Facebook Begins New Year in Fixer-Upper Mode
Facebook Begins New Year in Fixer-Upper Mode
One year ago Friday, Mark Zuckerbergset his sights on “fixing”
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That remains very much a work in progress.
At the top of the 2019 to-do list: find a balance between the social-media giant’s deeply held drive for growth and its heightened commitment to improving safety and security across its many platforms.
Those tensions were evident—and unresolved—inside Facebook throughout much of last year, say current and former employees. In one instance, an effort to decrease political polarization on the platform raised concerns from Mr. Zuckerberg and other executives about whether it would work and if it could reduce user engagement, which was starting to flag on Facebook’s namesake service, people familiar with the discussions say. The specific project was shelved in early September, although Facebook says its antipolarization efforts continue.
A separate effort to minimize misinformation in the Facebook news feed by promoting more “quality” news also stalled after several executives, including global policy chief Joel Kaplan, raised concerns about whether a change would disproportionately hurt conservative and right-wing sites, the people say.
Those sorts of issues, which were once peripheral as Facebook’s growth powered ahead, are now central to the company’s business prospects.
User growth has been flagging in Facebook’s key markets. As with many of its tech rivals, Facebook shares have fallen sharply in recent months, down 40% from a record high in July. For the Menlo Park, Calif., company, that has contributed to a sharp drop in employee morale. In a December note lowering their rating on Facebook shares from buy to hold, analysts at Stifel cited a Wall Street Journal article on the morale concerns as a critical issue facing the company. “In our opinion, there are plenty of places for unhappy Facebook employees to go in Silicon Valley to do interesting work while feeling better about the impact of its employer and maintaining compensation levels,” they wrote.
Government scrutiny of Facebook is also only expected to increase in 2019.
Mr. Zuckerberg has said he is open to some form of increased oversight, and has privately asked Mr. Kaplan and other executives to come up with regulation plans that Facebook could stomach, people familiar with the matter say.
Facebook remains hugely profitable—it earned more than $5 billion in the third quarter—but its once-torrid revenue growth is slowing and Mr. Zuckerberg has said the company is in a transition that will lead to slower growth and higher costs. Among other investments, Facebook now has more than 30,000 employees focused on policing content that could violate the site’s rules.
“I’m proud of the progress we’ve made,” Mr. Zuckerberg said in a post on his Facebook page Friday. “We’ve fundamentally altered our DNA to focus more on preventing harm in all our services, and we’ve systematically shifted a large portion of our company to work on preventing harm.”
He said fixing the company was “more than a one-year challenge.” Per tradition, Mr. Zuckerberg is expected to announce his specific annual goals later this month.
Some outside analysts say the company should focus on cleaning up the platform, and return to its growth strategy later.
“I don’t think adding users is the answer,” says Jason Cieslak, president at Siegel+Gale, a brand-consulting firm that advises companies on digital strategies and communications. “They are trying to fly the plane while they are still building parts of it.”
Facebook should be willing to limit certain apps’ features or withdraw altogether from markets where its social network has contributed to the most harm, he says.
Yet that approach seems unlikely, not least because Facebook has forged ahead on new sources of revenue growth, including from popular units Instagram and WhatsApp. Those efforts were controversial internally, and led to the founders of the apps leaving Facebook over the past year.
Analysts say a key challenge this year is for Facebook to generate more revenue from those units without turning off users as well.
Facebook CEO Mark Zuckerberg didn't turn up to a U.K. parliamentary committee inquiry into fake news and disinformation, irking lawmakers. A Facebook representative was asked to explain the social-media company's policy on data harvesting and privacy.
Amid industrywide concerns that digital advertising growth could slow, continued dents to the Facebook brand could impede its efforts to branch into other growth areas. For example, as Facebook competes for premium video content with rival tech giants including
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Alphabet Inc.’s Google and
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it could be a less attractive partner if negative headlines persist, says Brian Wieser, an analyst at brokerage Pivotal Research.
Inside the company, many current and former Facebook employees chafe at the tenor of media coverage about the company, and some question why there hasn’t been a broader overhaul in the upper ranks, where many executives have worked at Facebook for a decade or longer during a time when the social-media giant was intent on expanding its reach across the world.
Several senior executives tapped to oversee Facebook’s cleanup efforts were key players in Facebook’s past growth efforts, including Javier Olivan, vice president of growth; Naomi Gleit, vice president of social good; and Guy Rosen, co-founder of Onavo, an app that Facebook bought in 2012 that has now become a key source of competitive intelligence for Facebook, according to people familiar with the matter.
A Facebook spokesman says it made sense to put the company’s premier experts on growth in charge of preventing abuses.
Write to Deepa Seetharaman at Deepa.Seetharaman@wsj.com and Georgia Wells at Georgia.Wells@wsj.com
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