January 12, 2018 / 6:52 PM / in 3 months

Breakingviews - Facebook discovers cost of factory-farming users

By Robert Cyran

Facebook Founder and CEO Mark Zuckerberg waves as he arrives on stage during the annual Facebook F8 developers conference in San Jose, California, U.S., April 18, 2017. REUTERS/Stephen Lam

NEW YORK (Reuters Breakingviews) - Mark Zuckerberg is discovering the cost of factory-farming Facebook’s users. The $550 billion social network’s success harvesting advertising dollars through mass-appeal content has made it very profitable. The snag is that users are increasingly unhappy. The founder and chief executive’s return to focusing more on their welfare may limit short-run earnings but should improve sustainability.

The Facebook farm has become increasingly unwholesome. The company is at the center of a storm over the promotion of false news stories, some potentially placed with the intention of interfering with the 2016 U.S. presidential election. Time spent per user on the core site has been falling, albeit from a high base, according to Pivotal Research. Zuckerberg’s stated goals for 2018 are fixing the site, cleaning up abuse, limiting interference by nation states, and “making sure time spent on Facebook is time well spent.”

Now Facebook is changing its algorithms, according to a post on Thursday, to prioritize news-feed items that users’ friends share and interact with and reduce the amount of third-party non-advertising content. Multiple studies link time spent on social networks with unhappiness, and watching mass-produced videos and reading clickbait articles on a screen surely don’t help. Facebook hopes higher-quality feeds will work better. “We feel a responsibility to make sure our services aren’t just fun to use, but also good for people’s well-being,” Zuckerberg wrote.

This along with possible changes like favoring reputable news sources over more sensational ones, as Facebook is considering according to the Wall Street Journal, will probably hurt the company financially over the short run. Time spent on the site by users will probably fall, and that means advertising will grow more slowly. That helps explain the 4 percent decline in the company’s shares by early afternoon on Friday. It’s worth it over the long term, however, if it keeps users sufficiently content to remain on the Facebook farm.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below