Zuckerberg Says He Intends To Protect Facebook ‘Community’
With Facebook (FB) under its harshest scrutiny since its initial public offering in 2012, Chief Executive Mark Zuckerberg on Wednesday responded — after five days of silence — to reports about Cambridge Analytica obtaining millions of user profiles by abusing the social media giant’s data-sharing abilities.
In a 937-word written response, posted to his Facebook page, Zuckerberg outlined three steps the company will take to prevent abuses like those that occurred with Cambridge Analytica, which was involved with the sweeping collection of personal data on some 50 million Facebook users without their knowledge. Cambridge Analytica, a data mining and analysis firm, was employed by President Trump’s 2016 campaign.
“I started Facebook, and at the end of the day I’m responsible for what happens on our platform,” Zuckerberg wrote. “I’m serious about doing what it takes to protect our community.”
For starters, he said, Facebook will conduct an audit of apps that had access to large amounts of information before it made changes in 2014 to dramatically reduce data access. It also will audit suspicious apps.
Second, Facebook will restrict developers’ data access even further to prevent other kinds of abuse. Third, Facebook will provide users more clarity about apps they use and how to revoke permissions for data.
Analysts that follow Facebook have mostly stuck with the company throughout the ordeal, maintaining buy ratings on the general view that the company will weather the storm.
“We are glad to hear Zuckerberg finally address this issue sooner rather than later as this uncertainty has been a major overhang on Facebook shares,” wrote GBH Insights analyst Daniel Ives in a report to clients. “While this Cambridge situation will remain a dark cloud over the Facebook name in the near term, breaking his silence and the actions outlined in his blog post should help users, advertisers and investors feel more comfortable that Facebook and Zuckerberg are starting to get their arms around this issue.”
But one of its harshest critics, Pivotal Research analyst Brian Wieser, reiterated a sell rating Wednesday, suggesting that personnel changes might be needed. Facebook has addressed some of its problems, and presumably will address the remainder or eventually be compelled to do so, said Wieser.
“However, investors now have to consider whether or not the company will conclude that it has grown in a manner that has proved to be untenable or whether it needs to significantly improve how it is managed,” Wieser wrote in a research note to clients. “The former scenario would depress the size of the company, but the latter scenario introduces the possibility (and related risks) of personnel changes at some point in the not-too-distant future.”
The New York Times reported late Monday that Facebook security chief Alex Stamos will leave the social networking giant in the wake of internal disagreements over how to probe and disclose Russian mischief on the site.
Also damaging the reputation of Facebook is a Twitter meme, #deletefacebook, started by WhatsApp co-founder Brian Acton, who told his Twitter followers that it is time to delete Facebook. Facebook acquired WhatsApp for stock and cash valued at $ 19 billion in 2014.
The heat is on. In reaction to the Cambridge Analytica breach, the Federal Trade Commission is reportedly investigating whether Facebook mishandled user data. British Information Commissioner Elizabeth Denham said she will vigorously probe whether Facebook data were illegally acquired and used. Further, Massachusetts Attorney General Maura Healey in a Twitter post announced that a Facebook investigation will be launched.
Whether the steps Facebook plans to take will lift the cloud hanging over the company is not yet known.
With the heat on Zuckerberg, might he relinquish his title as chief executive, but hold on to his title as chairman?
Shebly Seyrafi, analyst at FBN Securities, said that’s highly unlikely.
“Anything can happen, but I do not believe that this will take place,” Seyrafi told Investor’s Business Daily. “It would look too much like he is succumbing to pressure, and I don’t sense that that’s his style.”
Facebook stock, which was up 2% early Wednesday, closed at 169.39, up 0.7% on the stock market today. That reversed two days of deep slides in the price of its shares. In after-hours trading Facebook shares were holding at 169.39.
Facebook shares plunged to a seven-month low before recovering somewhat Tuesday. Analysts viewed it as a buying opportunity despite the risks of government investigations and possible regulations slapped on the social networking giant.
Facebook held a companywide meeting Tuesday to address the Cambridge Analytica matter, but it was not attended by Zuckerberg. It was led by Paul Grewal, Facebook’s general counsel.
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