Facebook’s (FB - Free Report) new gaming hub can help it lure gamers from Twitch and YouTube, its Marketplace ads can open the door to a new revenue stream, but its data sharing practices will remain a headache as regulators the world over take stock of its privacy practices. Users appear unperturbed however, with hardly anyone dumping the platform. Here are the details-
A Gaming Video Hub
Facebook has launched a gaming video hub called Fb.gg (gg stands for the standard post game courtesy of saying good game) that is a collection of all the games streaming on the platform. Users interested in gaming content can head there for a piece of the action, which currently includes live streams of popular games like Fortnite, PUBG and FIFA 18, as well as a selection of recommended games based on the user’s liked pages and activity on Facebook.
Being what Facebook is, it does help gamers reach a wide audience. But what really attracts them is a way to make money. So now, those with at least a 100 followers streaming for at least four hours within the last 14 days can hope to earn from the number of stars awarded by their fan base. They also qualify for tips on how to increase their followers and other perks.
Users can buy packs of stars to award gamers, of which Facebook takes a cut of anywhere between 5 and 30%. For each star awarded, the gamer gets $0.01 from Facebook.
Facebook has roped in popular gamers MelonieMac, Darkness429, MissesMae and StoneMountain64 to kick things off.
The goal is of course to lure some of the gamers away from Amazon’s (AMZN - Free Report) Twitch and Alphabet’s (GOOGL - Free Report) YouTube Gaming. A recent Pew Research report showed that Facebook was losing its teen users to YouTube and newer messaging formats like Instagram and Snapchat (SNAP).
One way it can get those users back (or at least some of them) is by focusing on gaming. It turns out that around 97% of boys and 83% of girls are now gamers. Younger audiences are what advertisers love most, so it’s the way to go.
Ads on Marketplace
Facebook is bringing ads to Marketplace, where anything from an extra batch of foodstuffs and plumbing services to used cars and apartment rentals are sold. Both individuals and brands can now target users in the U.S., Canada, Australia and New Zealand using “the traffic, conversions, product catalog, video views and reach objectives” Facebook offers.
This can be quite an opportunity for Facebook, helping it monetize small sellers and capture a piece of the local classifieds market. CEO Mark Zuckerberg mentioned at F8 that Marketplace has 800 million monthly visitors.
A Bug Exposed Private Posts
Facebook blamed a bug for leading some 14 million users to post publicly by default between May 18 and 27. Facebook settings generally set the default according to the user preference last indicated. So if you once post privately, future posts are always set to private until you change that setting.
In this case, Facebook inadvertently changed the setting while it was testing a new feature that would let users automatically share "featured items" on their profiles publicly, irrespective of their preference on other posts.
Facebook said it has already reversed the mistake, notified affected users and asked them to check their posts.
Data Sharing with Chinese Companies
Facebook faced congressional questioning (from both Republicans and Democrats) over data sharing with four Chinese hardware makers. It appears that these hardware makers could access not just information related to the particular user, but also information related to their friends, even those that explicitly declined to share their information with third parties.
The company said in response that data was in fact shared with 60 device makers, including not just the Chinese players Huawei, Lenovo, OPPO and TCL, but also Samsung, Apple, Amazon and Blackberry for the purpose of enabling Facebook-like experiences, that it retained tight control over the APIs, that data was stored on the users’ devices and was never on its partners’ own servers, and that users had control over the experiences they chose.
Facebook announced recently that it was doing away with these arrangements because they were not used anymore. But it’s significant that this judiciousness was not exercised sooner although there has been no use for the arrangement for several years (earlier, hardware makers needed to build customized apps so users could experience Facebook). It’s also significant that it followed the Cambridge Analytica scandal and GDPR implementation.
The FTC, which said in March that it was investigating Facebook’s privacy practices, may now also investigate whether these partnerships violate Facebook’s 2011 consent decree, which prohibits it from overriding users’ privacy settings without consent.
Data Sharing Challenge in India
A government statement conveyed deep concern over Facebook data sharing with device makers, citing media reports: "Recently there are media reports claiming that Facebook has agreements which are allowing phone and other device manufacturers access to its users' personal information, including that of their friends, without taking their explicit consent.
"The Government of India is deeply concerned about reports of such lapses/violations…The Ministry of Electronics and Information Technology has sought an explanation from Facebook seeking a detailed factual report on the issue. Facebook has been asked to respond by June 20."
India is Facebook’s largest market, ahead of the U.S. (the second largest market) by 30 million active users. So problems in India could be a big deal for the company.
More on Data Sharing
European authorities are also concerned about this revelation that even more data was shared than previously imagined, this time with hardware makers. Germany’s top privacy regulator, Johannes Caspar, has accused Facebook of “unprecedented violation of privacy laws and user trust.”
Separately, the WSJ reported that Facebook offered some partners like Royal Bank of Canada and Nissan Motor Co. special access to user data after 2015, including information about their friends along with their phone numbers, and what it internally refers to as a "friend link" that measures closeness between users.
Facebook shares carry a Zacks Rank #3 (Hold). So better options at this point are buy-ranked Baidu (BIDU - Free Report) , The Trade Desk (TTD - Free Report) and United Internet AG (UDIRF - Free Report) . You can also see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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