It?s been a rocky year for Facebook. The social media platform has faced internal and external criticism for its handling of hate speech and misinformation and has been targeted by Capitol Hill for being a big tech monopoly. Yet, despite these scandals, Facebook shares have increased by 30% for the year as of October.
Let?s take a closer look at the biggest blows to Facebook in 2020 ? and how it managed to get through them relatively unscathed. The company sure can survive a lot.
Last updated: Nov. 3, 2020
June: Facebook Employees Stage a Virtual Walkout
In early June, some Facebook employees staged a virtual walkout in response to CEO Mark Zuckerberg?s decision to not take action on a series of controversial posts from President Donald Trump, CNN reported. The posts included misinformation about mail-in ballots and a post in response to racial justice protests that stated, ?when the looting starts, the shooting starts? ? which many interpreted as glorifying violence.
Stocks dipped in the days surrounding the walkouts, but at the time, Facebook?s stock was still up 11% for the year and 36% over the previous 12 months, MarketWatch reported.
June: Major Advertisers Boycott Facebook
It wasn?t just employees who decided to voice their concerns about Facebook?s lack of action. Numerous major advertisers ? including Verizon, Unilever, Coca-Cola, Starbucks and Honda ? came out in support of the ?#StopHateForProfit? campaign, pausing their advertising spending on Facebook to encourage the company to make more of an effort to combat hate speech and misinformation.
Initially, Facebook stock did drop ? it was down 8% even before some of the bigger names like Verizon announced they were joining the advertising boycott, CNBC reported. But the dip was short-lived ? by the beginning of August, Facebook?s stock had risen to record highs despite the fact that the boycott was still ongoing, MarketWatch reported.
?We believe that [the boycott] is a short-term issue as Facebook has a strong track record in resolving advertiser concerns over the past two years,? Mizuho analysts wrote at the time, according to MarketWatch.
July: Audit Concludes That Facebook Has Failed the Civil Rights Community
After a two-year analysis of Facebook?s decisions, an audit put together by a team of civil rights attorneys concluded that the social networking site had not done enough to filter hateful content and misinformation, CNN reported. Decisions that Facebook had made ?represent significant setbacks for civil rights,? the audit found. The report specifically pointed out Facebook?s inaction on the aforementioned posts from Trump. The auditors concluded that Facebook?s decision not to remove these posts was ?deeply troubling.?
Despite the audit results, company shares rose slightly the morning it was released, CNBC reported.
July: Facebook Agrees To Pay Illinois Users $650 Million in Facial Recognition Settlement
The state of Illinois sued Facebook in 2015 for the use of facial recognition software for its photo-tagging feature. Illinois has a law against businesses collecting biometric data ? which includes facial recognition ? without first obtaining consent, and concluded that Facebook was in violation of this law.
The years-long class-action lawsuit was finally settled in July, with Facebook agreeing to pay $650 million, Recode reported. According to court documents, Illinois users are eligible to receive between $200 and $400 each. Although this may seem like a big blow to Facebook, it was hardly a dent in the company?s finances.
Recode put it into perspective this way: ?One possible bright spot in all of this for Facebook, actually, is that $650 million settlement. While it?s obviously a lot of money, it?s far less than the $47 billion it could have lost if the case went to trial and, if accepted by the judge this time, means the end of a costly lawsuit. Facebook?s most recent quarterly earnings report showed revenue of nearly $18 billion, almost all of it from advertising. A $650 million loss will barely register.?
October: Facebook Faces Scrutiny From Capitol Hill
After a 16-month investigation into the largest U.S. tech companies, Democratic congressional staffers released a 449-page report in October that concluded that Facebook ? along with Amazon, Apple and Google ? has monopolistic powers that need to be checked, CNBC reported. These checks may involve breaking the company up, blocking future acquisitions or forcing Facebook to open its platforms.
Wall Street seems to have shrugged off the damning report ? Facebook stocks slid less than a dollar after the report was released and posted a 2.19% gain the following day, Investor Place reported.
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