Why Facebook Lost Users This Year

December 24, 2018 Updated: December 26, 2018

People are continuing to leave Facebook, as campaigns to “delete Facebook” gain momentum and global scrutiny expands in the wake of the social media and social networking company’s tumultuous year marred by privacy-related scandals.

The latest negative publicity came from a Dec. 18 report that revealed that Facebook had shared more personal user data with 150 other technology companies, such as Amazon, Microsoft, and Netflix, than it had previously disclosed, in a bid to exempt its business partners from normal privacy regulations.

Scandal After Scandal Surfaces

For years, Facebook had provided business partners the ability to read private messages from users and grant access to contact lists, often without consent, according to The New York Times.

The company gave Netflix and Spotify the ability to read the private messages of Facebook users and allowed Microsoft’s Bing search engine to see the names of every Facebook user’s friends without their consent. They also let Yahoo view friend posts, even as Facebook claimed that it had stopped this kind of data sharing.

Facebook responded to the report with a blog post authored by Konstantinos Papamiltiadis, director of developer platforms and programs. He argued the partnerships were for the user’s benefit, so people could access their Facebook accounts on other platforms such as Apple, Amazon, and Yahoo, while also giving users more recommendations from their Facebook friends on other popular apps.

“To be clear: none of these partnerships or features gave companies access to information without people’s permission, nor did they violate our 2012 settlement with the [Federal Trade Commission],” Papamiltiadis said.

Facebook was already dealing with the fallout from the Cambridge Analytica scandal in March, which surfaced after reports said the UK political consulting firm had accessed the personal information of as many as 87 million Facebook users without their permission and analyzed the data ahead of the 2016 presidential election.

“We don’t sell data to anyone,” Mark Zuckerberg, founder and CEO of Facebook, testified to Congress in April about his company’s policies. Facebook has utilized a defensive strategy this year in an attempt to reassure that users’ data would be protected.

While Zuckerberg told lawmakers the firm would tighten its data policies, the recent New York Times report indicates the company is still choosing to ignore potential privacy concerns in favor of profits.

A British parliamentary committee this month released internal Facebook emails that revealed the company debated whether to give app developers, who spent money advertising with them, more access to its data. In other cases, the emails discuss whether to shut off companies that Facebook viewed as competitors.

The greater concern is not only what Facebook does with its user data, but also about the security of it. Just about two months ago, Facebook reported a data breach affecting more than 50 million accounts.

The incident involved hackers that exploited a vulnerability in Facebook’s code that affected “View As,” a feature that lets people see what their own profile looks like to someone else. It’s still not clear who carried out the breach and what specific data was hacked.

District of Columbia Attorney General Karl Racine filed a lawsuit against Facebook on Dec. 19 for failing to protect the data of users. The suit, which specifically mentioned the Cambridge Analytica scandal, noted that Facebook’s loose data policies enabled companies and other third-party applications to collect data.

“Facebook failed to protect the privacy of its users and deceived them about who had access to their data and how it was used,” Racine said of the complaint. “Facebook put users at risk of manipulation by allowing companies like Cambridge Analytica and other third-party applications to collect personal data without users’ permission.”

The Fall Out

With the social media company holding a 2.2 billion-strong user base worldwide and a net income of $15.9 billion last year, it’s unclear how much the scandals have affected Facebook’s bottom line. But the number of privacy breaches has hurt the company’s share price and prompted a number of official investigations into the company. Facebook shares have fallen about 42 percent from its 52-week high of $218.62 to a near 52-week low of $124.06, on Dec. 24.

Zuckerberg is on pace to end the year with the biggest decline in wealth among all billionaires. According to Bloomberg’s Billionaires Index, Zuckerberg was down more than $20 billion to date, to a net worth of $49.7 billion, having started the year with a total net worth of $72.8 billion.

More than 1 in 4 Americans have deleted the Facebook app from their mobile phones, according to a Pew Research Center survey conducted in September. The consumer-trust headache continued, with 81 percent of users saying that they had little or no confidence in the company to protect their data and privacy, according to a Business Insider survey.

The Pew survey also revealed that more than half of Facebook users 18 years old and up have adjusted their privacy settings in the past 12 months, an indication of how important digital privacy is to today’s users.

Some Facebook investors have even called for Zuckerberg to step down as chairman of the company, in the wake of another public-relations blowout in November that revealed the company had hired a firm to lobby against Facebook’s critics.

Jonas Kron, a senior vice president at Trillium Asset Management, a U.S. investor who has an 8.5 million-pound stake in Facebook, argued that there needs to be a separation in positions.

“Facebook is behaving like it’s a special snowflake,” Kron told the Telegraph. “It’s not. It is a company, and companies need to have a separation of chair and CEO.”

In a conference call with reporters later, Zuckerberg denied knowing about the company’s relationship with the firm named Definers, which The New York Times reported was used by Facebook to disparage other tech companies. Zuckerberg said he ended the relationship as soon as he found out about it.

Stifled Voices

Facebook also has faced criticisms for marking nonpolitical advertisements as political content and censoring the voices of conservatives.

In one case, a campaign advertisement by Elizabeth Heng, a Republican congressional candidate in California, was blocked on Facebook. Heng said the video, which features images of the Cambodia genocide of the 1970s, had personal relevance because her parents had escaped the country. After the story received media attention from conservative media, Facebook later restored the video.

Another case involved the popular conservative duo Diamond and Silk, who asked the Trump administration to investigate Facebook after the company notified them that their content was “unsafe to the community” and that their ban was not “appeal-able in any way.” Facebook later apologized adding that they “mishandled” the incident.

Facebook also apologized to Prager University for mistakenly removing some of their videos for “hate speech.” Prager is a nonprofit organization that produces conservative educational videos.

Follow Bowen on Twitter: @BowenXiao3
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