What This Could Mean for Facebook (and Advertisers)
Why the hesitation? One possibility is that the GDPR — which Facebook is required to implement for its EU-based users when it comes into force next month — could limit the company’s revenue from ads. That will become especially true if advertisers feel, for example, they can’t use certain user data to target customers’ News Feeds as accurately.
“Facebook’s whole business model is centered on user data for accurate ad targeting,” says Henry Franco, HubSpot’s social campaign strategy associate, “so it’s no surprise that it might be against government intervention in the way companies are required to manage that data for users in the EU.”
But the damage done by users potentially leaving the platform entirely could be a greater hit to the company if it doesn’t take a position on its global markets soon. At this point, the value of Facebook’s shares is down more than 15% since the revelation around Cambridge Analytica came to light on March 16.
Zuckerberg did clarify that many of the tools belonging to the GDPR are already available to all Facebook users — so these risks are likely top-of-mind for the executive. But nonetheless, Washington is both grateful and eagerly anticipating Zuckerberg’s appearance before the House of Representatives next week.
“This hearing will be an important opportunity to shed light on critical consumer data privacy issues and help all Americans better understand what happens to their personal information online,” said Committee Chairman Greg Walden and Ranking Member Frank Pallone, Jr. in the official statement. “We appreciate Mr. Zuckerberg’s willingness to testify before the committee, and we look forward to him answering our questions on April 11th.”
But Facebook looks to be making some of these pieces more iron-clad leading up to the testimony, including the rewriting of its terms of service and data policy that was unveiled earlier today — which could leave these existing rules less open to interpretation or questioning by lawmakers.
“As a company, Facebook is probably reading the writing on the wall,” says Franco. “If data regulation is on the horizon, it wants to have a seat at the table for that conversation, in order to protect its own interests.”
We’ll be reporting on this ongoing story up to and after the hearing next week.This post was originally published here