Since 2016, Facebook has been mired in scandal over data-mining practices tied to advertising in the 2016 elections and its seeming inability to control hate speech and other incendiary political content. But none of that had a huge effect on Wall Street, as long as ads sold and users kept clicking. But now ad sales and user visits are declining, and Wall Street’s retribution was swift.
Reuters reports that Facebook lost 24% of its value on the stock market as the company’s second-quarter results came in. Why? Because Facebook has to respect user privacy, at least in Europe, and its ad sales are declining:
The second-quarter results were the first sign that a new European privacy law and a succession of privacy scandals involving Cambridge Analytica and other app developers have bit into Facebook’s business…Operating profit margin, which fell to 44 percent in the second quarter from 47 percent a year ago, will sink to the “mid-30s” for more than two years, Chief Financial Officer David Wehner said in investor guidance.
Facebook, it should be noted, is still making money, just not at the pace Wall Street investors would prefer. Still, on paper, Mark Zuckerberg alone lost nearly $17 billion, and it seems likely there will be more problems to come for Facebook. The company has a long history of claiming, publicly, to fix problems while not actually doing so and attempting to pass off small steps as the only possible ones. Users simply don’t trust Facebook, and it will need to take drastic action to change that. That the CEO of the company is defending Holocaust deniers posting on the platform in public simply underscores how hard that’s going to be.