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Facebook (FB), the world’s largest social network with nearly 3 billion daily active users, is once again awash in controversy. But that won’t deter it from continuing to gain users or generating revenue.
After a series of articles by The Wall Street Journal revealed Facebook was either unwilling or unable to address systemic issues related to everything from users’ mental health to human trafficking, the social media giant has seen no major backlash from investors or advertisers.
And despite Sen. Marsha Blackburn (R-TN) and Sen. Richard Blumenthal (D-CT), who sit on the Senate Commerce Committee’s subcommittee on consumer protections, opening a probe into the report’s allegations, Facebook is unlikely to suffer any consequences that hurt it where it counts: its pocketbook.
“I think that the impact of these stories on Facebook in the long run, would be minimal,” NYU Stern School of Business professor Arun Sundararajan told Yahoo Finance.
In fact, according to Sundararajan, investors may view the news, if not as positive, then as neutral to the company. That’s because the reporting shows that Facebook is attempting to address at least some of the issues raised in the articles, while simultaneously trying to limit the impact any changes have on its advertising revenue.
Facebook’s users aren’t going anywhere
Proof of Facebook’s resilience in the face of its multiple controversies was on full display Wednesday when the company’s stock fell more than 4%, its lowest point since July, on news that its advertisers were having more difficulty reaching potential customers thanks to Apple’s iOS privacy changes. That’s a far larger drop than at any point since the WSJ’s reporting went public.
More importantly though, users around the world are still joining the sprawling social network, while those who are already there are unlikely to leave. And as long as there are billions of users on board, the company will continue to power forward.
“Facebook will weather this storm as they have done in the past,” Niklas Myhr, Chapman University assistant professor of marketing, told Yahoo Finance.
“They have a lock-in effect. They have users that are quite addicted to their platforms, and they already have all of their friends there,” explained Myhr, who is known as The Social Media Professor. “Out of pure convenience, people stay where all of their friends are.”
In Q2 2021, Facebook reported having 2.7 billion daily active users, a 12% year-over-year increase from 2.5 billion users in Q2 2020. And while that increase was smaller than the 15% growth it saw from Q2 2019 to Q2 2020, it’s still proof that the company continues to…
Read More: Facebook’s latest controversies won’t hurt its bottom line