“Today, we’re going to talk about building a privacy-focused social platform,” Facebook CEO Mark Zuckerberg declared, with only a mild sense of irony, as he kicked off the F8 developer conference in San Jose on Tuesday morning.
One would be forgiven for wondering if Facebook is even capable of such a pivot, and Zuckerberg recognized the skepticism.
“I get that a lot of people aren’t sure that we’re serious about this,” Zuckerberg chuckled. (Yes, he actually chuckled.) “I know we don’t have the strongest reputation on privacy right now, to put it mildly, but I’m committed to doing this well and to starting a new chapter for our products.”
It’s a new chapter that centers on six key components: private interactions, end-to-end encryption, reducing the permanence of messages and Stories, safety, interoperability and secure data storage.
Starting now and over the next few years, Facebook will build – and rebuild – more and more of its services based on these principles.
For example, Facebook rolled out a stripped-down redesign of its core app and desktop site on Tuesday that focuses more on groups and community. It’s also working on making its primary messaging apps (Messenger, WhatsApp and Instagram) interoperable as people continue to shift away from public sharing in the news feed toward more private interactions.
“This isn’t just about building features,” Zuckerberg said. “We need to change a lot of the different ways we run this company today.”
He didn’t mention, however, how these changes will affect Facebook’s ad business. Mobile ad revenue – which grew 30% year over year to $13.9 billion in the first quarter – made up roughly 93% of Facebook’s total ad revenue. And the lion’s share of that comes courtesy of ads in the news feed.
But the quick growth of Stories is a sign Facebook can build significant revenue from less public environments, said Debra Aho Williamson, a principal analyst at eMarketer. On its most recent earnings call, Facebook said that it’s now got 3 million advertisers using Stories Ads across Instagram, Facebook and Messenger.
“Private encrypted messaging will reduce the amount of information available for targeted advertising, and that will be a concern to many marketers,” she added.
Yet a connected backend for Messenger, WhatsApp and Instagram could actually provide the groundwork for a new kind of advertising network connected to more than 2 billion people, said Tom Edwards, chief digital and innovation officer at Epsilon.
“How data will be used to support the targeting is TBD,” Edwards said.
But “as Facebook continues to shift toward fast, reliable and private experiences, it will be interesting to see how the platforms actually evolve and where new opportunities to drive monetization will come from,” Edwards added.
Facebook also pretty much had to move away from what Zuckerberg likes to call the “digital town square” toward the “digital living room.”
Consumers favor more private interactions, and Facebook also faces macro privacy trends pulsing from Brussels to DC to California and beyond.
“Facebook needed to acknowledge the way that communication was changing, and the fact is that posting publicly and sharing content to a feed is less engaging for some users than it once was,” Williamson said. “There aren’t a lot of drawbacks to Facebook trying to turn its ship in this direction.”
And even the headwinds could be quite manageable. Facebook recently set aside $3 billion for an expected fine coming soon from the Federal Trade Commission over privacy violations, but a fine of that magnitude isn’t more than a scratch for a company that pulls in tens of billions every year.
Zuckerberg was even a bit blasé about the seeming never-ending stream of bad news and privacy offenses that started in 2016 and shows no sign of ebbing.
“I’m sure we’re going to keep on unearthing old issues for a while, which may feel like we’re not making progress as first,” he said. “But I think we have shown time and again as a company that we can do what it takes to build and evolve the products people want.”
