Facebook’s biggest problem isn’t ethics, hate or fake news. It’s Facebook.

facebook's biggest problem

By Mark Schaefer

A recent article in The Wall Street Journal caught my eye: “Mark Zuckerberg Resolves to ‘Fix’ Facebook in 2018”

The article explains that the Facebook founder focuses on one major priority each year and Zuckerberg stated his current challenge in this way:

“The world feels anxious and divided, and Facebook has a lot of work to do—whether it’s protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent. My personal challenge for 2018 is to focus on fixing these important issues.”

By any measure, Facebook is under attack. Facebook has been lambasted for allowing violent live videos, fabricated news articles, and Russia-backed advertising that disrupted the 2016 U.S. presidential campaign.

More recently, former executives and employees admitted they designed a platform meant to manipulate users into psychological dependence on Facebook.

The beloved social media platform built on cat memes and baby pictures has become a dark metropolis run by technologists determined to manipulate what we know and how we think.

Perhaps Facebook’s biggest mistake has been that it has never accepted the awesome responsibility that comes with being the biggest media channel in history. Is Mark Zuckerberg finally focusing on the right problem? Is he about to get ahead of the ethics curve?

I’m concluding that he cannot and will not fix Facebook’s core issues unless there is a threat of imminent and unavoidable government intervention. Allow me to explain.

It’s all about dwell time

The economic viability of every social platform is built on a simple formula: Attract users and hold their attention as long as possible (“dwell time”) so personal information can be collected that will fuel targeted ads.

We can view every Facebook problem through this lens. If a policy reduces dwell time, it will keep the company from attaining its never-ending goal of increasing quarterly profits.

Nearly every Facebook problem can somehow be connected to this simple economic truth. Dwell time increases through provocative posts and ads over dull ones. Dwell time will be enhanced through cunning psychological manipulators who make us addicted, over authentic and well-researched news stories. Controversy, sex, and violence drives dwell time more than truth and principled debate.

No tweak to algorithms, processes or policies can fix a problem that is the very foundation of Facebook’s economic success and rising stock price.

The self-service conundrum

The other economic issue at the heart of the company’s problem is the elegance of the Facebook self-service ad platform.

When the controversy emerged about Russia manipulating public opinion through ads, I wasn’t surprised at all. I mean why wouldn’t somebody try this? On the other side, 60 Minutes reported how the Trump campaign used A/B testing to micro-manage ads in much the same way.

Anybody can advertise anything on Facebook as long as you have a valid credit card. Accessibility and ease of use is a pillar that has made Facebook great.

Zuckerberg acknowledged that the majority of advertising purchased on Facebook is bought “without the advertiser ever speaking to anyone at Facebook.” His argument for this policy: “We don’t check what people say before they say it, and frankly, I don’t think our society should want us to.”

We don’t want Facebook to edit everything typed by our friends and family. But isn’t it reasonable for Facebook to review all of the content it gets paid (tens of billions of dollars) to publish and promote?

Facebook has demonstrated that it has the technology to do this. But it won’t, because it jeopardizes its economic model, which jeopardizes the quarterly number, which jeopardizes the stock price and individual wealth.

Remember, Facebook is running out of ad inventory. There is no way Facebook is going to take any meaningful action that would undermine ad sales in the forseeable future.

Facebook’s biggest problem

So here’s the situation.

  • The economic foundations of Facebook are dependent on dwell time driven (at least in part) by provocative and controversial content.
  • The company’s ad revenues are under pressure, meaning they can’t make any meaningful move that undermines dwell time or self-service ad sales.
  • Historically, Facebook has not accepted its ethical responsibilities. The company has repeatedly demonstrated that it only responds to a problem after it has been caught.

In essence, Facebook’s biggest problem is … Facebook.

Can Mark Zuckerberg tackle these issues in the next year? No. In fact, the problems might become even worse because to truly solve the overwhelming ethical issues, the company would have to uproot its entire advertising model. Becoming more ethical hurts their bottom line.

Zuckerberg will not fix Facebook’s problems because he has no immediate economic incentive to do so.

Unless …

The only thing that matters

The only thing that will force the company to change is an extreme threat to its reputation that could impact its stock price.

If Zuckerberg believes that public opinion against Facebook is so bad that the government would consider regulation, he will take action to improve the company’s reputation and hold that off.

The truth is, tech firms have enjoyed a hands-off approach from Washington but this is changing.

  • Facebook's biggest problemMany major tech companies are increasing their Washington presence through lobbying efforts (chart via WSJ).
  • Some lawmakers say big internet firms could lose key aspects of the special legal protections they enjoy under U.S. law. There is even talk of possible antitrust scrutiny, following the European Commission decision to issue a $2.91 billion fine against Google for abusing its power as the dominant search engine.
  • Tech firms have faced intense fights over issues such as user privacy, net neutrality, antitrust, intellectual property and their legal immunity for unlawful third-party posts such as those linked to sex trafficking.
  • In 2017, the House and Senate passed GOP-backed legislation that rolled back Obama-era rules that had benefited internet companies by tightening user-privacy rules for their nascent rivals in the wireless and cable sectors.

These data points indicate a growing alarm over the power of monopolistic and unresponsive tech firms. Is internet legislation and government oversight on the horizon?

I think this development could tip the economics of Facebook and drive a proactive response. If the cost of defending his firm from potentially harmful legislation is greater than the impact on ad revenues, Mark Zuckerberg may actually do the right thing and get ahead of the ethics curve.

What is your view? Will Facebook make the deep internal changes required to save its reputation or will it be legislated into conformance? Will Facebook’s biggest problem just get worse because addressing ethical concerns will hurt the bottom line?

Mark Schaefer is the chief blogger for this site, executive director of Schaefer Marketing Solutions, and the author of several best-selling digital marketing books. He is an acclaimed keynote speaker, college educator, and business consultant.  The Marketing Companion podcast is among the top business podcasts in the world.  Contact Mark to have him speak to your company event or conference soon. I

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