or not Facebook’s value would continue to fall or not, with 40/44 Wall Street brokers recommending to buy the stock. It is worth noting that while Facebook’s stock continued to fall as more information came out about the Cambridge Analytica scandal, since March 23rd Facebook stock prices have risen 5%, with a 2.5% rise in share prices during Zuckerberg’s testimonial to Congress and have continued to climb. While the loss of $25 Billion is significant to any large multinational it is worth noting that Facebook’s exceedingly quick rate of recovery will build faith in the stock, and the company and this will exponentially grow, potential putting Facebook into a stronger position in the future as investors know that Facebook can survive one of the most publicised business scandals to date.
In my opinion, not only will Facebook be able to return to the financial position it was in, in only a matter of months, it will become a stronger stock option and investment in this organisation will only increase. As well as this while some people may be deleting their Facebook profiles and all together leaving the social network platform, Facebook’s natural growth rate will easily offset these losses and I wouldn’t be surprised to see the profiles returning to Facebook soon.
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