Facebook can’t stop monkeying with its News Feed.
After its latest pledge Thursday to emphasize status updates from friends and family in the feed and downgrade content from publishers and brands, the company saw shares sink 4.5 percent to $179.37 Friday.
Since last year, the social giant has been talking about prioritizing shares from loved ones over corporate posts and headlines, but now chief executive officer Mark Zuckerberg aims to build on those updates with what he describes as a “major” change to bring people together through more meaningful interactions.
“We started making changes in this direction last year, but it will take months for this new focus to make its way through all our products,” he wrote in a Facebook post that suggested this was just the beginning. “The first changes you’ll see will be in News Feed, where you can expect to see more from your friends, family and groups.” He didn’t explain what comes second or third, only that the feed would have “less public content like posts from businesses, brands and media.”
Consumer-focused businesses and news organizations, which rely on Facebook to drive revenue and traffic, are issuing a collective gasp, perhaps most notably on Twitter.
The investment community seems split. Some, like RBC analyst Mark Mahaney, believe it’s a good move that will retain users, so he rates the shares as a “buy.” Others, like Stifel analyst Scott Devitt, downgraded the stock. He wrote in a research note, “There is too much uncertainty relating to the economic impact of Facebook’s pending News Feed changes for us to be comfortable retaining a ‘buy’ rating on the stock.” The concerns center on whether the revamp will make it harder for advertisers to reach Facebook’s two billion monthly users. But the stakes are too high to do anything rash: Over the last three years, Facebook’s stock shot up 140 percent, and its market value of $545 billion is one of the biggest in the world.
No one knows how these changes will play out — only that they highlight the risk of depending too heavily on a single platform, especially one for whom course changes seem to be a favorite hobby.
These latest overtures are a response to mounting criticism over its role in the spread of false news during the 2016 presidential election, as well as its effects on users’ mental well-being. In fact, former executives have gone on record citing the company’s intentional efforts to keep people hooked on Facebook.
In an interview with Axios in November, Sean Parker, Facebook’s founding president, said the company created a “social-validation feedback loop” with the goal of psychological addiction. A month later, another former executive, Chamath Palihapitiya, shared a post — on Facebook, natch — blasting his former employer for essentially the same thing. Both men have expressed concerns about the effects on people and society.
There’s one glaring omission: The directive stopped short of including Facebook advertisements, the network’s bread and butter. Social shares from companies and video ads bring in 85 percent of Facebook’s revenue.
That casts a shadow over the company’s seemingly good intentions. Or perhaps a confusing fog.
With de-emphasized posts, the only way for brands and media companies to grab meaningful eyeballs would be to buy ads. The company has been highly focused on video ads, in particular. And yet, Zuckerberg called out such content, noting that “passively reading articles or watching videos — even if they’re entertaining or informative — may not be as good.”