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Facebook shares drop 4 percent after news feed changes

By Sheetal Sukhija, North Dakota State News
13 Jan 2018, 06:18 GMT+10

CALIFORNIA, U.S. - In a massive overhaul, Facebook Chief Executive Mark Zuckerberg has announced changes to the platform’s centerpiece news feed.

Following the announcement, Facebook shares fell 4 percent on Friday.

As part of the announcement, Facebook will change the filter for the news feed in a bid to prioritize what friends and family share.

This will, however, also mean that Facebook will now reduce the amount of non-advertising content from publishers and brands.

According to analysts, if the premarket declines in shares hold, Facebook stands to lose nearly $23 billion from its market capitalisation as a result of the move.

In a statement, Pivotal Research Group said its analysis of Nielsen’s digital consumption rates showed that usage was already falling even before Zuckerberg’s announcement.

In a note, Pivotal’s Brian Wieser wrote, “We can speculate that the concerns reflected in Zuckerberg’s post may very well have been driving these declines.”

Facebook has been facing widespread criticism for algorithms that may have prioritized misleading news and misinformation in people’s feeds.

This, investigators, complained influenced the 2016 American presidential election as well as the political discourse in several other countries.

According to Zuckerberg, Facebook’s advertising would be unaffected by the changes.

Facebook said in its statement that the shift was likely to mean that the time people spend on the network and some measures of engagement would go down in the short term.

The changes are set to have an impact on major suppliers of news and other content.

On Friday, John Ridding, the chief executive of the Financial Times, warned that the domination of online advertising revenue by search and social media platforms was putting pressure on media firms.

He explained, “The FT welcomes moves to recognize, and support trusted and reliable news and analysis. But a sustainable solution to the challenges of the new information ecosystem requires further measures. In particular, a viable subscription model on platforms that enables publishers to build a direct relationship with readers and to manage the terms of access to their content.”

Last week, Zuckerberg said in his opening 2018 statement that his "personal challenge" for the year will be to fix Facebook.

He wrote on the platform, “Facebook has a lot of work to do — whether it's protecting our community from abuse and hate, defending against interference by nation states, or making sure that time spent on Facebook is time well spent.”

He added that it wasn't possible to prevent all mistakes or abuses, but that the social network was making too many errors in enforcing its policies.

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