Despite its immense size and vast resources, analysts say Facebook will have a tough time establishing itself as a leader in private, encrypted communication.
Among other challenges, “Facebook ‘privacy-focused vision’ comes with a backdrop of looming privacy regulation and antitrust complaints,” Jessica Liu, a Forrester senior analyst at Forrester, says in a new note to investors.
Mark Zuckerberg “is trying to find an impossible balance between pushing for more users and more time spent in-app to fuel more advertising dollars, while also trying to build a ‘privacy-first experience,’ all under a cloud of potential anti-competition breakups,” said Liu.
Announced by Facebook’s cofounder-CEO on Wednesday, the forthcoming change has big implications for marketers.
“Such a to-be-determined business model is likely going to rely on Facebook’s ability to enable relations and transactions between consumers and brands,” said Thomas Husson, vice president-principal analyst, Forrester.
In the short term, Liu suggests ad targeting won’t be impacted, but brands might find it harder to engage with customers through Facebook’s messaging platforms.
“Over the long term, the impact of this privacy vision on Facebook’s ad business will depend on how Zuckerberg chooses to enforce it, and how he’ll balance it with a plethora of new offerings,” Liu said.
Even Zuckerberg acknowledges that the shift toward private messaging will be difficult.
“Frankly, we don’t have a strong reputation for building privacy protective services,” he admitted on Wednesday.
Among other issues, New York Governor Andrew Cuomo just called for investigations into Facebook’s “invasion of consumer privacy,” while two Senate Democrats recently asked the FTC to review claims the company manipulated minors into using their parents’ credit cards to make videogame purchases.
Zuckerberg’s announcement confirmed a recent story in The New York Times noting that Facebook was integrating the infrastructures of Messenger, Instagram and WhatsApp in order to enable end-to-end encryption across its network of properties.
Some analysts see such integration as a brazen move by Facebook to capture far more data from users.
“Zuckerberg is officially making wild data sharing a legitimate interest of his business,” said Enza Iannopollo, a Forrester senior analyst. “It sounds like a change in the small print, but it is not.”
“In practice, it means no more user consent is required every single time the sharing happens, no more opportunity for users to opt-out, no more opportunity to be forgotten, no more opportunity to remain in control over the data,” Iannopollo suggests. “From a user’s privacy perspective, this is a big loss, translating in less transparency, less choice, less control.”