Facebook’s Double-Edge Privacy Battle

It is often easy to focus on the short-term outcomes for a company. For example, looking at how Facebook is going to monetize its own cryptocurrency, continue to to grow ad revenues, and brand out to other revenue streams is enough to give you a clear-ish picture of the next year of performance. But how about the next five?

The population and governments of the world are starting to realize there is a significant threat to how democracy works, because Facebook literally controls the flow of news. What is interesting about observing the Facebook debate is how both sides have problems with the way things are being run.

One side is opposing the fact that several controversial figures, such as Paul Joseph Watson and Laura Loomer, have been banned from Facebook. They are turning it into a free speech issue where Facebook is no longer viewed as a private company and is a public utility. The other side believes that Facebook has empowered these voices too much, and it puts certain people at risk.

Big Shifts at Facebook

It was announced last month that Mark Zuckerberg was leading Facebook towards a renewed focus on privacy, however the picture is a little more complicated than that. As we see political candidates like Elizabeth Warren calling for Facebook and Amazon to be broken up into smaller components, it seems like Facebook’s real strategy is to make it impossible to break them up. They have started bundling their users numbers to make growth more opaque, and forming WhatsApp, Messenger, and Instagram into a secure communications network will just make it harder for them to be separated.

Facebook has recently hired Jennifer Newstead, who was involved in the implementation of the Patriot Act. Additionally, they have retained John Pineete who helps manage the public personas of billionaires like Bill Gates and Paul Allen. Both of these hires signal a desire to manage the legal and reputational hazards of Facebook’s domination. But will it be enough?

Facebook has recently been fined between $3 and $5 billion for its misuse of users’ personal data during the Cambridge Analytica scandal. The FTC has implemented this fine, and many believe it to not be enough. Even though it represents a record high fine, it is still only 6% of the cash that Facebook keeps on hand. This is hardly an effective penalty if the goal is deterrence from future wrongdoings.

Where Does this All Go?

If Facebook really has hit a point where it is a public utility, or at least to large a private power, then there will be push back soon. My prediction is in the short term we will see the value of Facebook increase significantly, but even with them playing this strong defensive game, other countries will start to intervene.

“Fake News” and “Russian collusion” were just the beginning of Facebook being analyzed on the main stage as a global power, the same as any country is. The United States hasn’t done much yet, but it seems as if the most potent opponents could be a combination of a grassroots movement, Trump’s interest in free speech, and several other large countries who aren’t benefiting from the same tax dollars. This makes it a short-term buy, but long-term sell, assuming Zuckerberg can’t continue to outmaneuver regulators.

Featured image courtesy of Shutterstock.