In many ways, this is not a “new” story. There have long been questions about what happens to the data of Facebook (and other social media platform) users, the transparency of the social media providers’ policies and the extent to which such information can/is made accessible to third parties for commercial gain. What is different this time, critically, is the sheer scale with the data of 270,000 users allegedly expanded without permission or knowledge to dramatically shape major events, most notably the US election. The company now faces probes from a range of regulatory bodies as a result.
Facebook’s response certainly hasn’t helped its cause – its founder and CEO has remained silent, delegating communication to others, while at a corporate level the company has gone as far as to suggest passing such a huge amount of information onto a third party “does not constitute a data breach”. It has to be said that if this doesn’t, it is difficult to conceive what would!
Facebook now finds itself with two related, but distinct, crises. The first and more immediate is at the corporate level – the company is a listed entity; its share price has fallen dramatically (down 9% since the story first broke); and the company is now being pressured by regulators to answer some tough questions.
A severe and difficult challenge, yes, but potentially a surmountable one. Criticisms and fines for companies regarding breaching privacy and data misuse are not unprecedented – Google was fined a substantial amount in 2012. Likewise, share prices can rebound and companies can recover financially over time.
The bigger issue for Facebook, which is far harder to overcome and may yet prove fatal, is a reputational one. Quite simply, there has been a breach of trust. This would be a serious issue for any company but given Facebook’s role as a social channel and its positioning as an entity that brings people together, that breach of trust becomes far harder to take. Even one of its past supporters, WhatsApp’s founder (who sold to Facebook for billions in 2014) is leading a charge to #deletefacebook. Add to all of this the fact that the company’s founder and standard bearer is suddenly missing in action, thereby doing little to reassure, and the problems begin to look insurmountable.
This of course is not the end of the story and no doubt we will hear far more in the coming days and weeks, some which might explain the situation and some which may prove even more unpalatable. But in what is perhaps the biggest example of reputational crisis for some time, Facebook is in trouble. Or to put it in social media parlance – #fail.