Facebook’s predicament

Published September 24, 2013
Picture taken on May 12, 2012 in Paris shows an illustration made with figurines set up in front of Facebook's homepage. — AFP Photo
Picture taken on May 12, 2012 in Paris shows an illustration made with figurines set up in front of Facebook's homepage. — AFP Photo
Facebook CEO Mark Zuckerberg speaks to reporters during a media event at Facebook's Headquarters office in Menlo Park, California on Thursday, April 04, 2013. — AFP Photo
Facebook CEO Mark Zuckerberg speaks to reporters during a media event at Facebook's Headquarters office in Menlo Park, California on Thursday, April 04, 2013. — AFP Photo

Two headlines from two different sites:

1) US and UK 'crack online encryption'

2) Facebook delays privacy policy update that includes analyzing your profile photo

Two seemingly disparate stories which have an intrinsic underlying connection; Privacy is a problem people are irreversibly aware of now, and Facebook can’t appease advertisers therefore cannot satiate the appetite of it’s shareholders without violating it to some extent, especially in the face of increasing competition.

Edward Snowden’s leaks have caused substantial ripples in the world, and Facebook might well be the one to suffer the hardest blow. With staggered leaks appearing in the media over the past few months, awareness in users has risen acutely and suddenly all of Facebook’s privacy-related shenanigans are getting more attention than they may have in the past.

The results of a recently concluded privacy-related survey conduct by Pew Internet are staggering.

Ironically, Wall Street seems to be oblivious to this as the stock is back past it’s IPO price for the first time. Yes, revenues are up, but there is no reportage pertaining to teens or new generation usage even though that was indicated as a substantial concern in it’s annual 10-K report not too long ago.

Apart from privacy, It’s also a generational issue; Facebook is now almost ten years old and people don’t want to ‘hang-out’ on the same social network as their parents. Facebook’s segregation features are more cumbersome and less intuitive to manage than some of it’s competitors.

Increasingly, more and more kids are turning to Tumblr for their social networking needs, especially since it integrates photography as part of it’s core product offering. Yahoo’s billion dollar acquisition hasn’t changed the user experience much with the exception of making it more harder to find explicit content.

After the $20 million settlement for violating user privacy and intervention by a consortium of privacy groups, Facebook has delayed the update to it’s privacy policy which would allow them to market a user’s profile photo. Facebook has also decided to delay the launch of it’s Video Ads platform without citing any specific reasons.

Facebook tried to mitigate some of the negativity surrounding privacy violations and issues by emphatically stating secure browsing i.e 'https' is now a default. It’s a pity that Snowden’s latest leak states that HTTPS is essentially useless against the NSA, as reported by The Verge.

Newsfeed story bumps, Hashtags, Trending Topics, shared photo streams, embeddable statuses and photographs, searchable photos, visual recognition on profile photos, internet.org, Facebook Home, HTC first, fwd.us, native advertising and the list goes on.

Either Mark Zuckerberg’s Facebook is trying to alter it’s perception and become known as a company that experiments often, and fails at some initiatives regularly, or they’re trying to throw multiple arrows in the dark and hoping that a) something sticks and b) their efforts will negate some of the negative PR that is being generated fairly regularly through their privacy missteps.

Experimentation is an integral part of an company’s evolution, but to do so so publicly, consistently tells a slightly different story. In an age where lean methodology is permeating across all industries, its hard to believe that Facebook would not form a cohesive strategy and iterate their offerings more systematically.

As tools to measure impact and quantify comparative results become more sophisticated, Facebook is going to likely experience a decline in advertising and thereby it’s stock value. One of the smartest decisions made by Facebook was to deploy “Login with Facebook” as an option. This has kept the social network relevant far longer than it would have stayed if it were just a self-contained utility.

Unfortunately, the Login function doesn’t generate any revenue. Facebook is now answerable to Wall Street regularly, and it’s core customers, the advertisers, in addition to having more choices of where and how to advertise, are wary of user backlash in case any of FB’s moves misfire.

The acquisition of Parse, a developer platform, indicates that Facebook realizes it needs more apps onboard to retain user interest. Whether this happens or not remains to be seen.

Unless they can lobby for legal changes, find a loophole or find a new revenue stream from it’s existing user base, it’s fighting a losing battle.

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