Thu Mar 07, 2019 04:42 PM
CEO Mark Zuckerberg on Wednesday announced a sweeping reorientation toward privacy, explaining in a lengthy essay posted to his account that he would spend the coming years focusing Facebook's distinct apps - WhatsApp, Instagram, Messenger, and Facebook - on content that disappears after a period of time or is encrypted, meaning that data is scrambled so outsiders, and even Facebook, cannot read it. But the shift, which shows how the embattled company is positioning itself for an uncertain future marked by consumer distrust, declining growth on its core social network and ongoing fights with regulators around the world, could cause an upheaval in Facebook's business model of mining people's information to show them ads.
While offering few specifics, Zuckerberg said the company's direction would shift from being a social network where people broadcast information to large groups of people - a town hall - to a service that is modelled after a living room, where people communicate with smaller trusted groups.
"As I think about the future of the internet, I believe a privacy-focused communications platform will become even more important than today's open platforms," Zuckerberg wrote. "Privacy gives people the freedom to be themselves and connect more naturally, which is why we build social networks."
Reactions to Zuckerberg's announcement were swift and sceptical. Privacy advocates said Zuckerberg needs to go beyond touting encryption to provide concrete information about whether less data will be collected and used for Facebook's profits. "Why does it always sound like we are witnessing a digital version of 'Ground Hog Day' when Facebook yet again promises - when it's in a crisis - that it will do better?" said Jeff Chester, executive director of the Center for Digital Democracy, a nonprofit privacy advocacy group in Washington. "Will it actually bring a change to how Facebook continually gathers data on its users in order to drive big profits?"
The promised shift to more secure communications, while good for users, could entail major risks to Facebook's relationships. Many governments oppose encryption, and Zuckerberg acknowledged that Facebook may end up getting blocked in some foreign countries as a result. Encryption will also make it harder for Facebook to fulfil what Zuckerberg has described as a core mission of detecting misinformation operatives and other bad actors on the company's platform, which requires the ability to read the content people post. On Twitter, Facebook's former Chief Security Officer Alex Stamos said law enforcement and people who care about moderating unwanted content were the "losers" of Wednesday's announcement.
Public trust in Facebook is at record lows, according to studies, the result of crushing privacy controversies last year as well as the misuse of user data that extends back more than a decade. In a reputation score of 100 highly visible public companies, Facebook last year dropped from 51st to 94th, according to a Harris Poll published Wednesday in conjunction with the news organization Axios. In a Pew Research Center study from September, a quarter of the Facebook users polled said they deleted the app from their smartphones last year, and more than half said they adjusted their privacy settings.
Zuckerberg acknowledged the trust deficit in his post. "I understand that many people don't think Facebook can or would even want to build this kind of privacy-focused platform - because frankly we don't currently have a strong reputation for building privacy protective services, and we've historically focused on tools for more open sharing," he wrote. "But we've repeatedly shown that we can evolve to build the services that people really want, including in private messaging and stories."
But the moves also appear to be prompted by business considerations. Since 2012, Facebook has grown from a single social network - Facebook - to what Zuckerberg refers to as a "family" of four apps, with Messenger, Instagram, and WhatsApp. Facebook was long the star, but last year WhatsApp surpassed it in the number of people who use it on a monthly basis, according to industry reports. Zuckerberg recently began emphasizing the number of people who use at least one of its products once a month - 2.7 billion people - more than the 2.3 billion monthly users for Facebook alone. Users log on to messaging apps more frequently than the core social network, whose growth has flattened in the US and Europe.
Usage of Facebook and of Messenger in the US also appear to have declined by about 10 percent per person between 2017 and 2018, according to Brian Wieser, an analyst with Pivotal Research Group. The trend is worrisome for Facebook: US users on the core social network are the most lucrative because Facebook can command high ad prices to target them.
"This move is entirely a strategic play to use privacy as a competitive advantage and further lock in Facebook as the dominant messaging platform," Ashkan Soltani, a former Federal Trade Commission official and privacy researcher, said on Twitter.
Zuckerberg's new blueprint for Facebook arrives as regulators around the world, including the United States, are forging ahead with efforts to craft new rules targeting how companies collect and monetize their users' data. There's widespread trepidation that tech giants know too much about their users - and immense frustration that Facebook in particular hasn't safeguarded that data from abuse.
Facebook's mishaps have triggered an investigation from the Federal Trade Commission, which is considering a multibillion-dollar fine against the tech company. Facebook also is set to defend itself against a lawsuit Wednesday filed by the attorney general of the District of Columbia, who said the company deceived its users about its data-collection practices.
But some of the ideas Zuckerberg proposed could lead to their own share of regulatory headaches. European officials have criticized Facebook for its plan to merge communications services after initially promising to keep apps, including WhatsApp, separate; greater integration among Facebook's apps may raise antitrust concerns.
Zuckerberg has routinely reaffirmed Facebook's commitment to privacy when apologizing for scandals. But the differences in Wednesday's announcement were the structural changes Zuckerberg said he intends to make to Facebook's wide array of services - changes he said he hopes will ensure that Facebook, with its damaged reputation and slowed growth, has a place in the future of social media.
WhatsApp, which Facebook acquired for $19 billion in 2014, is the model for Facebook's new embrace of privacy. While WhatsApp has been end-to-end encrypted for years, Facebook's standalone Messenger app is not. Messaging within Facebook's Instagram app is also not encrypted.
In Zuckerberg's blog, he set out a vision for "interoperability," meaning that the changes would not only make messaging more private, they would allow people to message and communicate with one another across the company's apps.
More-fluid communication could also help Facebook achieve a goal that it has made little progress on: finding money in its messaging platforms. Messaging apps - while hugely popular with users - generate a fraction of the revenue compared with the core social network. The company recently introduced advertising on Messenger and also allows businesses to pay to reach customers on WhatsApp.
But Facebook makes the majority of its revenues by targeting ads to US and European users of its core social network - and Zuckerberg didn't address the revenue implications of the privacy shift. Facebook can command the highest ad prices to target these groups because the company has extensive profiles of them and they make the most purchases. If the company cannot read the content of messages, it will lose valuable profiling data.
If Zuckerberg continues to encrypt more services, Facebook could run into more trouble internationally.
WhatsApp's encryption has put the service into bruising fights with governments in India and Brazil, two of Facebook's largest markets. Brazil has shut down WhatsApp on three occasions when government officials asked for data that WhatsApp said it did not have. The Indian government has also proposed breaking WhatsApp's encryption to make the data in it more traceable.
Jennifer Grygiel, assistant professor of communications at Syracuse University, said Facebook's changes would severely curtail its ability to moderate content.
"What's not clear is how they are going to make this transition safely," she said. "We have already seen the risks associated with WhatsApp and private encryption in India, for example, where misinformation has led to mobs and the loss of life."
Zuckerberg suggested that the future would look different. The company, for example, might allow businesses to communicate with their users not only WhatsApp but to find new users on Instagram. Currently, the services are distinct.
After making messaging more secure, he said, the company will "build more ways for people to interact on top of that, including calls, video chats, groups, stories, businesses, payments, commerce, and ultimately a platform for many other kinds of private services."