August 2, 2012, was a day when the world issued a collective unlike to Facebook.
Its stock fell another four percent and even went below the $20 mark (to $19.82) before closing at $20.04. All told, Facebook’s stock is down 47 percent from its May 17th IPO.
Two of Facebook’s senior executives, Katie Mitic (former director of platform marketing) and Ethan Beard (head of platform partnerships), announced they are leaving the social media company for other, yet unspecified opportunities. Back in June, former chief technology officer Bret Taylor had said he was leaving Facebook to embark on his own venture.
9 percent of Facebook’s users are fake, the company announced. That is, some 83 million of its 955 million active accounts are illegitimate. 4.8 percent are duplicates; 2.4 percent are “user-misclassified” (the accounts are personal profiles for pets, businesses or organizations); 1.5 percent are “undesirable,” meaning that they contain fake names and (according to documents from Facebook) are “intended to be used for purposes that violate our terms of service, such as spamming.”
BBC technology correspondent Rory Cellan-Jones says that these problems are “particularly acute in developing countries like Indonesia and Turkey where Facebook is enjoying rapid growth.” These fake users generate scores of fake “likes,” Cellan-Jones explains. He investigated this by setting up a fake company, Virtual Bagel:
His investigation found that the large majority of “likes” for the fake firm originated from the Middle East and Asia.
Many users appeared to be false, such as “Ahmed Ronaldo” – apparently a Cairo-based user who is employed by Spanish football club Real Madrid.
All of these fake “likes” bode very badly for Facebook’s advertising revenues, an area that has been routinely noted as a source of concern. The assumption had been made that, since Facebook has so much access to so much personal data from users, the company has a potential gold mine in profits if it can just figure out how to finesse the ad situation. But Cellan-Jones’s investigation suggests that many of those “liking” an ad are not real, actual human beings who would actually, really buy something.
Indeed, digital distribution firm Limited Press has found that 80 percent of clicks on its ads on Facebook are from fake users:
In a post on its Facebook page, the company said: “Bots were loading pages and driving up our advertising costs. So we tried contacting Facebook about this. Unfortunately, they wouldn’t reply.
“Do we know who the bots belong too [sic]? No. Are we accusing Facebook of using bots to drive up advertising revenue. No. Is it strange? Yes.”
Facebook CEO Mark Zuckerberg has lost about $4.7 billion on paper but the losses are also affecting the state of California. Due to Facebook’s share price falling so below projected revenues, the state faces the loss of “hundreds of millions of dollars” in revenue from taxes on capital gains that it was banking on.
With shocking rapidness in the months after its IPO, Facebook is turning into, if not “Fakebook,” a very different story.
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Photo by B Rosen