Facebook F8: New Path, Same Familiar Missteps

F8 reveals privacy-centred future and opportunity beyond advertising

Facebook’s 2019 F8 developer conference had a very different feel to it than previous years and struck a sharp contrast with rival events such as Microsoft Build and Google I/O, both of which take place next week. Although there were the usual breakout sessions covering Facebook’s APIs, Spark AR Studio and promoting its Oculus virtual reality headset as the next computing platform, the tone has changed. The event revealed few grand product announcements and there was little chest-thumping about Facebook’s unrivalled scale and engagement.

This was a reset for Facebook. Mark Zuckerberg’s opening keynote speech was essentially a 60-minute manifesto pledge that built on his new strategy for Facebook, published in March (see Zuckerberg’s About-Facebook). The CEO walked on stage and without pausing for breath, launched into his vision for a privacy-first Facebook with the phrase “The future is private” emblazoned behind him.

To an auditorium full of developers, Mr Zuckerberg carefully presented the six pillars of Facebook’s new strategy: private interactions, encryption, reduced permanence, safety, interoperability and secure data storage. He painstakingly communicated the company’s commitment to an open and consultative approach, tools that are used for good and the construction of infrastructure needed to deliver his vision. This was a shrewd move. It’s essential that Facebook brings its developers along on the journey, and F8 is an important forum to show the world at large that the company’s taking steps to fulfil the promised vision.

But as is so often the case, Facebook is its own worst enemy. Having clearly articulated his vision, Mr Zuckerberg laughed about Facebook’s record on privacy and the likelihood that few people would take the company at its word. At the event in 2018, he delivered an impassioned speech in the wake of the Cambridge Analytica scandal about his company’s responsibility and its commitment to use its platform to improve lives. Concluding that keynote session, Facebook then announced a dating service (see Instant Insight: Facebook F8 Developer Conference 2018).

Facebook must ensure that its commitments and promises are supported by appropriate behaviour and actions that are consistent with its vision. The same dating service announced in 2018 will now be expanded to multiple markets — the groan from the audience was audible. Now isn’t the time for the high-profile promotion of a dating service. The fact that this mistake was repeated two years running is baffling.

This reversion to form underlines what has sparked a change in strategy. It’s hard to imagine that Facebook would have adopted a change of course with so much potential disruption to its core advertising business without broader pressure. The social media player knows that regulation is inevitable; being seen as proactive and taking steps to adapt its platform is the right move and means the company will be better positioned when the inevitable happens — assuming Facebook’s actions follow words. Ironically, regulation could make the large web platforms stronger by raising standards for everyone, a process that will disadvantage challenger players far more than established ones given their comparative lack of cash, scale and resources.

What’s striking is the uncertainty about the strategy shift. Mr Zuckerberg echoed his comments from the company’s release of its latest financial results when he said that “we don’t have all the answers for how this is going to work yet” (see Instant Insight: Facebook Results, 1Q19). Implications for its advertising revenue seem certain, as user engagement increasingly shifts to private conversations. This is reminiscent of the transition from desktop computing to mobile and the negative impact that this initially had on advertising revenue. However, we expect the privacy shift to be far more significant.

Notable at F8 were signs of Facebook’s plans for generating revenue. Payments are a clear priority: its Messenger and WhatsApp platforms boast formidable scale, with over 2 billion people communicating with end-to-end encryption. Shopping is also a leading candidate and Facebook announced the ability of users to buy items from creators within Instagram, to be launched next week. Unsurprisingly, other announcements focussed on enhancements to improve speed, reduce friction and heighten accessibility of its messaging apps. All these improvements will be crucial to building user engagement within private chats. For example, Facebook will introduce a Messenger app for Windows and macOS.

Facebook also announced that the Oculus Quest and Oculus Rift S virtual reality headsets will ship on 21 May 2019, priced at $399. Ironically, virtual reality now sits more comfortably in a privacy-centred strategy. The technology wouldn’t be able to replicate the network effect that made Facebook so successful, but it’s much better suited for personal interactions.

Although the post-Cambridge Analytica climate forced Facebook to change tack, privacy and greater emphasis on personal communication were necessary for the company to deepen its role in the fabric of daily life. In the long term, this could prove to have been a positive catalyst, but the short-term challenges are significant. Facebook is following a path paved by Tencent’s WeChat but is a long way behind. Its own missteps remain its biggest obstacle.