The boss of Facebook, Mark Zuckerberg, delivered on Monday for the first time to investors since the beginning of “Facebook files”. The entrepreneur sought to minimize the impact of this scandal with multiple revelations by assuring that Facebook would solve its problems by attracting young people more. A difficult strategy to understand.
Salvation will come from young people or it will not. Mark Zuckerberg, the CEO of Facebook, insisted on Monday, October 25, on the importance of bringing and keeping the under 25s in the fold of Facebook, Instagram, and WhatsApp, during the presentation of the financial results for the third quarter.
A long-awaited speech. Mark Zuckerberg had not yet had the opportunity to explain himself to investors since the beginning of the “Facebook files”, this continuous stream of revelations for almost a month on the dysfunctions of the social network.
Lord of a besieged fortress
But the content of internal Facebook documents, sent to multiple media by whistleblower Frances Haugen, was only touched upon by the CEO of the Silicon Valley giant. He blamed the revelations on a “coordinated effort to select certain leaked documents to misrepresent the group.”
It is therefore as lord of a besieged fortress that Mark Zuckerberg appeared before those who are most competent for the good financial health of the group: the investors. Facing them, he wanted to be reassuring. The scandals on Facebook used as a platform to spread hatred around the world, on Instagram which can prove dangerous for the mental health of adolescents (s) or on the almighty algorithm which more or less escapes control of its creators inside Facebook, would have no impact on the profits of the social media empire.
>> Ethiopia: Facebook still tripping over ethnic violence
After all, this isn’t the first time Facebook has faced headwinds from the media. The Cambridge Analytica scandal – involving a massive leak of data – and that of the Russian propaganda campaign before the 2016 US presidential election had not shaken the confidence of advertisers and financial markets, recalls the American channel CNN.
This time, one might think that the same scenario is at work: turnover is up 35% year on year, profits are up 17%, and Facebook, Instagram and WhatsApp even have 12% users. in addition.
But that’s only part of the story. The other is darker: the social network recorded “a lower increase in its turnover than expected by investors, and the number of monthly active users is also lower than expected”, underlines Alexandre Baradez, head of market analyzes for the financial consulting firm IG France, contacted by France 24.
Apple and young people in the crosshairs
Financial disappointments that have nothing to do with a possible “Facebook files” effect wants to believe Mark Zuckerberg. For him, the only clouds on the horizon are called Apple and TikTok. The first because of its new data protection policy on the iPhone which makes targeted advertising – Facebook’s core business – much more difficult. The second because it is more popular with young people.
Mark Zuckerberg can’t do much to counter Apple, which is the only one with a say in the rules of the game on the iPhone. On the other hand, he can try to challenge TikTok for the crown of king of social networks for young people.
Internal Facebook documents provided by Frances Haugen indicate that the American group has long been aware that it is no longer the idol of young people. The number of teenagers who connect to the venerable platform born in 2003 has fallen by 13% since 2019 and should drop by 45% in the next two years, underlines the site The Verge, which was able to have access, thanks to ” Facebook files”, to the group’s internal research on this topic.
The reason for this dislike was that young people would find Facebook “boring” and populated by “parents” and other adults. Hence the announcements of Mark Zuckerberg, who unveiled an envelope of nearly 10 billion dollars to develop Facebook’s presence in virtual reality, augmented reality and the creation of a metaverse (i.e. persistent virtual worlds). He also announced that he wanted to rebuild Facebook from top to bottom to be more suited to the expectations of young adults.
There would be enough to restore the momentum to Facebook. Virtual reality and the metaverse are not just a smokescreen to try to divert attention from repeated scandals, it is also “a way for the group’s CEO to show that he can always innovate and renew his offer in the face of the challenge of the aging of its public”, estimates Alexandre Baradez.
The proof of the limit of the king algorithm
Mark Zuckerberg thus tried to convince investors that some poor performance simply because the group “is in the transition phase to reinvent itself and that takes time”, continues the IG France analyst.
But sweeping away the impact of “Facebook files” with the back of the hand is an error of assessment, believes Alexandre Baradez. Proof by action: since mid-September – period when the revelations resumed – the title has lost more than 8% on the stock market. “In the Gafam basket [Google, Apple, Facebook, Amazon, Microsoft]it is the value that has lost the most, which suggests that there is indeed a scandal effect”, analyzes this specialist in the financial markets.
For him, everything is in the timing of these revelations. They come as “investors already have doubts about Facebook’s ability to retain its most lucrative audience: young people,” notes Alexandre Baradez. The “Facebook files”, by revealing the dark side of the internal kitchen of the social network and all the dysfunctions linked to the cult of the algorithm, arrive like the straw that can break the camel’s back. These revelations insinuate additional doubt in the minds of stockbrokers: “Is Mark Zuckerberg capable of improving the brand image and the functioning of his group?” Summarizes the analyst.
The Facebook CEO’s desire to minimize the impact of this new scandal only makes the situation worse. “There is a big gap between Facebook’s reaction and what investors perceive, and the group will have to correct this discrepancy to reassure,” says Alexandre Baradez.
For the moment, the only initiative taken by Facebook is to throw a bone to gnaw at the shareholders. The social network has announced a gigantic plan of 50 billion dollars of share buybacks for 2021. “It’s a way of encouraging investors to keep their shares because they will mechanically gain in value [puisqu’il y en aura moins en circulation, NDLR]“, explains Alexandre Baradez. But for him, “this type of initiative only lasts for a while, and financial gifts cannot fill all the holes in the Facebook building”.
He judges that one of the priorities for Mark Zuckerberg would be to correct the image of a social network subject to the “good pleasure of cold algorithms”. This is not just to put some human warmth back into the realm of Facebook, but also because all of the “Facebook Files” revelations appear that the algorithms are not omniscient.