Facebook is nearing a reputational point of no return | The Economist - 2 views
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The next day a whistleblower, Frances Haugen, told Congress of all manner of wickedness at the firm, from promoting eating disorders to endangering democracy.
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investors have kept buying the stock, regardless of the bad headlines. Yet the company should take no comfort from this. The blind fury unleashed shows that its reputational problems have got out of hand
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Reports highlighted internal research showing that Instagram, Facebook’s photo-sharing app, makes one in five American teenagers feel worse about themselves.
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They paid less attention to the finding that Instagram makes twice as many feel better about themselves.
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She revealed internal projections that a drop in teenagers’ engagement could lead to an overall decline in American users of 45% within the next two years. Investors have long faced a lack of open disclosure.
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The question of how to regulate viral content for children goes beyond Facebook, as any parent who has left their child with YouTube knows. Likewise, dilemmas over how the firm amplifies attention and how to draw the line between upholding free speech and minimising harm.
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Facebook repeated its plea that Congress should weigh in on matters such as minimum ages, rather than leaving it to firms.
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Facebook’s critics are right that it should be more open. But the firm has half a point when it says that the hysterical reaction to unsurprising findings will lead companies to conclude that it is safer not to do such research at all.
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The most damaging claim this week gained the least attention. Ms Haugen alleges that Facebook has concealed a decline in its young American users.
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Misleading advertisers would undermine the source of nearly all the firm’s sales, and potentially break the law.
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Although Facebook’s share price has lagged behind some tech giants, it has risen by almost 30% in the past 12 months. Politicians threaten to break the company up, but the antitrust case is flawed.
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The Justice Department’s claim that Facebook is a monopoly rests on defining its market so as to exclude most social networks.
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Facebook is nearing a reputational point of no return. Even when it set out plausible responses to Ms Haugen, people no longer wanted to hear.
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The firm risks joining the ranks of corporate untouchables like big tobacco. If that idea takes hold, Facebook risks losing its young, liberal staff.
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Even if its ageing customers stick with the social network, Facebook has bigger ambitions that could be foiled if public opinion continues to curdle.