August 5, 2018
After the launch of the European Union’s General Data Protection Regulation (GDPR) on May 25 this year, the number of daily active Facebook users in Europe declined by 3 million people from the first quarter, declining to 279 million. In contrast, this number of users in North America remained stable at 185 million people.
Although the launch of GDPR is one sure affecting factor on this drop there was also the strong inquiry from the Cambridge Analytica data breach to consider as a contributing effect.
In an authorized declaration Facebook CEO Mark Zuckerberg said that GDPR was to censure in the user drop across Europe, while Aaron Goldman, CMO of 4C, a Facebook marketing partner said that “The application of GDPR in Europe and continuous scrutiny of secrecy plans after the Cambridge Analytica scandal left stockholders feeling unreliable about Facebook”.
Facebook’s association with Cambridge Analytica, the third-party developer accused of mishandling data of up to 87 million Facebook users and using it to assist target advertisements for political campaigns in the U.S. and the U.K, implied that the group had to rewrite its playbook for working with creators and audit hundreds of creators to explain any data it shared in the bygone days. Together with this Mr. Zuckerberg was compelled to meet with lawmakers in the U.S. and EU to testify concerning how Facebook is safeguarding user data. In the U.K. Facebook was struck with a $650,000 penalty, the maximum possible fine for mishandling user data.
With the launch of GDPR Facebook had to change many operational processes to comply with the new stricter secrecy rules. Users across Europe were made conscious of pending modifications to its secrecy policies. Together with this notification, all Facebook users were asked to confirm approval of its data gathering practices before being permitted to carry on to use Facebook.
Because of the decline in active users, Facebook also missed the income forecasts of most financial experts for the second quarter of the financial year. Facebook made $13.2 billion in income, shy of Wall Street’s expected $13.4 billion. The ad sales part of income hit $13 billion in the second quarter, good for a gain of 42 percent from the preceding 12 months.
Facebook shares plunged when the results were circulated and continued to decline during CEO Mark Zuckerberg and Chief Operating Officer Sheryl Sandberg’s earnings call with Wall Street experts.