It's been a rough couple of weeks for Facebook (NASDAQ: FB). After revelations that its data was used against its authorization by Cambridge Analytica to target and influence voters in the 2016 election, concerns about how Facebook handles user data are rising once again. The Federal Trade Commission (FTC) said on Monday that it was investigating the misuse of personal data from Facebook users in the wake of the scandal.
Facebook CEO Mark Zuckerberg has agreed to testify before Congress, and shares of the social network have fallen as much as 19.5% in the aftermath of the news. A #DeleteFacebook movement has attracted some attention; even Tesla CEO Elon Musk deleted the Facebook pages of both Tesla and SpaceX, the other company he leads.
While talk of a backlash continues against the social media giant, a survey by Raymond James found that Facebook users aren't abandoning the platform.
Image source: Facebook.
Too big to fail
The Raymond James survey of internet users found that virtually the same percentage were using Facebook in March as they were five months earlier in October, with 73% on the site this March and 74% last October. This shows little response to Facebook's involvement in Russian hacking or the recent Cambridge Analytica scandal. Facebook had already said in its recent earnings report that daily active users declined slightly in North America, from 185 million to 184 million as the company reduced the presence of viral videos and made other adjustments to its news feed.
The survey found that both Messenger and Instagram, two other Facebook-owned properties, also saw usage remain essentially the same over the five-month period.
Separately, however, half of Facebook users said they planned to use the service less after the Cambridge Analytica scandal, with 26% saying they planned to use the service somewhat less, 19% saying they'd use it significantly less, and 8% saying they'd quit altogether.
However, Aegis Capital said after interviewing Facebook users: "The average Facebook user has been paying little attention to the data privacy concerns raised by the Cambridge Analytica crisis. Very few indicated a loss of trust in Facebook and most indicated no intention of deleting their accounts or reducing usage of the platform."
Also worth noting is that the #DeleteFacebook campaign never reached the pitch of the #DeleteUber campaign during last January's immigration ban fiasco. The #DeleteUber campaign peaked at 182,000 daily mentions, leading to 400,000 account deletions, while the #DeleteFacebook movement topped out at 126,000 daily mentions. While Uber's revenue growth slowed last year, it still hit 61% in the fourth quarter, indicating the campaign to delete the app had little long-term effect.
Will the backlash persist?
The #DeleteUber campaign, which was sparked by a misinterpreted attempt to break a strike by New York City cabbies, caught on because there had already been so much anger simmering against the ride-hailing company. Similarly, plenty of Facebook users already questioned their time on the platform before the latest scandal. Enter "Why Facebook is" into the Google search bar, and Google offers to complete it with options like "bad," "bad for society," "dangerous," "bad for relationships," and "bad for self-esteem."
Like TV or junk food, Facebook is the kind of thing that people indulge in, even though they know that it may not be "good" for them as the average daily user spends 41 minutes a day on the app. Therefore, it's easy for users to say they'll spend less time on Facebook -- but doing it is much more difficult.
Similarly, researchers have known for a long time that Americans are wary of privacy issues on social media, but continue using it anyway. They implicitly believe that the benefits of Facebook, like sharing photos and keeping up with friends and family, are greater than the costs -- such as potentially having private data exposed.
While it's easy to be angry at Facebook for its role in the Russian election hacking or allowing Cambridge Analytica to misuse its data, that ultimately effects users' cost-benefit calculus very little. Facebook is a free product with enormous utility, allowing users to connect with friends, family, and strangers in a way you couldn't before the internet. Because of that, I suspect most of its users will continue using it as they were before the scandal. Its network effects also mean there's no convenient substitute, and 2 billion people aren't going to suddenly migrate to another platform.
With Zuckerberg set to testify in front of Congress and the ongoing FTC investigation, Facebook will stay in the headlines, but the product is stronger than the critics give it credit for. Most users like Facebook, even if it's not popular to admit it.
More From The Motley Fool
- 3 Growth Stocks at Deep-Value Prices
- 5 Expected Social Security Changes in 2018
- 6 Years Later, 6 Charts That Show How Far Apple, Inc. Has Come Since Steve Jobs' Passing
- 10 Best Stocks to Buy Today
- The $16,122 Social Security Bonus You Cannot Afford to Miss
- Bitcoin's Biggest Competitor Isn't Ethereum -- It's This