Over the next week or so, the beleaguered social media colossus Facebook will rebrand itself as something akin to a play on the metaverse — a hypothetical digital reality where people can virtually mingle, work and play. Its detractors say the extreme makeover is part of a concerted effort by the social media giant to shed its image as a toxic platform better known for amplifying hate speech and fake news as well as for using surreptitiously gathered data to boost engagement and advertising sales.
Few companies in history have wielded as much power or have been as hated as Facebook is today. With over two billion users addicted to its platforms — Instagram, WhatsApp as well as the core Facebook — the social media giant has been slowly shedding users, and by its own admission, even advertisers. It blames Apple’s new ad tracking tools for slump in advertising revenues.
Facebook currently has a market value of over US$960 billion ($1.2 trillion) making it the sixth largest company on Earth. Its stock plunged 16% after a whistleblower appeared before the US Congress earlier this month, and another testified in the British Parliament.
The firm that Mark Zuckerberg built as a Harvard dropout nearly two decades ago is under siege and faces an existential crisis. Will a name change be enough to turn its fortunes around? Or will the regulators act and break up the toxic platform formerly known as Facebook? Or will the US Congress be forced to enact new laws to drastically clip its wings?
The social media giant faces an antitrust suit filed by the US Federal Trade Commission (FTC) that seeks to split it up. The FTC accuses Facebook of operating a ‘buy or bury’ campaign to either take control of — or crush — its competitors.
Among the firms it bought include social media platform Instagram in 2012, messaging platform WhatsApp and virtual reality devices manufacturer Oculus in 2014. Facebook also tried to buy rival American camera and social media company Snap for US$3 billion in 2013 but was snubbed. Snap, now a listed firm, has a market capitalisation of US$120 billion.
US Senator Amy Klobuchar said last week that the US Congress was losing patience with giants like Facebook which continued to defy the law to maximise profits for its shareholders. On Oct 20, Facebook was fined US$70 million for withholding information about its acquisition of animated graphics start-up Giphy last year. Just hours earlier, Facebook settled with the US Department of Justice over claims that it discriminated against American workers for some jobs in favour of foreign workers with temporary visas. It agreed to fork up US$14.25 million as part of the settlement.
For weeks now, there has been a steady drip of bad news for the dominant social media platform. Earlier this month, former Facebook employee Frances Haugen testified before US Congress about documents she had leaked to The Wall Street Journal that showed that Facebook knew about issues with the service, including its inability to deal with hate speech and human trafficking, as well as its impact on the mental health of teenage girls.
Though the social media giant claims it has been working hard to combat hate speech, Haugen produced the firm’s own research which showed Facebook can only take action against 3% to 5% of hate on the platform and less than 1% of violence and incitement.
Haugen also testified that Facebook’s financial incentives were at odds with its users’ well-being. The longer people linger on its platform, the more money Facebook can make from advertising, she told the US Congress. As such, Facebook’s algorithms are primarily designed to promote the content that leads to the most engagement, based on ‘likes’, ‘comments’ and ‘shares’. Such content, she noted, “generates strong reactions, like anger and fear.”
An avalanche of more revealing documents is coming. By Facebook’s own admission, more revelations based on thousands of pages of leaked documents are likely over the next few weeks. John Pinette, Facebook’s vice president of communications, in a scathing attack on the media claimed, “30+ journalists are finishing up a coordinated series of articles based on thousands of pages of leaked documents.”
Haugen is set to testify before the British Parliament on Oct 25 and another whistle blower, Sophie Zhang, who testified before Parliament in London last week, is ready to testify before the US Congress.
During Haugen’s Congressional testimony, Connecticut Senator Richard Blumenthal wondered aloud whether “Big Tech is having a Big Tobacco Moment”. While other large global technology companies — e-commerce powerhouse Amazon, software behemoth Microsoft, iPhone maker Apple and search engine giant Google’s owner Alphabet — have all faced increased scrutiny over the past two years, Facebook is currently the main target of legislators and regulators.
Big Tobacco moment
In the late 1950s, powerful tobacco firms were first attacked for enticing people to become chain smokers. It took decades for meaningful reforms to regulate cigarettes. Up to 15% of all smokers develop lung cancer which is responsible for over 480,000 deaths each year in America alone. Almost as many people die of other smoking-related causes like heart disease, stroke or emphysema.
Here is what tobacco and social media have in common. Both are highly addictive, widely used and cause harm. In both cases, the firms researched their own products and then tried to cover up the findings. But here is where cigarettes and social media diverge. Though it took decades to get to meaningful regulation, there was a clear link between cigarette smoking and lung cancer.
While social media can be as addictive as tobacco, opioids or alcohol, it is difficult to pinpoint exactly how it harms. You can’t tell someone was radicalised by the social media or prove in a court that a 14-year-old girl committed suicide after being hooked on Instagram or misinformation on Covid-19 vaccines led to millions of deaths.
Even though young people are constantly checking their phones and you hear of young girls forced into eating disorders or harming themselves in other ways or Facebook algorithms amplifying hate speech, or false claims of election fraud using the data they have collected or to divide societies, such harm is difficult to prove in a court of law where powerful social media giants can field top lawyers to make their case.
In America and in other developed societies, there is also the issue of guaranteed freedom of expression. And then there is Section 230, the main Internet Communications Law that protects online platforms like Facebook and Google that publish information. Section 230 — a provision of the Communication Decency Act — states social media or search engines or Internet platforms are not responsible for all the individuals postings. A key part of Section 230 states that “no provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
So whether you post something derogatory on Facebook or make a bogus claim in a YouTube video that vaccines will just turn you into an ultra-liberal or a Chinese Communist Party sympathiser, the platform that publishes your posts cannot be held liable in a court of law. You cannot sue Facebook or Google because Section 230 says they are not a publisher like The New York Times or The Wall Street Journal or a broadcaster like CNN or Fox News even though they publish tons more content than all of the other media combined.
Why are Google and Facebook, which have sucked up 80% of all the advertising that previously went to print media, TV, radio and billboards, not considered media and are protected while The Wall Street Journal is liable if it publishes exactly what was in a Facebook post just days earlier? It is silly, but that is where the law stands today.
Facebook claims it is a mere aggregator, and not creator of content. But social media does not just post what you say. Its algorithms are amplifying what you say so that far more people — maybe a hundred times the combined total readership of US newspapers or the combined viewership of Fox News and CNN — read it or hear it.
The social media giant argues that content on social media platforms does not directly translate into real-world harm. Really? Even if one was to buy into that argument it does not give Facebook the license to use algorithms to amplify the propaganda on vaccines, or surreptitiously use data to steal elections and for Instagram to push teenagers to the brink of suicide.
Make no mistake. Facebook and its ilk can no longer hide behind Section 230 and must acknowledge that they are a media company and are liable for everything that happens on their platform or due to lies spread through the platforms. So, the parents of a 14-year-old Instagram fan girl who commits suicide should be able to sue Instagram or Facebook rather than have their case thrown out because CEO Zuckerberg is protected by Section 230.
So, what is next? Regulators like FTC and Congress will take years to come up with their remedies and solutions. After all, it took them 40 years to regulate Big Tobacco where the link to lung cancer was clear. While the world waits for legislators and regulators to deliver, Facebook will continue to pile on the profits, pivot and indeed even remake itself as an even more formidable platform.
Rebranding exercise
Now, Zuckerberg wants to rebrand the social media giant. Six years ago, search giant Google renamed its listed holding company Alphabet though it has reportedly toyed with idea of reverting to its old name since search engine still accounts for over 90% of the group’s earnings.
Still, a name change cannot whitewash the toxic waste that corporate giants offloads, otherwise oil giant Exxon would have successfully renamed itself after Exxon Valdez oil spill 32 years ago or British multinational oil and gas company BP would have changed its name after it spilled oil in Gulf of Mexico in 2010. If it quacks like a duck, it’s still a duck.
Yet, Facebook urgently needs a makeover if it is to stay relevant. It faces fierce competition from Chinese-owned short video app TikTok, which is now the biggest social media platform among the most desirable demographics — people between the ages of 13 and 25. Moreover, younger users are not posting as much content as they used to on Facebook.
In her testimony, Haugen said Facebook — which is increasingly being abandoned by the young — could see its user base in the US shrink 45% within two years. That would deal a huge blow to its advertising sales.
Even Instagram — whose growth helped off-set decline in Facebook’s core app — is now losing market share to TikTok. The core Facebook app is now seen as a playground for older people.
As TikTok rises, Instagram is fast following Facebook’s path to irrelevance. Other challenges are emerging: FinTech giant PayPal is reportedly seeking to buy social media platform Pinterest.
Little wonder, then, that Facebook wants to change the name and Zuckerberg — who once vowed not to let his own kids on Instagram — has been strategising about how to bring children to its platform. Facebook’s own documents described preteens as a “valuable but untapped audience.”
In a presentation a few years ago, Facebook’s own executives wondered if there was a way to leverage “playdates” for kids to attract more younger users. That is exactly what you would expect a platform facing an existential crisis and battling to stay relevant to do.
Assif Shameen is a technology and business writer based in North America
Photo: Bloomberg
