The result of Brexit and USA election, has put the weaponization of our personal data on social media platforms in the forefront.
We always know that marketing, when done successfully, have a way of altering our perception on certain products and services.
However, with greater amount of data, that was previously difficult to collect in traditional media, marketing can be carried out in a more effective manner.
The problem is that its not use so much to make us poorer immediately, but used to advance organization’s power and purpose.
In particular, the whistle blowing in Cambridge Analytica on their methods used, which may ultimately affect the elections, brought our relationship with Facebook out into discussion recently.
Here are some of my thoughts and how this relates to me as a financial blogger.
1. Facebook has a problem if the user base decides they do not want to be on it. What is great about Facebook is that there are a lot of reasons for you to be on it. It used to be very entertaining games.
Then it is the friends that you never meet for a long time that you are able to reconnect.
Lately, I feel is the social groups that are your interest areas. You can learn a lot of stuff through those interactions.
The tipping point will be when we realize they are the big monster and we can live without them.
When the users base fall, number of signals fall. The analytics for Facebook becomes weaker, they become less lucrative as a platform.
Since a lot of their current value is based on the forecast future stream of cash flows that you are paying today, that may collapse as well since the cash flow in the future is smaller.
2. The Honeymoon for Tech is Over. This do not mean that they will collapse. Rather, some of the things that used to be easy for them will start biting.
This is the same as what Microsoft used to face in the EU. Over in Europe, Google recently were the first to face greater regulation.
Prior to this, technology are seen as disrupting inefficient government, current matured business and it is a good thing.
The tide has swung in perception that they are doing a lot of fishy hacking stuff that may cause us more harm then good. It is not that they started doing this recently, it is just that now, it seems not very OK.
Facebook could have earned less and rein in this prior to this. However, they dismissed this as not their problem.
Due to mishandling it, it became a big storm. Could it be that, without all these unintended usage, their earnings would be substantially less than what we think?
3. Facebook needs to get Regulated to Save itself. Regulation seems like a bad outcome. However, it seems like this is the best outcome for them.
People may be shook and trust Facebook less. There might be a tipping point.
If Facebook gets regulated, it comes at a cost, but at least people get the idea that some things are done to fix the problem and still let them use this awesome product.
4. The Impact of these Privacy Concerns are Still Educated by the Media. For many of us, we do not have a good idea the impact of letting other people harvest our privacy data.
For a long time it has been a “fair” exchange. We let Facebook in on what we like, who we are related to, in return for using this platform for free.
As we think our privacy do not matter so much to us, there is no issue there.
The Cambridge Analytica revelation make us more aware of how the data could be harvested and used against us.
However, majority of the people will still rely on opinions to tell us whether is this really that bad of a thing:
- Prof Scott Galloway of NYU was on this topic even before all these revelation. He also called this a text book case of how not to handle a crisis.
- #deletefacebook hashtag, which is movement on social media to tell people that you are disconnecting from Facebook is similar to that of the #metoo movement. However, if its done by well known folks in the tech space I wonder if its for publicity purpose. Elon Musk deletes his own, Tesla and SpaceX page. Are you telling me that a person so well informed in the tech space, who needs some form of marketing for his projects do not know these things are happening? And he is only making this move now? However, they are the though leaders and if they do something, people get the idea that this is serious enough for them to put things to action (even though sometimes they still don’t fully understand it)
- Whatsapp found Brian Action, who Facebook made rich when they bought Whatsapp, now tells us to delete our Facebook, and use other platforms. He invested US$50 mil in Signal, a chat application known for its security aspect. He might have inner knowledge on things, but he also have vested interest for Whatsapp and Facebook not to do well (now that he has the money)
- A lot of the major platforms such as Techcrunch and Verge are not mincing their words when it comes to covering this. And it is shaping the views of the people
5. Facebook usership was declining even before the revaluation. Even before the revaluation, Nielsen did a survey and found that the average daily readership has gone down.
In the latest Q4 quarterly report, Mark Zuckerberg said that they tweaked their algorithm so as to limit the amount of viral videos. Thus that is why their user ship has one of the lowest growth.
We know that the demographics of Facebook tend to be the older folks. The younger folks prefer to be on another Facebook owned platform, Instagram.
I don’t believe that Facebook will go the way of MySpace or Friendster, but the speed at which MySpace and Friendster went away tells us that if they are not careful, something similar could happen as well.
6. Switching Cost for some Financial Blogging Businesses on Facebook is not Cheap. Take the case of Investment Moats. I get a part of my traffic from both my personal domain and Investment Moats. The amount is certainly more than other social media platform.
However, I had it easy since I am one of the earlier once on the platform.
The rest of the financial bloggers had it more difficult because to make their sites more prominent they have to put out their articles on Seedly, BIGS World, SGX Technical Analysis and Fundamental Analysis.
This shows how much these platforms can help them grow their business. If they are able to capture the readers attention and convert to organic traffic in the form of email lists and direct readership, this is good.
I find it hard to disconnect my content from Facebook since if people over there are getting to know your content, and being educated about financial matters, why do I want to deliberately shut it out?
Facebook Group is really good in my opinion. I have been on forums since early days and for some reason how Facebook Groups work is just right.
People see tremendous value in Seedly which is why the participation rate is high.
For this niche space… switching away might not be easy since they depend on eyeballs. I don’t see anyone shutting down their business in this space.
This is especially so when some of my peers this year have heavily invested in video content.
Again, things will turn when the user base tips.
Its good to have alternate sources of viewership, or that your platform is independent. The saving grace is that the survival of Kyith do not depend on Investment Moats.
The survival of Investment Moats do not depend on Facebook. The income stream does depend on Facebook.
7. Insider Selling and potential Allegations. This period is traditionally tax season, so for employees to be selling their shares might not be something new. Facebook has one of the highest insider selling out there. One of the primary reason is that the CEP Mark Zuckerberg is selling his shares to fund philanthropic efforts since his declaration in September last year.
Excluding him, the insider selling this year was from Chief Operating Officer Sheryl Sandberg, Chief Financial Officer David Wehner, director Kenneth Chenault, Chief Technology Officer Michael Schroepfer, General Counsel Colin Stretch, Chief Product Officer Christopher Cox, and director Jan Koum.
Particularly, Sheryl Sandberg, was brought in to provide operation experience, or a sort of stabilization role that a CEO with less operation experience couldn’t.
The communication with the public since the episode have not been coherent, which makes us wonder what is it that they might not be telling us.
A possible shift in confidence would be when the words fraud and corruption are thrown into the discussion when more investigation takes place. Then there we will see first hand how the management handles this.
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Tuesday 27th of March 2018
I find that for long time users. It is too late. they have enough data about us.
Tuesday 27th of March 2018
Interesting analysis. Would you consider buying at this price (160)?