Could a Small App Developer Bring Down Facebook?
Out of the UK this weekend came news that app developer Six4Three, a company based out the U.S., was forced to hand over sensitive court documents related to the company’s ongoing lawsuit against Facebook (NASDAQ: FB) to the British Parliament under penalty of heavy fines and prison time.
These documents—which Facebook is demanding that Parliament return—contain new revelations about the years preceding Cambridge Analytica, as well as how Facebook essentially loaned out user data to reap huge windfalls.
Amusingly, it’s this small developer that had literally $400 in sales for its “Pikinis” app that may shave millions more off Facebook’s share price. Even if Facebook’s tactics are nothing truly revelatory, it will still throw salt on a still-open wound and force Mark Zuckerberg to continue plodding on in damage control mode for the foreseeable future.
The Role of Cambridge Analytica in All This…and Why It Matters to User Growth
Cambridge Analytica feels like an eternity ago, but Facebook is still struggling to regain its footing after that massive debacle. It led to Facebook’s first death cross ever and may have been a leading factor in decimated user growth in Q2.
Cambridge Analytica, a datamining company, was allowed by Facebook to create a “quiz” which not only mined the data of the people who took it, but all their friends as well. This amounted to over 80 million users having their data mined and processed into psychographic profiles which would in turn allow the company to create ads based on their personalities.
Because of Cambridge Analytica’s connection with Donald Trump (Robert Mercer, an original investor of Cambridge Analytica, and Steven Bannon who was the company’s founding Vice President) it sent off a shockwave of horror among democrats and the media, forcing Facebook into a merciless situation where neither side of the political spectrum trusted its motivations.
Meanwhile, many in the UK believe that the only reason Brexit happened was because of Cambridge Analytica’s influence and election meddling. Well, that, and the Russians, of course.
Facebook Must Regain Trust Again If It Hopes to Shore Up Flagging User Data
Facebook is unlikely to regain the trust of its users anytime soon, but that does not mean the company can’t come back from its trust deficit with enough time and good will.
Investors won’t be happy once they find out how the “sausage is made,” but in many ways, whatever comes out of these revelations aren’t likely to be entirely new. We’ve known for a long time that Facebook has allowed advertising companies plenty of access to user profiles in order to create highly targeted ads, and some users in the past have noted that they don’t see that as a bad thing.
In the end, it’s unlikely that documents revealed during the former bikini-pic-finder app’s lawsuit will be the death of Facebook. Similar scandals have only been speed bumps for the company, who’s real problem is sluggish user growth. If trust can be rebuilt (and growth re-established), then it’s almost certain that Facebook will hit a new high in the future.
How long it takes them to reach it, however is up to Mark Zuckerberg and the changes he makes to ensure customers feel safe on his platform.