The Industry

Facebook’s Very Good, Very Bad Week

The social network’s business is roaring despite its scandals. But it may have finally crossed the wrong people.

Mark Zuckerberg and Sheryl Sandberg, smiling, because they have reasons to smile this week.
Facebook’s CEO Mark Zuckerberg and COO Sheryl Sandberg Photo illustration by Slate. Photos by Drew Angerer/Getty Images,

Facebook routinely outrages privacy advocates. It has double-crossed app developers who built businesses on its platform. It has pulled the rug out from beneath brands and media companies that had come to rely on its promises of delivering a massive audience. It has let down users by accidentally exposing their personal information to hackers. It has sold them out by freely giving away their personal data to shady third parties. It infuriated the left by allowing fake news and propaganda to flourish, and contributing to Donald Trump’s election. It’s mistrusted on the right because its executives and employees are presumed to lean left. It has alienated minorities with perverse content moderation policies and riled up free speech advocates by taking down Pulitzer Prize–winning images.

You might think that all of this animus would have come back to harm the company’s business by now, one way or another. It certainly seemed that way six months ago, when Facebook’s stock plunged 20 percent after a sour earnings report that lowered expectations for future growth. The company has continued making headlines for all the wrong reasons since then—including at the beginning of this week.

But on Wednesday, the unexpected happened: A sunny earnings report broke through the gloom and cast a warm glow on Menlo Park. Facebook’s numbers showed not only that the company is making more money, but that more people are using it—even in the United States and Canada, where it was presumed to have plateaued. We knew Instagram and WhatsApp were still growing, but few counted on Facebook proper to add users in every major market in the final quarter of a year that saw #deletefacebook become a trending topic.

Investors on the earnings call were so giddy they didn’t even bother to ask Mark Zuckerberg and Co. about their latest controversies, including reports that the company is set to incur record fines from the Federal Trade Commission for privacy violations. Facebook shares popped 12 percent.

Could it be that all the scandals, all the data leaks, all the underhanded tactics, all the blights on democracy and the media didn’t matter—at least, not to the company’s success? That they amounted to no more than a hill of beans compared to the mountains of cash and user engagement that Facebook continues to accrue? That for all the frothing by media talking heads, users simply don’t care about online privacy and never will?

It’s probably true that the media tend to overestimate the average Facebook user’s sensitivity to its myriad PR snafus, projecting their own disillusionment onto hundreds of millions of people who are mostly still just grateful to have a convenient place to keep in touch with friends online. Certainly some were too quick to count out a goliath that has a history of proving its doubters wrong. And the still-rapid growth in its subsidiary apps gives it plenty of upside even if and when the original social network starts to wane.

On the other hand, as the Verge’s Casey Newton pointed out, a company’s financial performance can be “a lagging indicator of public perception.” It’s likely that Facebook has forfeited some user trust, even if it hasn’t yet been enough to drive people away in large numbers. (It certainly helps that the leading alternatives to Facebook are also owned by Facebook.) And if Congress and regulators are still a long way from taking serious action to constrain the company, they’re surely more interested in it than they were a year ago.

But let’s put aside for a second all the groups that we knew were angry with Facebook prior to this week, and focus on an obstacle that reared its head on the same day as its blockbuster earnings report.

On Tuesday, TechCrunch’s Josh Constine reported that since 2016 Facebook had been quietly running a research app, called Facebook Research, that gave it almost total access to everything that app’s users did on their phones. The users consented to this in exchange for cash.

The purpose: to give Facebook insight into smartphone usage patterns beyond Facebook’s own apps. The company famously used a similar app, Onavo Protect, to detect the surge in WhatsApp usage that led it to presciently acquire the upstart messaging app. But Apple banned that app last summer when it found out how Facebook was using it.

With the Facebook Research app, as with Onavo Protect, there are questions about just how well they understood the trade-offs involved, and whether Facebook’s parental consent requirements for the app’s teen users were effective. (My Slate colleague Shannon Palus talked to some of them Thursday.) Regardless, we know by now that Facebook can weather bad headlines about morally questionable data-collection practices.

But in this case, the PR blowback turned out not to be Facebook’s biggest problem. Its biggest problem was that its research app violated Apple’s rules by using Facebook’s special developer privileges to make apps used by consumers, rather than just its own employees. It didn’t help that these apps had the purpose of circumventing Apple’s own privacy barriers so that Facebook could gather the type of data Apple reserves for itself. And Apple surely wasn’t amused that Facebook was still doing this after the Onavo imbroglio.

By Wednesday, Facebook had pulled its Research app—but not before Apple pulled a much bigger plug. Apple revoked Facebook’s special permission—its “Enterprise Developer Certificate”—to create and use apps internally without going through its public App Store. According to the Verge, that cut off not only the Facebook Research app, but a host of other apps that Facebook was using for development and testing purposes, including internal test versions of Facebook itself. They all just stopped working Wednesday, presumably bringing entire Facebook teams to a standstill.

Meanwhile, revelations that Google had been running a similar research app prompted Apple to take the same action against Google, the Verge reported. Suddenly, two of Silicon Valley’s three giants found themselves hamstrung by the third. It took until Thursday night for Facebook to convince Apple to restore its enterprise certificate.

Apple has to tread carefully here. As Stratechery’s Ben Thompson observed, this flex highlights a market power of Apple’s that looks rather anti-competitive in the right light. Newton made similar points in his newsletter Wednesday.

That said, it’s hard to argue Apple’s crackdown isn’t justified—especially given Facebook’s repeat offenses. And if Facebook’s public relations debacles haven’t dented its ad business, they’ve at the very least foreclosed much chance of playing the aggrieved victim in a situation like this.

That Google was doing something similar—if somewhat less pernicious—and also got busted is good news for Facebook. But we know that Apple CEO Tim Cook already had bones to pick with Facebook, in particular, over data privacy. Apple has long had near-absolute power over what happens on the world’s most influential personal technology platform, iOS. And now we know that Cook is willing to wield that power against Facebook when so moved.

In the New York Times, Kevin Roose made the case for Apple booting Facebook off of iOS altogether until it improves its privacy practices. That seems far-fetched. But at the very least, the possibility is now in the back of both companies’ minds.

Wednesday’s stunning earnings report taught us that Facebook’s scandals haven’t put the brakes on its inexorable growth. But Apple’s power play was also a good reminder that Facebook isn’t the only big tech platform with awesome power—and its recklessness could yet come back to haunt it in ways that no one predicted.