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Social Networking Giant Facebook Staring at Bigger Problems This Year

In Wieser's analysis, Facebook's problems are unlikely to go away in 2019

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Facebook, data
Facebook staring at bigger problems this year, warns analyst. VOA

Already mired in controversies, social networking giant Facebook should brace itself for another tough year as its revenue growth faces risk due to increased scrutiny of the platform’s usage by marketers, according to Pivotal Research analyst Brian Wieser.

In a note published in MediaVillage on Monday, Wieser maintained his “sell” recommendation on the company’s stock.

“On a negatively revised price target for 2019, we maintain our Sell recommendation on Facebook as we think downside risks on higher costs and management changes are more pronounced now vs. before…,” Wieser said.

“…and revenue growth also faces risks as marketers enhance their scrutiny when they assess their use of the platform,” he added.

Facebook had a tough year in 2018. Scrutiny of Facebook increased manifold since it revealed earlier in 2018 how a London-based political consultancy, that worked for US President Donald Trump’s campaign, improperly got access to data of up to 87 millions users.

Appearing before a US Congress Committee in April 2018, Facebook CEO Mark Zuckerberg apologised for the Cambridge Analytica data leak scandal.

Facebook
Facebook, social media. Pixabay

While Facebook was slammed for revealing the Cambridge Analytica scandal years after it got to know of it, similar allegations of inaction were also levelled at the social media site for its role in the spread of false and divisive messages by Russian-linked accounts during the 2016 US presidential election.

Again in September 2018, Facebook said that a breach had exposed data of 50 million people and then, in December, it reported another security breach where nearly 6.8 million users risked their private photos being exposed to third-party apps.

User numbers at Facebook were flat in North America and declined slightly in Europe in third-quarter information released in October, although total monthly active users worldwide went up to 2.27 billion from 2.23 billion on the previous quarter, CNBC reported.

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In Wieser’s analysis, Facebook’s problems are unlikely to go away in 2019.

Pivotal estimates that Facebook made between $5 billion and $7 billion from Chinese advertisers in 2018, and that might also be a problem this year if economic weakness continues in China, the CNBC report said on Monday. (IANS)

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Facebook To Invest $300Mn In Local News Partnerships, Programs

The idea behind the investments, Brown said, is to look “holistically at how a given publisher can define a business model."

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Facebook, dating
Facebook owned photo-messaging app Instagram already supports the "Unsend" capability VOA

Facebook says it is investing $300 million over the next three years in local news programs, partnerships and other initiatives.

The money will go toward reporting grants for local newsrooms, expanding Facebook’s program to help local newsrooms with subscription business models and investing in nonprofits aimed at supporting local news.

The move comes at a difficult time for the news industry, which is facing falling profits and print readership. Facebook, like Google, has also been partly blamed for the ongoing decline in newspapers’ share of advertising dollars as people and advertisers have moved online.

Facebook, Fake News
A user gets ready to launch Facebook on an iPhone, in North Andover, Mass., June 19, 2017. Facebook has made changes to fight false information, including de-emphasizing proven false stories in people’s feeds so others are less likely to see them. VOA

Campbell Brown, Facebook’s head of global news partnerships, acknowledges the company “can’t uninvent the internet,” but says it wants to work with publishers to help them succeed on and off the social network.

“The industry is going through a massive transition that has been underway for a long time,” she said. “None of us have quite figured out ultimately what the future of journalism is going to look like but we want to be part of helping find a solution.”

Facebook has increased its focus on local news in the past year after starting off 2018 with the announcement that it was generally de-emphasizing news stories and videos in people’s feeds on the social network in favor of posts from their friends.

At the same time, though, the company has been cautiously testing out ways to boost local news stories users are interested in and initiatives to support the broader industry. It launched a feature called “Today In” that shows people local news and information , including missing-person alerts, road closures, crime reports and school announcements, expanding it to hundreds of cities around the U.S. and a few in Australia.

Facebook, social media
Silhouettes of laptop users are seen next to a screen projection of Facebook logo in this illustration. VOA

The push to support local news comes as Facebook, which is based in Menlo Park, California, tries to shake off its reputation as a hotbed for misinformation and elections-meddling. The company says users have been asking to see more local content that is relevant to them, including news stories as well as community information such as road closings during a snowstorm.

The $300 million investment includes a $5 million grant to the nonprofit Pulitzer Center to launch “Bringing Stories Home,” a fund that will provide local U.S. newsrooms with reporting grants to support coverage of local issues. There’s also a $2 million investment in Report for America as part of a partnership aiming to place 1,000 journalists in local newsrooms across the country over the next five years.

The idea behind the investments, Brown said, is to look “holistically at how a given publisher can define a business model. Facebook can’t be the only answer, the only solution — we don’t want the publisher to be dependent on Facebook.”

Also Read: Democratic Lawmakers Further Investigate Russia’s Involvement In U.S. Election

Fran Wills, CEO of the Local Media Consortium, which is receiving $1 million together with the Local Media Association to help their member newsrooms develop new revenue streams, said she is optimistic the investment will help.

“I think they are recognizing that trusted, credible content is of benefit not only to local publishers but to them,” she said. (VOA)