Ruben Rens from Ashgrove Marketing reflects on a catastrophic 12 months for Facebook, which saw the business transformed from victor to villain, and left digital marketers with much to think about.
While we greet the New Year with a traditional sense of optimism, it’s clear 2018 was dominated by one crisis after another for the digital industry.
Looking back at some key events, we are almost bewildered by the spectacular fall from grace for Facebook. The monetary loss alone was mind-boggling but even more important was the growing realisation of how little we can all trust Facebook, especially considering how much time we spend on our screens. This has very real implications for the entire digital industry.
It was also the year that online hate and misinformation became an unavoidable reality and Google, Microsoft and Amazon faced revolts from their own employees over ethical lapses. It was the year Apple became the first trillion-dollar company and then lost a quarter of their market capitalisation due to slowing sales of its new iPhones, especially in key markets like China.
But that still pales against the world’s biggest single-day drop in the share price for Facebook on 25th July 2018, instantly wiping US$120 billion off the company’s market capitalisation.
Facebook’s corporate culture is epitomised by its early motto “Move fast and break things” and one former Facebook executive described 2018 as the year when we all started learning the extent of the company’s “fairly reckless growth”.
So let’s look back at how things unfolded:
Mark Zuckerberg vowed to spend 2018 fixing Facebook in a personal post on 11th January: “We’ve gotten feedback from our community that public content – posts from businesses, brands and media – is crowding out the personal moments that lead us to connect more with each other,” Mr Zuckerberg explained.
In a follow-up press release, Adam Mosseri, Head of News Feed, explained that Facebook’s algorithm would “prioritize posts from friends and family over public content.”
This was the month of two particularly painful events for SnapChat: a very unpopular software update and Kylie Jenner’s announcement that she stopped using the app. The latter was initially being blamed for wiping US$1.3 billion off Snapchat’s stock market value and a spike in mentions about people also quitting the app.
According to data from SimilarWeb, Kylie Jenner’s tweet had minimal effect. A day before Jenner posted her tweet on 22th February, Wall Street investors had downgraded Snapchat’s stocks from “neutral” to “sell,” citing changes in the app’s design as the reason.
As it turns out, Jenner returned to Snapchat posting pictures and video of her cosmetics line as well as her new-born’s toes.
On 16th March, Facebook banned Cambridge Analytica ahead of a report from the New York Times and Observer newspapers about a massive data leak to the analytics firm. A few days later, on 21st March, Mr Zuckerberg made his first public comments about the Cambridge Analytica leak.
On 4 April, Facebook admitted up to 87 million users may have had their data accessed by Cambridge Analytica and in the ensuing days this wiped US$39 billion off its market capitalisation.
On 10th and 11th of April, Mr Zuckerberg appeared before the US Congress for two days of grilling, though many of the panel’s politicians were criticised for the lack of understanding of the social network.
On 30th April, the billionaire chief executive of WhatsApp, Jan Koum, announced his plans to leave the company after clashing with its parent, Facebook, over the company’s strategy and its attempts to use its personal data and weaken its encryption. Considering that his co-founder, Brian Acton, left WhatsApp a few months earlier, this sent shockwaves through the industry.
Facebook suspended 200 apps for their data-sharing practices and, on 22nd May, Mr Zuckerberg was questioned by EU lawmakers, although he refused to make the trip in person.
Anybody in the digital industry will also remember the end of May as the time when the EU’s General Data Protection Regulation came into effect, aimed at protecting consumers against unscrupulous companies.
As one lawyer eloquently put it at the time: “The GDPR is an attempt to strengthen, harmonize, and modernize EU data protection law and enhance individual rights and freedoms, consistent with the European understanding of privacy as a fundamental human right…”
GDPR expanded the scope of personal information to include things that digital marketers typically exploit such as IP addresses, behavioural data, location data, biometric data, financial information and a host of other elements. Viewed as a very welcome set of rules, most big digital players soon started announcing measures to implement them globally.
On 3rd June, a media report surfaced that Facebook had been sharing users’ data about their friends with device makers, including China’s Huawei.
On 20th June, Instagram (owned by Facebook) launched IGTV, a standalone app for longer video. Facebook Watch, the video platform that features made-for-social TV shows and longer content, was also rolled out globally.
The UK data regulator became the first public body to fine Facebook for serious breaches, issuing the maximum penalty of £500,000.
On 18th July, Mr Zuckerberg said in an interview that Holocaust deniers are not “intentionally getting it wrong” as he defended Facebook’s decision not to take down contentious material.
On 25th July, Facebook warned of slowing revenue growth, squeezed margins and stagnating user numbers in developed markets in its second-quarter results, sending shares down sharply. And when I say sharply, I mean the company shed US$120 billion from its market capitalisation on this day – the biggest single-day drop in history!
On 27th July, Facebook suspended InfoWars, a website widely criticised for promoting conspiracy theories and faced fresh accusations of being anti-conservative.
On 21st August, Facebook removed more than 650 accounts from Russia and Iran that were spreading disinformation.
Facebook’s Chief Security Officer, Alex Stamos, announced he would be leaving the company, following the suspension of Cambridge Analytica in March.
According to reports, Mr Stamos said he had been clashing with executives since 2016 “over how to handle Russian interference on Facebook and how best to reorganize Facebook’s security team before the midterm elections in the US.” He had been overseeing the transfer of his security team to Facebook’s product and infrastructure divisions. His group, which once had 120 people, was left with three by the end of August!
On 5th September, Facebook Chief Operating Officer Sheryl Sandberg faced questions from US Congress members, alongside Twitter’s Jack Dorsey.
On 17th September, Instagram introduced Shoppable media. This was a giant leap forward for social commerce, with Instagram reporting that 90 million accounts were already using tags in shopping posts on Instagram every month.
The move essentially created a smoother and more direct shopping experience within the app, allowing business to use Shoppable posts and Shoppable stories.
Less than a week later, Instagram co-founders Kevin Systrom and Mike Krieger announced their resignation. Facebook acquired Instagram for US$1 billion in 2012 and it became one of its biggest success stories as it topped 1 billion users and launched new formats, grabbing momentum from competitors such as Snapchat.
On 28th September, Facebook announced a major cyber-attack which it estimated affected about 50 million users.
On the other side of the globe, WeChat, Sina Weibo and Alibaba’s Youku had all been struggling to gain ground outside of China. But at the end of September, the social video app TikTok announced it had amassed more than half a billion users with around 40 per cent of them outside China, across 150 countries and regions.
CNBC reported that TikTok was the world’s most downloaded iOS app during the first half of 2018, beating app downloads of Facebook, YouTube, and Instagram.
Adding fuel to the fire, TikTok’s parent company ByteDance acquired the popular teen video app Musical.ly and migrated their 200 million users to TikTok. The mobile app analytics firm Sensor Tower found that, in the third quarter of 2018, TikTok increased their downloads fivefold year-on-year and was now ranking among the top three social video apps in the world, alongside Instagram and Vigo (also owned by ByteDance).
On 22nd October, Brendan Iribe, co-founder at Oculus, the virtual reality company bought by Facebook in 2014, announced that he was stepping down.
A few days later, Facebook’s third-quarter earnings confirmed its prediction of slowing revenue and user growth in the US and Europe.
The New York Times reported Facebook hired Definers, a Republican-leaning PR firm, to smear opponents including George Soros, the billionaire investor and philanthropist. Whilst first denying any involvement, by the end of the month Facebook admitted that Sheryl Sandberg had questioned whether Mr Soros was shorting the company’s stock.
In fact, many influential market commentators are predicting that Ms Sandberg will depart in 2019. The argument is that, having already spent a decade at Facebook, she is too talented to stick around and continue to get blamed for Mr Zuckerberg’s ongoing bungles. She could have the chief executive job at another major company that might help rebuild her image. For Facebook, the upheaval might give it the opportunity to reboot its surveillance business model into other services and maybe even subscriptions.
And then, of course, on 22nd November, there was Black Friday – the American retail phenomenon being eagerly adopted by retailers around the world.
Adobe analysts claimed that just over a third of online Black Friday sales were completed on smartphones, up from 29.1% just one year earlier. Looking into the future, Allied Market Research predicts that the global mobile-payments market will grow by more than 33% through the year 2022 to reach US$3,388 billion.
Meanwhile, on the subject of mobile technology, Samsung revealed a folding smartphone at the end of November. Apparently the company plans to sell the phone, which unfolds like a book to reveal a 7.3-inch screen inside, later in 2019. Samsung will have to prove its Infinity Flex Display is more than a gimmick but the idea is that it will give us access to both a really big phone for working and watching video, and a small pocket-size phone at the same time.
But don’t get too excited. Samsung, like Apple, is looking for reasons to price phones more like laptops and certainly in the initial stages these foldable phones will be eye-wateringly expensive.
On 14th December, Facebook announced another vulnerability that may have exposed millions of users’ photos and, just to make sure the year ended on a really low note for Facebook, Washington DC attorney-general Karl Racine announced that he was suing Facebook over the Cambridge Analytica data leak.
In a 28th December post, Mr Zuckerberg admitted he has yet to “fix” Facebook.
I’d say he has a lot of fixing to do.