Advertisers Pulling Out En Masse after Facebook Loses $70 Billion in 10 Days

Facebook is a giant in the social media scene. However, recent happenings have made people see the company with a different eye. Shares of the company were headed towards a downward spiral just last week after the U.S. consumer protection regulator made public that they were launching a probe against the social media behemoth.

The U.S. Federal Trade Commission subjected the company to scrutiny given the emerging reports of users’ data leaks. Their involvement in the Facebook fiasco only goes to confirm that an investigation is currently ongoing. This could be resultant to the widespread significant public interest in the matter.

Lawmakers have pressured the current Facebook Chief Executive Mark Zuckerberg to testify before them. At present, he is set to appear before Congress in the coming week in a bid to provide clarity on the company’s stand when it comes to protecting user data and privacy.

Facebook shares have taken a nosedive since the news scandal broke out. The shares have dipped by as much as 6.5% and briefly below $150 for the first time since July 2017. Currently, they are still in a tumble by as much as 13 % since March 16.

It is important to note that was the first time Facebook acknowledged that Cambridge Analytica had misappropriated user data for political gains. Since the news broke, the social media giant has lost more than $70 billion in market value.

Market Trends

Typically, the market is usually in Facebook’s favor. However, the debacle has presented otherwise. In the day-to-day sessions, the company has accrued losses of up to $100 billion in market value since March 17. This matches with the time that the story broke to the press that a company had mined Facebook users’ data.

The company in question is a British political consultancy agency called Cambridge Analytica. The company is said to have engaged in political campaigns in both the U.S. and the U.K. More specifically, the company aided Trump’s victory in the 2016 U.S. election and in the recent Brexit elections in the U.K.

The poor performance of the company in the stock market has been further complicated by recent withdrawal actions by members of the advertisement industry who make use of Facebook’s platform.

Popular U.S. auto parts retailer Pep Boys suspended all forms of advertising done on Facebook last week on Monday. The move coincided with the ad-withdrawal action of companies like Mozilla Corp. There’s also the case of a popular German bank, Commerzbank that suspended ads they run on the platform.

In opinions polls conducted in countries like Germany, Canada, and the United States, numerous people expressed the lack of faith they had in Facebook. This was in relation to the company’s poor attempt at ensuring that users’ data is protected.

Poor Reception

The public backlash was despite Facebook’s reassurances through advertisements in the respective countries issuing an apology to users for failing to protect their information with absoluteness.

The findings of the opinion polls showed a population that is largely discontented by Facebook’s modus operandi. This is especially when it comes to matters of privacy and security. In fact, almost half of the interviewed Americans actually want Facebook to offer assurances that users’ data is protected.

In another publication, this time one of Germany’s most popular Sunday paper, Bild and Sonntag conducted a survey among the populace about the impacts of Facebook and other social media platforms on democracy.  The findings were that 60% of Germans actually believe that these social interaction platforms were actually helping stifle the emergence of strong democracy practices.

Elsewhere, more than 75% of Canadian Facebook users have openly avowed to make a change to how they interact with the social site. This is in light of the latest data mining fiasco that Facebook is currently embroiled in.

Such declarations will be music to the ears of other social media sites. These are sites that employ a semblance of stringent rules when it comes to data privacy. However, social media use is likely to see a change in attitude by many people world over.

Facebook executives will surely be slowly mulling over the best strategies to employ. A well-mapped plan is necessary at present. Having one is necessary in order to re-gain user confidence in their platform. Importantly, it will also help drive advertisers back to their site.