The Cambridge Analytica scandal has given Facebook a black eye, but ultimately, it’s likely to do little lasting damage.
That’s the take of Daniel Ives, a financial analyst who covers the social networking giant for GBH Insights. Ives recently surveyed Facebook users from around the globe to get a sense of their sentiments about the company in the wake of the brouhaha over the leaking of millions of users’ personal information to the Trump-linked data firm.
Despite copious amounts of press coverage of the data leak, most Facebook users were unaware of it, Ives found. Even among those who were aware of the scandal, only a minority said they planned to reduce their activity on the site as a result.
“There are clear concerns post-Cambridge,” Ives said. “It’s been a jolt to the system and raised eyebrows across board.”
But, he continued, “at this point it looks very containable in terms of damage to the platform and time spent” on it.
Indeed, working through the numbers in the survey, Ives estimated that about 15% of Facebook’s worldwide users will spend less time on the site as a result of the scandal. Collectively, the number of minutes per week those concerned users spend on the site could fall 10% to 15%, he said. That would translate into about a 3% reduction in Facebook’s global ad revenues, he said.
“I would characterize that as a better-than-feared number, given this is the darkest chapter in the company’s 14-year history,” Ives said.
Most Facebook users are unaware of the Cambridge Analytica scandal
Facebook has been scrambling for much of the last two months to contend with the news that Cambridge Analytica illegitimately gleaned the personal information of tens of millions of the social network’s users via an app. Company CEO Mark Zuckerberg has faced tough questions in Congress and the European Parliament, Facebook has tightened up access to the personal data it holds, and it’s launched new tools that are supposed to give users a better control over their information on the site.
Still, despite the widespread coverage of the scandal, many people still aren’t aware of it, Ives found. Only about 37% of Facebook users in Ives’ survey said they were either extremely or very familiar with it. Some 46%, meanwhile, said they either weren’t very familiar with it, or weren’t familiar with it at all.
Those who were aware of the scandal are generally more concerned about their privacy on Facebook as a result. Some 63% of those aware of the scandal raised privacy concerns related to it, in Ives survey. Among those who weren’t aware of the scandal, 44% had privacy worries.
But even among those who were aware of the scandal, less than half said they might take steps to reduce their interaction with Facebook as a result. About 46% of aware users said they were less likely to share information about themselves on the site. About 42% of such users said they would be less likely to share information about themselves with Facebook-connected third-party apps. And only about 32% said they would be less likely to use Facebook as a result of privacy concerns.
Among those who weren’t previously aware of the scandal, the portion that said they would limit their use of the site or what they shared with it was even less.
Other reports have indicated the scandal hasn’t affected Facebook’s business
The survey results jibe with the company’s first quarter earnings report. In spite of the furor over Cambridge Analytica, Facebook posted better-than-expected results and its number of daily active users increased in the period.
Meanwhile, a report from Baird last month similarly indicated that Facebook’s ad business was holding up following the scandal.
That’s not to say that Facebook is out of the woods, Ives said. The company has been hit with a string of bad publicity of late, including the alleged Russian meddling in the 2016 election and its handling of hate speech and other issues. It also faces a significant challenge in contending with the Europe’s new General Data Protection Regulation, a new wide-ranging privacy law that could hamper its advertising efforts there.
“There is a bright spotlight on this company,” Ives said. “That’s why any other false moves could be more onerous.”
But for now, the Cambridge Analytica scandal is looking like little more than a flesh wound.
“Ultimately today, the damage is limited and containable,” he said.
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