Facebook allegedly misled investors as it lost young users

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Facebook allegedly misled investors as it lost young users

Facebook allegedly misled investors and masked slowing growth among critical demographics like young users in the US, according to internal documents leaked by whistleblower Frances Haugen.

The documents show that young people are generally spending less time on Facebook, fewer teens are signing up and many new teen accounts are duplicates as opposed to unique new users, Bloomberg reported Monday.

People across age groups are also creating fewer posts, and it’s unclear to Facebook employees why all this is happening, Bloomberg said, citing Facebook’s internal research.

And while Facebook has internally studied its declining popularity among young users, it’s been fairly mum on the subject in official communications with investors, the report said, an allegation that forms the basis of Haugen’s whistleblower complaint that Facebook “has misrepresented core metrics to investors and advertisers.”

Teenagers and young adults are key demographics in the advertising market as companies seek to build relationships with people before they hit their peak income and spending levels.

The documents were among the tens of thousands of pages of internal reports at the company leaked by Haugen, a former employee. The internal reports formed the basis of Haugen’s formal whistleblower complaint with the Securities Exchange Commission and were handed over to the agency and to Congress, Bloomberg said.

Frances Haugen.
Frances Haugen has alleged that Facebook “has misrepresented core metrics to investors and advertisers.”
MediaPunch/BACKGRID

Redacted versions of the documents were then shared with a consortium of news organizations, including Bloomberg, which are expected to publish a slew of stories Monday.

While Facebook’s challenges recruiting teen users onto its platform have been previously reported, the new documents reportedly show that a cohort of slightly older, “young adults” has been on the decline for almost a decade, as well.

“There is a [young adult] sharing problem,” one internal report from early 2021 says, according to Bloomberg. “They are choosing other apps to share day-to-day moments and life moments.”

The documents cited by Bloomberg included, among other things, a chart showing that US teenagers’ “time spent” on Facebook was down 16 percent this year compared with 2020.

Facebook messenger for kids.
Young people are generally spending less time on Facebook and fewer teens are creating accounts.
Richard Drew/AP

A series of slides also showed that young people were taking much longer to create their first Facebook account that they did previously.

Most people born before 2000 created a Facebook account by age 19 or 20, the internal research said, but people born later aren’t expected to join the social network until they’re around 24 or 25, if ever, Bloomberg reported.

“What should we (particularly) optimize for among young adults?” one of the reports asked, referring to users between the ages of 18 and 29, according to Bloomberg. “We don’t know enough to know.”

Facebook spokesperson Joe Osborne pushed back against the data in the leaked documents, saying, “Our products are still widely used by teens, but we face tough competition from the likes of Snapchat and TikTok.”

Mark Zuckerberg.
Facebook CEO Mark Zuckerberg has said that media coverage of Frances Haugen’s leaks “misrepresents our work and our motives.”
Mandel Ngan/Pool via AP

“All social media companies want teens to use their services. We are no different,” Osborne continued. “That’s why we’re continuing to build new products and features that are entertaining and help teens, their friends and family stay connected to each other.”

Osborne added that the company’s filings with the SEC do alert investors to its recent challenges like estimates of duplicate and false accounts.

Facebook is “confident that our disclosures give investors the information they need to make informed decisions,” he told the outlet.

Facebook did not immediately return The Post’s request for comment.

Frances Haugen.
More documents leaked by Frances Haugen showed that Facebook has struggled to crack down on human trafficking-related content.
Shawn Thew/EPA

The platform’s CEO Mark Zuckerberg has denied Haugen’s allegations wholesale and said in a note to staff that media coverage of her leaks “misrepresents our work and our motives.”

Another batch of the leaked documents also showed that the company has for years struggled to crack down on human trafficking-related content on the site, according to CNN.

Facebook has known about human traffickers using its platforms since at least 2018, the report said.

The issues spilled into public view in 2019 when Apple threated to pull Facebook and Instagram’s access to the App Store, which would have been devastating to the company.

Kid on Facebook.
Facebook has reportedly known about human traffickers using its platforms since at least 2018.
Paul Sakuma/AP

While Facebook managed to dodge the App Store ban, it continues to struggle with human-trafficking issues to this day, the documents show, according to CNN.

“We prohibit human exploitation in no uncertain terms,” Facebook spokesperson Andy Stone told the outlet.

“We’ve been combatting human trafficking on our platform for many years and our goal remains to prevent anyone who seeks to exploit others from having a home on our platform.”

Shares of Facebook were down less than 1 percent in premarket trading Monday after falling over 5 percent on Friday. The stock was last seen exchanging hands at $322.63 per share.

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