Crisis Case Study: Facebook wounded by slow crisis response
By Georgia Comensoli and James Fitzpatrick
It’s the privacy leak that may change our interaction with social media outlets forever. It has spurred government investigations globally and cost the world’s largest social media outlet $150 billion.
What happened to Facebook?
They let a fire get out of control before throwing water on it.
UK based data company, Cambridge Analytica, gathered the information of millions of Facebook profiles without users knowing. They used personality quizzes to gather information from users and friends of those users. That information was then provided to the Trump Presidential campaign.
On March 17 this year, two explosive expose pieces reported by the Guardian and the New
York Times detailed how data from over 85 million Facebook profiles had been accessed.
That same week, the USE Federal Trade Commission opened an investigation into whether the company had breached their settlement from 2011 over user privacy protections.
Daniel Ives, Chief strategy officer for GHB Insights told Penske Media, that they ‘view this as a seminal moment that’s going to change the nature of privacy, content and ad transparency’.
Tech research company Techpinions created a study in the wake of the crisis and found that 35% of responses detailed how they were using Facebook differently after finding out about the data breach with 17% declaring they had deleted their Facebook entirely.
The hashtag #DeleteFacbook began to trend. Hundreds of users across the globe tweeted (via rival social media outlet Twitter) that they’ve stopped using Facebook.
Investors were rightfully spooked, with $150 billion wiped from Facebook’s market value.
Ives suggests that the Facebook Data crisis will lead to an overhaul on how big corporations deal with privacy and content. Because digital ads on social media rely on data that reveals how users spend their time and what their interests are, controlling the access to this data means that ‘hundreds of billions of dollars are at stake over the next several years over this issue’, Ives explains.
While Facebook’s stock is already starting to recover, it is going to take a lot longer to restore the public’s trust.
The company has already been forced to make technical changes including limiting the way advertising companies access user profiles.
The US federal investigation into the data breach will likely lead to new data and cyber regulations, further affecting the bottom line of many different social media platforms.
Facebook’s CEO, Mark Zuckerberg took five days to publicly address to issue the issue via a statement on his Facebook page and an interview with CNN. Zuckerberg acknowledged that 'we [Facebook] have a responsibility to protect your data, and if we can’t then we don’t deserve to serve you'.
Two weeks later, he provided another apology, all in the lead up to his infamous testimony on April 10th, perched on a booster seat, before the Senate Judiciary Committee at Capitol Hill.
The apology, acknowledgement of failure, and proposed resolution – albeit appropriate – was far too late. Five days was more than enough time for this crisis to spiral well-and-truly out of control with Facebook losing billions of dollars, customers, and brand reputation while the company sat silent.
Last month, we wrote about cosmetic firm Lush’s powerful response to a scandal involving the underpayment of employees. In contrast to Facebook, Lush was extremely quick to respond, acknowledge their failure, and provide a solution. The result was limited media coverage and brand damage.
Lush and Facebook are two very different companies faced by a different type of scandal but we believe Facebook could have limited their financial and reputational damage if they’d responded with the same swiftness as Lush.
If you take responsibility and acknowledge your failure early, you leave journalists and citizen activists with very few angles to take.