Facebook’s Fall from Grace: The Scandal and What It Means for the Future of Digital Marketing

Facebooks fall from Grace
Part 1: The US Election

It was the biggest and most sensational data leak in world history. Countless millions of internet users in the United States and overseas suddenly discovered that their private data had been unlawfully intercepted, scanned, and archived into unaccountable data centers where it would be kept indefinitely. Without any sort of permission, their personal details, friend lists, private chats, likes and dislikes would remain in databases in the hands of a third party, never to be deleted.

The year was 2013, when whistleblower Edward Snowden revealed that the US National Security Agency had been collecting as much raw internet and cellphone data as it was able to get its hands on. Many of the American senators and congressmen who voted to support and continue these worldwide surveillance operations were the very same people who grilled Mark Zuckerberg last week about Facebook’s collection and careless handling of user data.

Cynicism aside, Facebook is certainly growing to a worrying size, and its aggressive use of our online data gives us good reason to pause and wonder if its effect on society is a healthy one – particularly given the political fallout. The US election was a landmark moment in the evolution of Facebook, leading us inexorably to the charged political moment we are now experiencing. We all know the basic context, but a few key details from recent history are worth highlighting.

Two weeks after voting day in the US, a particularly helpful article in US News & World Report referred to it as “The Facebook Election”, duly noting that “the president-elect was far ahead online” compared to his opponent. There was a “groundswell of support among, for lack of a better term, the Facebook generation,” and so the president “will be the first occupant of the White House to have won a presidential election on the Web.”

Speaking of the campaign, the article continues, “it was no coincidence that one of key strategists was 24-year-old Chris Hughes, a Facebook cofounder. It was Hughes who masterminded the … campaign’s highly effective Web blitzkrieg – everything from social networking sites to podcasting to mobile messaging.” This effort naturally included attacks on his rivals, as the president “had attracted a massive following on Facebook while Clinton was struggling with the negative fallout of a Facebook movement called ‘Stop Hillary Clinton’.”

As you have surely guessed by now, the article excerpted above was written in November 2008, chronicling the successful Obama campaign. Even back then, most of the ingredients were in place for sites like Facebook to help swing an election. At that time, and as we would infamously witness again eight years later, Hillary Clinton emerged as the big loser of the social media war. The numbers are stark, and come from the same article:

Obama’s masterful leveraging of Web 2.0 platforms marks a major E-ruption in electoral politics – in America as elsewhere – as campaigning shifts from old-style political machines toward the horizontal dynamics of online social networks ….

Obama counted more than 2 million American supporters on Facebook, while McCain had just over 600,000. On the microblogging platform Twitter, Obama could count on 112,000 supporters ‘tweeting’ to get him elected. McCain, for his part, had only 4,600 followers on Twitter.

On YouTube, Obama stole the show. His supporters uploaded more than 1,800 videos onto the BarackObama.com channel, which counted about 115,000 subscribers. The channel attracted more than 97 million video views during some 18 million channel visits. Compare that with McCain’s YouTube presence: Only 300 videos were uploaded to the JohnMcCain.com channel, which attracted just 28,000 subscribers. The McCain channel attracted barely more than 2 million visits and some 25 million video views. On YouTube, Obama beat McCain 4 to 1 ….

While Obama’s Facebook page had attracted more than 250,000 members, Clinton’s page counted a paltry 3,200.

As the article also notes: “Exit polls revealed that Obama had won nearly 70 percent of the vote among Americans under age 25 – the highest percentage since US exit polling began in 1976.” For these and many other reasons, the 2008 article entertains the idea that Obama’s victory was the result of a “Facebook effect”.

Curiously little fuss about all this was made in the wake of Obama’s win, particularly as it was actually (unlike 2016) the first time something like this had happened. Much of the difference can be attributed to the nebulous concept of a “narrative”, which is little-discussed but highly consequential in the production of news. The narrative when Trump was elected was essentially: “How did we in the news media get the mood of the country so wrong?”, with undercurrents of, “Why on earth do people support Trump?”

Both questions needed an answer, but a big part of that answer – the media’s own loss of credibility among much of the population – was off-limits for obvious reasons. So a bad actor had to be blamed (Facebook) and a weapon had to be identified (fake news). As it happens, the actor actually was bad, and the weapon actually is potent, but there are good reasons to suspect that these explanations have been overblown in order to fit the dimensions necessary to keep the narrative going.

American elections are notoriously expensive, in part due to the size of the country (candidates need to travel often and hold many large events) and the extraordinary length of campaign season (a full year and a half). The need for candidates to stay in the spotlight for this entire period makes it all but impossible, under normal circumstances, for any politician to make a serious run unless they pander to a highly wealthy constituency that will bankroll such a gargantuan project. In other words, without social media, genuine friends of the working class such as Bernie Sanders wouldn’t have gotten a tenth as far as they had.

The US News article cited in depth above calls Facebook “the perfect medium for genuine grass-roots political movements”. In this context, its positive value as an electoral tool is virtually undeniable, even though recent articles and discussion from traditional media outlets studiously omit this angle. Facebook provides superb value for money when users voluntarily engage with advertisements and promoted posts, and less stellar value for money when they don’t. Clinton was simply an uninspiring candidate on both a personal and a policy level, and thus her posts were less frequently shared.

Much has been made of the fact that Trump’s ad spend on the platform earned him much more engagement per dollar than Clinton’s, but Sanders’ engagement was spectacular as well. Change Facebook’s model and you will probably weaken the efforts of rich candidates like Trump. But you will also absolutely destroy the viability of candidates like Sanders.

Other complaints center around ‘fake news’. The current US president has a well-deserved reputation for speaking falsely, but the idea that politicians lie cannot seriously be considered news. Yes, it is unfortunate that he was able to reap rewards from bad behavior, but the solution cannot be Facebook itself censoring content that it deems to be untrue. The entire principle of free speech that is at the heart of US democracy is based on the idea – which tends to be a good one – that the harmful effects of some speech are less of a danger than the idea that authority figures should decide what the rest of us are allowed to say.

Wikileaks’ releases of emails from the Clinton campaign may likewise be unfortunate, and very possibly the result of illegal hacking efforts by Russia, but their fast and incendiary spread across social media in 2016 is not the fault of social media. Telling Facebook to censor that content would also mean that Facebook should have censored Edward Snowden’s leak of classified information that revealed the worldwide privacy violations conducted by the NSA.

Rather than fault Facebook and other social media outlets for the results of their policy of free expression, perhaps Americans should turn inward and see where they as a society might have fallen short. A better-funded education system might have primed voters to be more adept at seeing through attempts at misinformation, and given them the literacy and maturity to seek evidence before sharing and retweeting information that conveniently bolsters their case. An improved electoral system might keep money out, as many other democracies seem able to do, so that people wouldn’t feel so frustrated that they vote to burn the whole thing down. A more responsible media landscape might have done a better job of favoring honest exposés even when they go against the narratives they were otherwise trying to push.

As a liberal company in a highly liberal industry, it seems a stretch to say that Facebook pulled too many strings for Trump – particularly in light of Obama’s sensational performance on the platform, aided by a Facebook co-founder. Speaking of having friends in high places, Clinton herself was no stranger to Facebook’s upper echelons:

Had Trump lost, he might have (ok, he would have) complained loudly about the type of “collusion” that the emails above suggest may have taken place. And Hillary’s side would have been repeating, “there was no collusion!”

Part 2: Nobody Trusts Facebook Anymore, But Nobody Can Replace It. What Now?

The first part of this article contained many defenses of Facebook’s conduct as a business. But there is nevertheless much to criticize, and in our view the company deserves most of the opprobrium that has come its way in recent weeks. Even though we work with Facebook as part of our core social media marketing business model, we nevertheless believe that the best policy is to maintain a measured take on issues we highlight. Social media may bestow increased engagement on hard-line, polarizing opinions, but these are short-term gains that are more than offset by the loss in trust.

Trust is yet another nebulous concept – but as with narratives, the reality of it is writ large on current and future media landscapes. Facebook itself seems not to understand trust, as its actions over the previous decade-plus could hardly have been more carefully designed to undermine it.

Before doing anything else, read this thread. It contains a frightening readout of all the information that Google and Facebook keep on their users. Both of them track you wherever you go on the internet – whether you’re on their sites or not. It is often said that Google knows more about you than your spouse, and threads like these go a long way to confirming it. Facebook was also caught storing your chat messages (even if you “deleted” them), and monitoring your contacts’ activities – even the ones that have never actually signed up for Facebook.

Moreover, Facebook itself has proven itself to be acting in bad faith with respect to users’ privacy time and again. If you were moved by Mark Zuckerberg’s recent attempts at apology in the wake of 87 million users having their data siphoned off the system by a Trump-connected marketing company in 2016, perhaps you would do well to read the scores of other apologies he has made over the past 14 years, all on the subject of Facebook failing to protect users’ privacy.

In unguarded moments, Zuckerberg has made his feelings plain regarding the level of intelligence to be found among people who freely give him their private data. You’ll need to click the link, as his actual comment is unprintable on this family-friendly website.

So why is it that Google, whose privacy invasions are at least as disturbing as Facebook’s, doesn’t face such a high level of public mistrust? Again we come back to the question of narrative. The narrative around Google is that it is using its platform to make people’s lives better. Gmail revolutionized the searchable inbox. Google Maps and Google Earth represented enormous qualitative leaps in everyday navigation. Google Translate is a godsend for travelers. And Google’s flagship product is a masterful search engine that puts a world worth of information at our fingertips. The narrative surrounding Google is that of a company which makes our lives better in countless ways, and if they suck up our data in the process, well, that’s a tradeoff we can live with.

By contrast, what does Facebook offer the general public? Its vague promises of connecting people are undermined by the opaque algorithms, platform controversies and partisan bickering that have come to define the Facebook experience for many. As social media analyst Charlie Warzel has noted, Facebook’s company mission is to “give people the power to build community and bring the world closer together”, but then failed to answer the follow-up question: “Okay, but then what?”

Facebook may well have seen Google getting away with massive privacy breaches, and figured that it could do the same thing with similar impunity. But it failed to consider that, while both companies provide an amazing service to advertisers, only Google extends that courtesy to its user base as well, by providing genuinely useful technology that improves our quality of life. No comparable narrative is within reach for Facebook, which is why public opinion surrounding the company is in freefall.

All this is to say that Facebook would have perhaps been wise to enlist the services of a branding / digital marketing agency such as Lexicon, which would have advised the company against making an ass out of itself continuously for 14 years.

The congressmen and senators in Washington last week were in over their heads as they tried to grill Zuckerberg on technical issues such as the handling of private data, but it didn’t matter. Zuckerberg’s smirking responses likely won him the battle but lost him the war. His half-truths got him out of the room intact, but as with so many fateful decisions made within powerful American institutions, that short-term victory came at the cost of public trust. Congress might not have known he was skating by on misleading responses, but the site’s users did.

Zuckerberg’s mistake in Washington was a strategic one. He thought his opponents were the lawmakers in the room (most of whom Facebook actually sent campaign contributions to), rather than the public at large, whose sense of betrayal fueled the hearings in the first place. Absent public pressure, lawmakers tend not to be eager to interfere with established institutions that send them generous campaign contributions. Now the noises from both sides of the aisle indicate that something really will be done. The interesting question is what.

Before getting to that, we’d like to interject a word about Facebook’s current utility as a platform. It’s still coasting off of its two mutually reinforcing founding epiphanies. Facebook invented modern social media, and used its formidable data collection power to design the world’s most efficient advertising platform.

Along with Google, Facebook totally revolutionized advertising and therefore modern media. Even the media companies that criticize Facebook have only half a leg to stand on, as the following screenshot beautifully illustrates:

When even your haters are copying your methods, it’s a pretty good sign you’re onto something. Popular dislike of Facebook will never in a million years inspire companies to go back to the old way of advertising through blunt demographics. Precision-targeted marketing is to traditional advertising as a Lamborghini is to a horse and buggy. That the Lamborghini in pole position is driven by an unprincipled, humorless android is lamentable, but that in no way disqualifies the technology (or the car itself).

So what happens to the car and the passengers in it? Most people are agreed on the two main possibilities.

1. Break up the monopoly

As the world’s biggest media company, Facebook’s ownership of Instagram and Whatsapp give it a virtual stranglehold in the world of popular online social media and communication. The following exchange between Senator Lindsey Graham and Mark Zuckerberg last week indicated as much:

Senator Graham: Who’s your biggest competitor?

Mark Zuckerberg: We have a lot of competitors.

SG: Who’s your biggest?

MZ: Hmm, I think the categories — did you want just one? I’m not I could give one — could I give a bunch?

SG: Uh-huh.

MZ: So there are three categories I would focus on. One are the other tech platforms, so Google, Apple, Amazon, Microsoft. We overlap with them in different ways.

SG: Do they provide the same service you provide?

MZ: Uhm, in different ways, different parts of it, yes.

SG: Let me put it this way. If I buy a Ford and it doesn’t work well and I don’t like it, I can buy a Chevy. If I’m upset with Facebook, what’s the equivalent product that I can go and sign up for?

MZ: Well, the second category that I was going to talk about…

SG: I’m not talking about categories. What I’m talking about is real competition that you face, because car companies face a lot of competition, that if they make a defective car, it gets out in the world, people stop buying that car and buy another one. Is there an alternative to Facebook in the private sector?

MZ: Yes Senator. The average American uses eight different apps to communicate with their friends and stay in touch with people, ranging from texting to email…

SG: That is the same service you provide?

MZ: Well we provide a number of different services.

SG: Is Twitter the same as what you do?

MZ: It overlaps with a portion of what we do.

SG: You don’t think you have a monopoly?

MZ: It certainly doesn’t feel like that to me!

It does feel like that to many other people. Indeed, many Facebook users only stay with the platform because everyone else is using it, and no one is using anything that could be called a direct competitor. Antitrust action against Facebook may be warranted, and similar types of actions have taken place in the past, but it nevertheless remains a step that would seem to be too drastic for the not-especially-tech-savvy-or-even-slightly-brave lawmakers who would need to draw up such a proposal.

If Facebook is broken up, however, it would mean a glorious new dawn for other companies that have waited years for a decent shot at challenging the king. The competition would drive down prices and improve the quality of services, offering more choice to advertisers and consumers alike, just the way we all imagined the internet would be in the early days.

The fascinating element to this scenario is, of course, consumer data. Data and its willful misuse are what brought Facebook into this mess, and competition from outside would provide an incentive for all social media companies entering this space to ease off the gas pedal on data collection, for the sake of being able to tell their customers that their data will truly be kept private.

On the other hand, harvesting personal data is the entire business model of social media. It is the secret ingredient that is at the center of the targeted advertisement pie. There is a zero-sum game yet to be played, between advertisers and consumers. The less consumer data is collected and shared, the happier ordinary users will be … but the idea of giving up on precisely targeted advertising will be anathema to advertisers. Making the one happy will inevitably make the other angry, and social media companies are forced to rely on both. It could very well be that the side that is louder about standing up for its needs will be the one that wins.

Or there could be reasonable tradeoffs. Do social media platforms really need to store your cellphone metadata and keep your private messages in their files? Does Google really need to constantly track your exact location 24 hours a day, every day? Do these personal details really help the platform deliver a better service to either users or advertisers? If not, then a breakup of Facebook into manageable pieces could prompt the company to abandon some of its creepier data collection methods.

There is, of course, another way to force Facebook to make similar moves.

2. Regulate the industry

The more likely outcome is that social media’s Wild West days are coming to an end. Regulation could set rules on what kinds of data social media companies are allowed to collect, and put various kinds of limits on the behavior of companies like Facebook. In a neat twist, the government could use “precision targeting” to identify and outlaw specific practices currently enjoyed by the internet’s giants, in the same way that those same giants currently allow precision targeting of their own users. Whether government has the technical awareness necessary to competently oversee the industry is another question entirely.

In his testimony last week, Mark Zuckerberg openly welcomed the idea of regulation. Although most businesses prefer to avoid government oversight, there are three obvious reasons why Facebook would be an exception to that rule.

The first is that, from Facebook’s perspective, regulation would be far preferable to antitrust action. If the common refrain is that “something must be done” about Facebook, then regulation is a relatively painless solution.

The second is that regulation would give Facebook an easy excuse when its future behavior is called into question. “We have always embraced government regulation of our activities and we continue to follow the rules entirely,” one can imagine Mark Zuckerberg saying in response to a future scandal. Instead of the buck stopping with him in an unregulated space, he could simply say, “We acted within the rules.” Meanwhile, his team of lobbyists would be urging lawmakers to insert additional loopholes into those same rules.

The third is that regulation could actually entrench Facebook’s position at the top of the social media heap. Innovation in the internet age comes quickly and often, and there is no way to know what form the next Facebook, or Google, or Amazon, or Uber, or AirBnB will take. It could truly come from anywhere, do anything, take the world by surprise … and even knock out today’s heavyweights.

But if there are sharp lines being drawn by regulators, then the playing field changes. If social media companies are allowed only to do certain things, and occupy a certain type of space online, then Facebook – with all its resources – can blanket that space, leaving no room for a competitor to innovate its way to a superior position. This scenario was also alluded to during Zuckerberg’s testimony.

Nevertheless, what’s good for Facebook isn’t necessarily bad for the rest of the world. Most companies are amoral entities, acting in their own perceived self-interest. An idealistic company could very well turn into an exploitative one if the system of incentives changes and an advantage can be gained. The reverse is also true; if predatory behavior no longer produces a profitable business model, a notorious company will adapt to the new situation and learn to become useful to society.

There is much in favor of an unregulated ecosystem, particularly as new technology is introduced. As long as nobody is getting hurt, a case can be made that companies should be free to explore the full possibilities of the new technology without being hindered. Government has a very limited imagination when compared to the diversity of visionary entrepreneurs worldwide, and too much meddling can prevent revolutionary ideas from being brought to life.

But when those ideas do come, their inventors have the potential of being carried away by them. The power they bestow on their creators can be misused, or taken too far, as is the case with Facebook (and Google). At a certain point, their power does become dangerous, and someone needs to rein them in. Much of the traditional political spectrum is defined by the question of where that “certain point” actually is, but the sense in America seems to be that Facebook has reached it.

Or maybe not. Maybe after all the song and dance and publicly-performed outrage, nothing will be done about Facebook. Washingtonian inertia, gridlock and partisan bickering has certainly stopped progress on other issues before, even it seemed as though something would really need to be done (cough guns cough). Government’s ever-present dysfunction, along with Facebook’s own lobbying efforts, could slow down the process to the point where a new, unrelated scandal occurs that makes everyone forget that they were supposed to be focused on the excesses of the social network.

Or maybe tomorrow Facebook will unveil a new pact with its users, obviating the need for government action at all. Public anger will fizzle out, the problem will be considered solved, and life will go on as before.

Whatever happens, that Lamborghini will keep on coasting. The data-based content marketing/ advertising model is here to stay, no matter who is in the driver’s seat. Success on this track will mean a complete understanding of the engine’s potential, and the experience to take advantage of the rules of the road.

Whether you’re a politician or a business, the way to the front of the pack is by seeing which way the wind is blowing and then adapting to the current conditions. The task isn’t as easy as it sounds; Facebook itself couldn’t figure out that its business strategy would prove alienating in the long run, although it should have known better than anyone else, given the amount of data it has on how people think.

Sometimes it takes an outside partner to shake people out of bad habits and put them on a more promising path. Each of the protagonists of the story above is deeply flawed: Zuckerberg (arrogance and dogmatic belief), government (ill-equipped to perform their central duties of oversight), Clinton (out of step with the times) and Trump (too numerous to mention). Each could have avoided a great deal of trouble by having the humility to defer to outside experts. Having failed to do so, we as a society now have the task of working through a tricky set of problems indeed.

So let’s get to it. Compared to the rest of human history, the problems of our generation – which feel so serious, so urgent because they are ours – are a walk in the park. Poor leadership got us here, just as surely as good leadership can get us out. We have better tools than ever before for enacting positive social change, and one of those tools, lest we forget, is Facebook itself.

The future is still there for the taking. For companies and social leaders alike, the tools are the same. All you ever need is a message and a medium.

Lexicon is a full-service digital marketing agency in Bangkok, Thailand. We specialize in corporate storytelling and produce all of our content in-house, including branding,  copywriting, video production and graphic design. Lexicon’s social media marketing services start from just 10,000 THB per month.

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