Non-market strategy

1. CASE: ETH-15 B
DATE: 10/03/18
FACEBOOK:
HARD QUESTIONS (B)
The rapidly changing environment in which Facebook operated—and in which it was
perceived— left the company “shocked,” according to Wired magazine, “a company, and a CEO,
whose techno-optimism has been crushed as they’ve learned the myriad ways their platform can
be used for ill.”1
Facebook responded in a variety of ways. These included:
FACING FACTS
Tweaking the Algorithm
News Feed was an essential element of Facebook’s success. “In many ways,” wrote Wired,
“News Feed is Facebook: It’s an algorithm comprised of thousands of factors that determines
whether you see baby pictures, white papers, shitposts, or Russian agitprop.”2
Facebook
determined the ranking of the News Feed based on the probability that each individual would
like, comment on, or share a story in the feed. This was inextricably linked to advertising
revenue. As the London Review of Books wrote, “Its news feed directs traffic at you based not
on your interests, but on how to make the maximum amount of advertising revenue from you.”3
Facebook’s approach to News Feed created “filter bubbles” in which each user’s News Feed
filtered out news with which he or she was less likely to engage and which tended, said Wired, to
“reward outrage.” In acknowledgement of this problem, Facebook in January 2018 announced
1
Nicholas Thompson and Fred Vogelstein, “Inside the Two Years that Shook Facebook – And the World,” Wired,
February 12, 2018, www.wired.com/story/inside-facebook-mark-zuckerberg-2-years-of-hell/ (September 10, 2018).
2
Nicholas Thompson, “Exclusive: Facebook Opens Up About False News,” Wired, May 23, 2018,
https://www.wired.com/story/exclusive-facebook-opens-up-about-false-news/ (September 11, 2018).
3
John Lanchester, “You Are the Product,” London Review of Books, August 17, 2017,
https://www.lrb.co.uk/v39/n16/john-lanchester/you-are-the-product (September 10, 2018).
Sheila Melvin and Professors Ken Shotts and Neil Malhotra prepared this case as the basis for class discussion
rather than to illustrate either effective or ineffective handling of an administrative situation.
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2. Facebook: Hard Questions ETH-15 (B) p. 2
changes to News Feed that would include prioritizing “news” from friends and family.
Explained Adam Mossieri, who was then head of News Feed:
With this update, we will also prioritize posts that spark conversations and
meaningful interactions between people. To do this, we will predict which posts
you might want to interact with your friends about, and show these posts higher in
feed. These are posts that inspire back-and-forth discussion in the comments and
posts that you might want to share and react to—whether that’s a post from a
friend seeking advice, a friend asking for recommendations for a trip, or a news
article or video prompting lots of discussion.4
Facebook CEO Mark Zuckerberg acknowledged that this change might mean people spent less
time on Facebook:
Now, I want to be clear: by making these changes, I expect the time people spend
on Facebook and some measures of engagement will go down. But I also expect
the time you do spend on Facebook will be more valuable. And if we do the right
thing, I believe that will be good for our community and our business over the
long term too.
At its best, Facebook has always been about personal connections. By focusing
on bringing people closer together—whether it’s with family and friends, or
around important moments in the world—we can help make sure that Facebook is
time well spent.5
Developing and Deploying New AI Tools
In the wake of the 2016 U.S. presidential election, Facebook deployed new AI tools to identify
fake accounts and false news in an effort to make it harder for foreign governments and
adversaries to interfere in elections. In March 2018, Zuckerberg explained to the New York
Times how this effort was working:
One of the things that gives me confidence is that we’ve seen a number of
elections at this point where this has gone a lot better. In the months after the
2016 election, there was the French election. The new A.I. tools we built after the
2016 elections found, I think, more than 30,000 fake accounts that we believe
were linked to Russian sources who were trying to do the same kind of tactics
they did in the U.S. in the 2016 election. We were able to disable them and
prevent that from happening on a large scale in France…
4
Adam Mosseri, “Bringing People Closer Together,” Facebook, https://newsroom.fb.com/news/2018/01/news-feed-
fyi-bringing-people-closer-together/ (September 11, 2018).
5
Mark Zuckerberg, Facebook, https://www.facebook.com/zuck/posts/10104413015393571 (September 11, 2018).
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3. Facebook: Hard Questions ETH-15 (B) p. 3
I feel a lot better about the systems now. At the same time, I think Russia and
other governments are going to get more sophisticated in what they do, too. So
we need to make sure that we up our game.6
Changing Its Mission
In February 2017, Zuckerberg dropped a 5,700-word post called “Building Global Community”7
that was widely labeled a “manifesto.”8
In this post, Zuckerberg set out to answer the question,
“Are we building the world we all want?”9
He emphasized the need for Facebook’s next focus
to be “developing the social infrastructure for community—for supporting us, for keeping us
safe, for informing us, for civic engagement, and for inclusion of all.”10
Soon thereafter, in June
2017, Facebook changed its mission from “Making the world more open and connected” to
“Give people the power to build community and bring the world closer together.”11
In making
the announcement, Zuckerberg explained that he used to think just helping people connect and
giving them a voice would make the world better, yet society still remained divided. It was thus
Facebook’s responsibility “to do more, not just to connect the world but to bring the world closer
together.” He continued, “We want to help 1 billion people join meaningful communities. If we
can do this it will not only reverse the whole decline in community membership we’ve seen
around the world… but it will also strengthen our social fabric and bring the world closer
together.”12
Patenting the Future
In June 2018, the New York Times ran an article on the thousands of patents Facebook had filed
since going public in 2012. The article noted that almost 99 percent of Facebook’s revenue came
from advertising in the first quarter of 2018 and that many of the patents the company had filed
“imagine new ways to collect, analyze and use personal information and package it for
advertisers —a process that is essential to the company’s business model.”13
The Times
reviewed hundreds of Facebook’s patent applications, which, the article’s author claimed,
revealed that Facebook “has considered tracking almost every aspect of its users’ lives: where
you are, who you spend time with, whether you’re in a romantic relationship, which brands and
politicians you’re talking about. The company has even attempted to patent a method for
predicting when your friends will die…”14
6
Kevin Roose and Sheera Frenkel, “Mark Zuckerberg’s Reckoning: ‘This Is a Major Trust Issue,’” The New York
Times, https://www.nytimes.com/2018/03/21/technology/mark-zuckerberg-q-and-a.html (September 11, 2018).
7
Mark Zuckerberg, “Building Global Community,” Facebook, https://www.facebook.com/notes/mark-
zuckerberg/building-global-community/10103508221158471/?pnref=story (September 11, 2018).
8
“The Facebook manifesto: Mark Zuckerberg's letter to the world looks a lot like politics,” The Guardian,
https://www.theguardian.com/technology/shortcuts/2017/feb/17/facebook-manifesto-mark-zuckerberg-letter-world-
politics (September 11, 2018).
9
Mark Zuckerberg, “Building Global Community,” op. cit.
10
Ibid.
11
John Constine, “Facebook changes mission statement to ‘bring the world closer together,’” TechCrunch,
June 22, 2017, https://techcrunch.com/2017/06/22/bring-the-world-closer-together/ (September 11, 2018).
12
Ibid.
13
Sahil Chinoy, “What 7 Creepy Patents Reveal About Facebook,” The New York Times, June 21, 2018,
https://www.nytimes.com/interactive/2018/06/21/opinion/sunday/facebook-patents-privacy.html
(September 11, 2018).
14
Ibid.
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4. Facebook: Hard Questions ETH-15 (B) p. 4
Communicating with the Public
In June 2017, Facebook began a blog called “Hard Questions”15
in which it acknowledged its
own size, importance, and power. “The decisions we make at Facebook affect the way people
find out about the world” the blog noted, adding, “It goes far beyond us. As more and more of
our lives extend online, and digital technologies transform how we live, we all face challenging
new questions—everything from how best to safeguard personal privacy online to the meaning
of free expression to the future of journalism worldwide.” In view of this, the blog would attempt
to answer such questions as: “Is social media good for democracy?” and “Who gets to define
what’s false news—and what’s simply controversial political speech?”
In line with its goal of more transparency, Facebook made it possible for anyone signed in to
Facebook to view any active ads that a Page (an account for a business or organization) was
running across Facebook, Instagram, Messenger and the Audience Network, regardless of
whether the viewer was in the ad’s target audience.16
It also created and began rolling out an
“Ad Archive” that “lets you view and search for ads related to politics or issues of national
importance that have appeared on either Facebook or Instagram.”17
In March 2018, Facebook began running ads—on television, on train platforms, in newspapers
and magazines—apologizing for the Cambridge Analytica “breach of trust” and promising to “do
better.”18
The ads included slogans such as “False news is not your friends” and “Clickbait is not
your friends.” And, in May 2018, Facebook released a 12-minute video called “Facing Facts” to
take viewers behind the scenes at News Feed and detail the company’s efforts to fight false
news.19
Zuckerberg also made himself available to answer the hard questions posed him by
Congress, and the media. As he told the New York Times:
…we’re doing something here which is unprecedented, in terms of building a
community for people all over the world to be able to share what matters to them,
and connect across boundaries. I think what we’re seeing is, there are new
challenges that I don’t think anyone had anticipated before.
If you had asked me, when I got started with Facebook, if one of the central things
I’d need to work on now is preventing governments from interfering in each
other’s elections, there’s no way I thought that’s what I’d be doing, if we talked in
2004 in my dorm room.
I don’t know that it’s possible to know every issue that you’re going to face down
the road. But we have a real responsibility to take all these issues seriously as
15
Eliot Schrage, “Introducing Hard Questions,” Facebook, https://newsroom.fb.com/news/2017/06/hard-questions/
(September 11, 2018).
16
See: https://www.facebook.com/business/help/358617227922955 (October 3, 2018).
17
See: https://www.facebook.com/business/help/2405092116183307 (October 3, 2018).
18
Nitasha Tiku, “Facebook Launches a New Ad Campaign With an Old Message,” Wired, April 26, 2018,
https://www.wired.com/story/facebook-launches-a-new-ad-campaign-with-an-old-message/ (September 11, 2018).
19
Nicholas Thompson, Wired, op. cit.
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5. Facebook: Hard Questions ETH-15 (B) p. 5
they come up, and work with experts and people around the world to make sure
we solve them, and do a good job for our community.
It’s certainly true that, over the course of Facebook, I’ve made all kinds of
different mistakes, whether that’s technical mistakes or business mistakes or
hiring mistakes. We’ve launched product after product that didn’t work. I spend
most of my time looking forward, trying to figure out how to solve the issues that
people are having today, because I think that’s what people in our community
would want.”20
20
Kevin Roose and Sheera Frenkel, The New York Times, op. cit.
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617.783.7860