The Facebook Backlash Has Begun

Facebook has faced regular heat and criticism of its privacy policies since the beginning. However since the Facebook S-1 and the recognition that its IPO will make many employees into millionaires and billionaires, there’s a new quality and intensity to the criticism.

In the past week, for example, the New York Times as run multiple articles that are somewhat or mostly critical of Facebook. Among them are the following:

• Those Millions on Facebook? Some May Not Actually Visit (about Facebook overstating its traffic)
• Facebook Is Using You (critical opinion piece by Chicago law professor about data mining on Facebook)
• Disruptions: Facebook Users Ask, ‘Where’s Our Cut?’ (Facebook depends on its users’ content and how there’s something in “unfair” in cashing in on that)
• The $1.6 Billion Woman, Staying on Message (a generally favorable profile of Facebook COO Sheryl Sandberg, except for the headline and discussion of her personal wealth)

It’s not just The Times, many other news outlets and tech blogs are playing up the “contrarian” angle or arguing that Facebook may not deliver for investors. In that category is Silicon Alley Insider’s Facebook Revenues Are Decelerating. And then there are the general “is Facebook really worth $100 billion?” articles, such as the WSJ’s Facebook’s $100 Billion Question.

Some of this is just analysis coverage in the wake of concrete information revealed in the Facebook IPO filing documents. But there’s something more subtle here too: a kind of resentment that Facebook is creating so much wealth for a relatively small group of lucky insiders off millions of people’s pictures, posts and “Likes.” In much of the coverage there’s an explicit or underlying critique that Facebook is exploiting users’ interests to generate ad revenues — and that it will need to do more of it in order to justify its valuation.

Internationally there also seems to be some “resentment” of yet another big American company dominating the internet in their countries. While its too simplistic to say that the new European privacy rules are guided by this, one gets the sense that there wouldn’t be quite as much “intensity” around the privacy debate if Facebook or Google were French companies for example.

I believe that regulators, governments and journalists around the world will be less tolerant of Facebook the post-IPO $100 billion internet giant vs. Facebook the fast-growing internet startup. This is the same thing that happened to Google. When the money came, some of the popular “good will” left.

While Google for several years after its IPO still thought of itself as a benevolent internet upstart, more and more people saw the company as a self-interested juggernaut and “homewrecker.” That’s in part why Google is facing so much pushback and so many investigations around the world.

Facebook can expect the same kind of “resistance” going forward. The company can learn from Google’s PR mistakes (and perceived arrogance) and act with humility and transparency in its dealings with users and governments. This is where the more diplomatic Sheryl Sandberg does a better job than Mark Zuckerberg. (Sandberg will be a politician or public official at some point in the future.)

There is now a category of people out there — call them the “schadenfreude class” — who are rooting for Facebook to underperform or fail in some way. The company must be mindful of this and the perception it’s “taking advantage” of its users and their information.

The Facebook “backlash” has begun.