This week in Facebook: Facebook's Achilles' Heel

Back when the Cambridge Analytica scandal was still in high gear, and the #deletefacebook movement along with it, Facebook's shareholders did something they hadn't really done for years: they sold their stock. They sold enough stock to actually drop Facebook's share price a bit, for a couple of weeks... until Facebook CEO Mark Zuckerberg was finished with his command performance testimony before Congress, and it was rapidly becoming clear that Congress had no intention of doing anything much to reign Facebook in.

None of Facebook's other scandals since then have had a much impact. FB shareholders, having learned that FB's actions had virtually no potential of negative consequences for the firm, have steadfastly driven FC's share price upwards ever since. The only other downwards blip on this general upwards trend was March of this year, when everyones' share prices were crashing.

That ended at the end of last week, when EU-UK giant Unilever announced that they were joining an advertising boycott of Facebook over their policies (or, more accurately, their lack of same) regarding hate-filled political advertising. Unilever's announcement that they were joining this boycott was probably the first time that most people had even heard that the boycott was happening, but once the world's attention was drawn to the boycott, and people had educated themselves on exactly who Unilever even were, the effect on FB's share price was immediate and dramatic: it dropped.

Facebook attempted damage control, promising to (finally) take action against the more toxic elements of the platform's discourse, but it wasn't enough to stop Coca Cola, Pepsico, and others from following Unilever's lead, and the carnage continues today, with Starbuck's also deciding that Facebook's brand is simply too toxic to be associated with. As reported by The Financial Post:

Facebook Inc. shares were poised to fall for a second day after more businesses, including Starbucks Corp. and Diageo Plc., joined the growing number of brands planning to halt spending on social media, undermining the company’s growth outlook.

Shares declined about 2.5 per cent in early trading before markets in New York opened on Monday. The stock had tumbled 8.3 per cent Friday after Unilever, one of the world’s largest advertisers, said it would cease spending on Facebook properties this year, eliminating US$56 billion in market value and shaving the net worth of Chief Executive Officer Mark Zuckerberg by more than US$7 billion.

The boycott isn't just an American affair, either; Canadian firms like Lululemon, MEC and Arc'teryx have also joined the boycott. The fact that FB's dropping share price, driven by an exodus of advertisers anxious to avoid being associated with a platform that can't bring itself to turn down advertising money from Trump and his supporters, shows pretty clearly that this boycott has forced something on Facebook that they've been dodging ever since the firm was founded: accountability.

Facebook isn't alone in having toxicity problems, of course; Twitch is also losing advertisers as part of the same boycott campaign, and even the notoriously toxic Reddit seems to be anxious to avoid finding themselves in the same situation, as reported by Variety:

Reddit first launched as an online discussion site in June 2005. Now, 15 years later, it has finally taken action to officially ban hate speech and groups that promote it.

A revised Reddit content policy, announced Monday, explicitly states that groups or users that “incite violence or that promote hate based on identity or vulnerability” are prohibited. “Everyone has a right to use Reddit free of harassment, bullying and threats of violence,” it says.

With the updated content policy, Reddit is initially banning about 2,000 subreddits, most of which are inactive, the company said. Included in the purge is The_Donald, a pro-Donald Trump forum notorious for users posting racist, misogynistic, anti-Islam and anti-Semitic content. At one point, The_Donald had nearly 800,000 active users.

In 2015, Reddit adopted a new content policy and banned several blatantly racist subreddits. But until today, the official rules still did not explicitly forbid hate or racist forums.

Reddit CEO/co-founder Steve Huffman, in an post about the new policy, said “I admit we have fallen short” in supporting the site’s communities and moderators with respect to adopting a comprehensive anti-hate policy.

None of the other social media sites has quite the toxic cachet of Facebook, though, and none of them seem to be suffering as much from the boycott as the crew from Menlo Park. All of which has normally more cautious media outlets like the BBC asking if this boycott might actually kill the company.

I don't think that Facebook's demise is at all likely; FB is a multi-national corporate colossus, and giants of this size take a lot of killing. But FB is weaker now than they've been for years, and with Democrats in the U.S. poised to take back control of both the U.S. Senate and the U.S. Presidency, while retaining control of the House, it sure looks like FB's efforts to cravenly curry favour for the last few years with Republicans, including Trump and his supporters, might be starting to backfire in a big way.

Facebook's business model relied on them being able to disrupt social and financial norms with no accountability at all, but it looks like accountability may be arriving, and their falling share price shows quite clearly that FB's shareholders don't believe that Zuckerberg & Co. can turn this ship around anytime soon, if at all. Whether that trend continues, or results in meaningful change, remains to be seen.

Watch this space...