To counter the “Facebook files”, Mark Zuckerberg goes fishing for young people

Facebook boss Mark Zuckerberg spoke to investors for the first time on Monday since the start of the “Facebook files”. The entrepreneur sought to minimize the impact of this scandal with multiple revelations by ensuring that Facebook would solve its problems by attracting more young people. A difficult strategy to understand.

Salvation will come from the young or not. Mark Zuckerberg, the founding CEO of Facebook, on Monday, October 25, stressed the importance of bringing and keeping the under-25s in the fold of Facebook, Instagram, and WhatsApp, during presentation of third quarter financial results, Monday October 25.

A much awaited speech. Mark Zuckerberg had not yet had the opportunity to explain himself to investors since the start of the “Facebook files”, This continuous flow of revelations for nearly a month on the dysfunctions of the social network.

Lord of a besieged fortress

But the content of internal Facebook documents transmitted to multiple media by whistleblower Frances Haugen has only been scratched by the CEO of the Silicon Valley giant. He blamed the revelations for a “coordinated effort to select certain leaked documents in order to misrepresent the group.”

It is therefore as lord of a besieged fortress that Mark Zuckerberg appeared before those who matter most to the group’s good financial health: the investors. In front of them, he wanted to be reassuring. The scandals on Facebook used as a platform to spread hatred all over the world, on Instagram which can be dangerous for the mental health of adolescents or on the almighty algorithm which is more or less out of control of its creators inside Facebook, would not impact the profits of the empire of social networks.

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After all, this isn’t the first time Facebook has faced headwinds in the media. The Cambridge Analytica scandal – involving a massive data leak – and the one about the Russian propaganda campaign before the 2016 US presidential election had not shaken the confidence of advertisers and financial markets, recalls the American channel CNN.

This time, you might think that the same scenario is at work: turnover is up 35% over one year, profits by 17%, and Facebook, Instagram and WhatsApp even have 12% of users. in addition.

But that’s only part of the story. The other is darker: the social network recorded “an increase in its turnover less important than expected by investors, and the number of monthly active users is also lower than expectations”, underlines Alexandre Baradez, head of market analyzes for the financial consulting firm IG France, contacted by France 24.

Apple and young people in the sights

Financial disappointments which would have nothing to do with a possible effect “Facebook files” wants to believe Mark Zuckerberg. For him, the only clouds on the horizon are called Apple and TikTok. The first because of its new data protection policy on the iPhone which makes targeted advertising – Facebook’s core business – much more difficult. The second because it is more popular with young people.

There is little that Mark Zuckerberg can do to stop Apple, which is the only one with a say in the rules of the iPhone game. On the other hand, he can try to challenge TikTok for the crown of king of social networks for young people.

Internal Facebook documents provided by Frances Haugen indicate that the American group has long been aware of no longer being the idol of young people. The number of teens who log on to the venerable platform born in 2003 is down 13% since 2019 and is expected to drop 45% in the next two years, underlines the site The Verge, who was able to access, thanks to “Facebook files”, the group’s internal research on this topic.

The reason for this disenchantment is that young people find Facebook “boring” and populated by “parents” and other adults. Hence the announcements of Mark Zuckerberg, who unveiled an envelope of nearly $ 10 billion to develop Facebook’s presence in virtual reality, augmented reality and the creation of a metaverse (i.e. persistent virtual worlds). He also announced that he wanted to rebuild Facebook from top to bottom to be more suited to the expectations of young adults.

There would be something to give Facebook a boost. Virtual reality and the metaverse are not just a smokescreen in an attempt to divert attention from repeated scandals, it is also “a way for the CEO of the group to show that he can always innovate and renew his offer in the face of the challenge of the aging of its audience ”, considers Alexandre Baradez.

Proof of the limit of the king algorithm

Mark Zuckerberg thus tries to convince investors that the few poor performances come simply from the fact that the group “is in a phase of transition to reinvent itself and that it takes time”, continues the analyst of IG France.

But brushing aside the impact of “Facebook files” with the back of the hand constitutes an error of assessment, believes Alexandre Baradez. Proof by action: since mid-September – period in which the revelations began – the title has lost more than 8% on the stock market. “In the basket of Gafam [Google, Apple, Facebook, Amazon, Microsoft], it is the value that has lost the most, which suggests that there is indeed a scandalous effect ”, analyzes this specialist in financial markets.

For him, everything is in the timing of these revelations. They come when “investors already have doubts about Facebook’s ability to retain its most lucrative audience: young people,” notes Alexandre Baradez. The “Facebook files”, by revealing the dark side of the internal kitchen of the social network and all the dysfunctions linked to the cult of the algorithm, arrive like the straw that can break the camel’s back. These revelations insinuate an additional doubt in the minds of stock marketers: “Is Mark Zuckerberg capable of improving the brand image and the functioning of his group?”, Summarizes the analyst.

The Facebook CEO’s desire to minimize the impact of this new scandal would only make the situation worse. “There is a big gap between Facebook’s reaction and what investors perceive, and the group will have to correct this gap to reassure,” says Alexandre Baradez.

For now, the only initiative taken by Facebook is to throw a bone to eat at shareholders. The social network announced a gigantic plan of 50 billion dollars of share buybacks for 2021. “It is a way of encouraging investors to keep their shares because they will automatically increase in value. [puisqu’il y en aura moins en circulation, NDLR]”, Explains Alexandre Baradez. But for him, “this type of initiative only lasts a long time, and financial gifts cannot fill all the holes in the Facebook building”.

He judges that one of the priorities for Mark Zuckerberg would be to correct the image of a social network subjected to the “good pleasure of cold algorithms”. This is not only to put a little human warmth back into the realm of Facebook, but also because all the revelations of the “Facebook files” show that algorithms are not omniscient.