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Privacy Controversy Aside, Facebook Users Are Sticking Around

By Evan Niu, CFA – Apr 3, 2018 at 9:00AM

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Just 1% of users are deactivating or deleting their accounts.

It's been a rough couple of weeks for Facebook (META -0.74%). The Cambridge Analytica scandal that saw personal data of 50 million users leaked has shaken the social networking giant to the core, and CEO Mark Zuckerberg has been on damage control. One of the most prominent risks associated with the controversy is the possibility that users will revolt, perhaps concluding that the free service isn't worth the privacy cost, and delete or deactivate their accounts. If enough users did, that could put pressure on Facebook's advertising business, as advertisers follow eyeballs.

Facebook users might be unnerved by the revelations, but it seems that for the most part, they're sticking around.

Mark Zuckerberg speaking on stage

Facebook CEO Mark Zuckerberg. Image source: Facebook.

Survey says

Deutsche Bank Markets Research has released the results of a recent survey (via Tech Trader Daily), and just a mere 1% of 500 respondents said they had deleted their Facebook accounts in the wake of the Cambridge Analytica scandal. Some respondents did concede that they may use the platform less going forward. Incidentally, many said they would shift their usage to Instagram, a Facebook subsidiary. Despite privacy concerns, most users still aren't willing to pay for the service, even if that would grant them an ad-free version.

The survey results largely support comments Zuckerberg made last month in a series of damage-control interviews. His Zuckness told The New York Times that "I don't think we've seen a meaningful number of people act on" the trending #DeleteFacebook campaign. In an interview with Vox last week, he also pointed out that many users in some emerging markets simply can't afford to pay for the social networking service, and the advertising model enables Facebook to still serve those users: "The reality here is that if you want to build a service that helps connect everyone in the world, then there are a lot of people who can't afford to pay. And therefore, as with a lot of media, having an advertising-supported model is the only rational model that can support building this service to reach people."

Additionally, keep in mind that many of those emerging market users don't really have the option to delete Facebook, since the platform is oftentimes their only way to interact with elected representatives or their local communities. In some cases, Facebook quite literally provides internet access to users through its controversial Free Basics Platform, which covers 1 billion people across 63 countries.

Generally speaking, outrage in response to these types of crises is strongest immediately after the news breaks, but that fades in subsequent weeks or months. That could suggest that a 1% abandonment rate could be the worst of it. In absolute terms, 1% would represent 21.3 million users if applied to Facebook's global monthly active user (MAU) base of 2.13 billion.

Facebook shareholders should keep a close eye on users and engagement in the quarters ahead to see if the backlash is manifesting in any meaningful way.

Evan Niu, CFA owns shares of Facebook. The Motley Fool owns shares of and recommends Facebook. The Motley Fool has a disclosure policy.

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