Mark Zuckerberg says his plan to break Facebook in 2 could put its $56 billion business model at risk

Mark ZuckerbergFacebook CEO Mark Zuckerberg.Getty

  • Facebook CEO Mark Zuckerberg published a 3,200-word plan to pivot to privacy.
  • His vision is to split Facebook in two, creating a public and a private space for users.
  • It will mean there are fewer ways for Facebook to gather the user information on which its $55.8 billion advertising business model relies.
  • Zuckerberg knows this - but has answers for potentially jittery investors.

It's almost a year to the day since Christopher Wylie blew the whistle on Facebook's giant Cambridge Analytica data breach, sparking a plague of scandals over how Facebook handles user information.

In that time, #DeleteFacebook has trended, Facebook's days of double-digit user growth were declared dead, and the firm's own research showed diminishing trust levels.

Something had to give.

Facebook has been signalling a pivot to privacy for months, but on Wednesday, CEO Mark Zuckerberg slammed the reset button in a thoughtful blueprint for the future.

In essence, Zuckerberg sets out a plan to split Facebook in two. To use his analogies, he wants to create:

  • A town square, where people can talk to many people at once. Think the Facebook Newsfeed, groups, Instagram posts, and Stories.
  • And a living room - a closed-off space where people can interact privately, using messaging with end-to-end encryption. Think WhatsApp, Messenger, and Instagram DMs.

Building and decorating the digital living room is one of Zuckerberg's big priorities over the coming years, and it is why his blog provided the clearest articulation yet of why he wants to combine the back ends of WhatsApp, Messenger, and Instagram Direct Messaging. He explained:

"You can imagine many simple experiences like this -- a person discovers a business on Instagram and easily transitions to their preferred messaging app for secure payments and customer support; another person wants to catch up with a friend and can send them a message that goes to their preferred app without having to think about where that person prefers to be reached; or you simply post a story from your day across both Facebook and Instagram and can get all the replies from your friends in one place."

But it will come at a cost. End-to-end encryption - along with other plans to give people more control over their data such as a clear history tool and disappearing posts - will make it harder for Facebook to gather the user information on which its business model relies. The company made $55.8 billion in revenue in 2018, the bulk of which came from advertising.

"He is coming down pretty hard on putting data outside of Facebook's reach for advertising," said former Facebook security boss Alex Stamos. Google Ventures general partner M. G. Siegler put it this way: "This is a tectonic shift. Either advertising has to be reimagined again, or weaned off of."

Zuckerberg knows this.

A tectonic shift for Facebook's business model

In an interview with Wired about his blog, the Facebook founder said growth will be "harder" to come by for his new-look company. "Certainly, ad targeting can benefit from having access to as much content or signal as possible," he said.

But Zuckerberg answered those potential investor jitters in two ways. Firstly, he said Facebook isn't "really using the content of messages to target ads" at the moment anyway, so encrypting messages isn't going to be a big loss.

Read more: Facebook and Google will be punished with giant fines in the UK if they fail to rid their platforms of toxic content

More importantly, however, he has a messiah-like confidence in his ability to create products that billions of people will want to use. Build it and they will come, is his message.

"There's still a huge amount of work just in building the consumer experience that people love, and that will be the foundation. If we do that well, the business will be fine," Zuckerberg told Wired.

"Well, you know, depending on how well we execute it, it could be better or worse, but it will be fine as long as we focus on building something that's good for people."

Critics will need convincing that Facebook is truly prepared to sacrifice revenue to right wrongs like the Cambridge Analytica catastrophe. Zuckerberg may have taken more than 3,000 words to lay down his manifesto for the future, but it will be his actions over the coming years that do the real talking. If successful, Facebook could be a healthier, happier place - and still make lots of money.
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