Bloom_Oct_08

Bloomberg Businessweek

October 8, 2018

PHOTO ILLUSTRATION BY

731; SOURCE: GETTY IMAGES

(2)

Edited by

Jef Muskus

FacebookCould

UseSomeNew

Stories

As in any relationship, once a company loses the

trust of its customers, there’s a long, lingering period

of suspicion that it’s bound to repeat its egregious

behavior. That greedy banks will take on too much

risk. That Chipotle will make customers sick. And

that Facebook will demonstrate it’s too creepy and

irresponsible to be an unquestioned staple of daily

life. Once trust is gone, it’s incredibly hard to win

back, and every misstep is magniied.

Facebook Inc. experienced a bit of this extra-

harsh spotlight on Sept. 28 after it reported a secu-

rity law that potentially let attackers hijack users’

accounts. It wasn’t a minor problem: The company

said the law afected almost 50 million accounts,

and it logged of 90 million users as a safety mea-

sure. It didn’t say whether accounts had been

hijacked as a result of the law. The Irish Data

Protection Commission is investigating the breach

and could ine Facebook as much as $1.6 billion if

it concludes the company violated the European

Union’s General Data Protection Regulation.

Although Facebook has a habit of underesti-

mating the number of people afected by its scan-

dals, for now it seems the company acted quickly

and responsibly once it discovered the techni-

cal vulnerability. The news of the hack reminded

people of previous Facebook scandals involving

Cambridge Analytica, Russian propaganda, and

Myanmar violence. It also cost the company 3 per-

cent of its market value. That was more money

than Tesla Inc. lost on the same day, when the gov-

ernment sued the carmaker’s chief executive oi-

cer for securities fraud. To people understandably

wary of Facebook after two years of scandal, the

combination of the words “Facebook” and “com-

promised data” are enough to bring up all the bad

feelings about the company.

Facebook doesn’t need any more distractions,

because it’s in the middle of a major shift in focus

and inancial strategy. Its big bet is on “stories,” the

short photo-and-video diaries that Snapchat pio-

neered and Instagram copied two years ago.

Stories are now everywhere at all four of

Facebook’s major properties. Instagram and

Facebook put people’s stories at the very top of

the sites’ apps so users can’t help but click on

them. On Sept. 26 the company opened its

○ A hack shows the company

is exceptionally vulnerable to

missteps as it tries to shift its

focus and financial strategy