The following is an excerpt from Alex Kantrowitz’s newsletter Big Technology. To put it in your inbox weekly, you can: register here..
The question of whether this series of scandals will cause immediate and direct harm to Facebook appears to have been resolved soon after the Senate adjourned Tuesday’s hearing. Two of Facebook’s most important stakeholders, investors and advertisers, have not escaped even after whistleblower Frances Haugen testified that it would harm the mental health of teenage girls and benefit from anger. He was. They already knew the drill.
“It will effectively be a hurricane,” Jefferies analyst Brent Chill told CNBC Wednesday morning. “And in past storms, it was a great shopping opportunity.”
Facebook scandals quickly turn hot and cold. About once a year, amazing things happen about social networks. Campaigns use that data to fraudulently psychologically profile voters. The company is lying to advertisers and publishers about vital indicators. Independent researchers have found that it divides the society they choose to live with. Then, after a period of anger from US lawmakers, everything returns to normal. The scandal proceeds like a storm.
Not all of Facebook’s disadvantages, for advertisers or actual customers, are adequate targeting and scale. Facebook generated $29 billion in the second quarter of 2021, up 56% year-on-year, with net income exceeding $10 billion. The company’s advertising system works so well that advertisers didn’t even pretend to boycott after the Facebook file was removed. they are crazy. “I’m looking for advertisers (any advertisers) to let them know they’re opting out,” said Insider Intelligence director Jeremy Goldman. said.. “I haven’t found anything yet.”
With such loyal customers, Facebook has commanded the loyalty of Wall Street. The company’s stock price has fallen 12% this month (and is trading at a discounted price compared to Google), but this year it has outperformed the S&P 500 compared to the S&P’s 19%. is up 23%. As Facebook shares continue to skyrocket as troubles continue, Thill and his counterparts are instructing customers to buy. “How do investors make money?” Chill said. “At times like these, usually when a stock takes a hit, that’s when you make a lot of money.”
When the money is poured in, Facebook fills Washington with cash and discourages legislators from taking a tough stand. Dark money sometimes appears to be “associations” or Big Tech, but flows into third-party groups that don’t want to. Grant They.
Senator Richard Blumenthal, who led the hearing with Hogan this week, knows this money is working to prevent him from taking concrete action. “Big Tech’s big bucks and lobbyists are hostile to us,” he said. said on Thursday. However, it is not clear how he intends to oppose it. Senator Blumenthal’s office declined to elaborate on him or make him available for interview. Therefore, the current situation is dominant.
what will change
Even if advertisers, users, Washington and Wall Street take no action, the scam could exacerbate some of Facebook’s current problems.
For Facebook, the most worrying part of this wave of criticism is that it may encourage more people to opt out of tracking on iOS. Facebook has already provided guidance that many expect to impact revenue this quarter after tracking them across the web has made advertisers’ lives more difficult. I am Facebook has won these “Do Not Track” designations after years of privacy scandals, and this moment may be in vain.
Facebook may also struggle to keep hiring talented people after it brings another hit to its brand. “Facebook is caught in a difficult cycle of hiring, which makes project staff shortages, scandals, and recruitment difficult,” Hogan said in a statement. Facebook is still considered a “prestige” brand by many techies, but it’s hard for recruiters to take a call when the company is exploding in front of Congress.
Finally, European regulators are likely to seek regulation, and something Hogan has already done with the EU. If the EU enacts something, it could have a significant impact on Facebook’s business. But that’s only if the rules don’t inadvertently hurt Facebook’s competition, which isn’t a thing.
From the moment the Wall Street Journal published its first Facebook Files article, the company reacted rebelliously. Some might say this without thinking it through without a hint of introspection. It may be because you genuinely believe that it is correct. However, it is possible that Facebook has incentives. The company has had little effect on its behavior so far. That’s why today we are adopting Aarohi Mantras among those who face criticism. Never apologize or impose.
This post was made before Alex Kantrowitz Big Technology Newspaper.