Yet another Facebook story
The absolute best times to hide a bad news story in the technology industry are considered to be: Friday at the end of the day, during an Apple keynote or the evening before any American holiday.
Facebook chose the latter, dropping a confession that yes, it did hire an opposition research firm to do dirty work, right as American journalists were logging off for the holiday. The post is an astounding, weird read that you should definitely click and read in full, but, here's what we learned:
While we’re continuing to review our relationship with Definers, we know the following: We asked Definers to do what public relations firms typically do to support a company — sending us press clippings, conducting research, writing messaging documents, and reaching out to reporters.
I mentioned this the other day when we looked at the New York Times revelations that Facebook had been engaging in shady practices, including creating its own fake news stories to discredit people that were against the company.
Initially Facebook denied the entire thing, as per the usual playbook. The about-face took less than a week, but now we know that Sheryl Sandberg had seen documents from the company, and that she technically signed off on the entire thing:
I asked our team to look into the work Definers did for us and to double-check whether anything had crossed my desk. Some of their work was incorporated into materials presented to me and I received a small number of emails where Definers was referenced.
The whole story is ludicrous, but what takes the cake today is that Facebook Newsroom post is a transcript of Elliot Schrage, Facebook's Head of Communications and Policy, speaking to the company — then his boss, Sandberg, owning him immediately afterward.
I'm sorry, I know we've covered Facebook a lot here, and I really don't want to talk about Facebook anymore either, but this stuff actually matters. That the company claims it had no idea this was going on, then it turns out the executive-level people who denied it actually approved it, even if it was somewhat unknowingly, is a serious problem.
Oh, and a related piece of news: the company is appealing the UK's £500,000 fine for exposing data in the Cambridge Analytica breach, because of course it is.
Foxconn planning deep cost cuts
The key iPhone assembler needs to save $2.9 billion in 2019 as smartphone sales slide, signalling that the industry is truly beginning to slow down. It cites a "difficult and competitive year" and indicates that the company misinterpreted demand for an array of gadgets.
We've been discussing this on Discord a bunch over the last day, and this story is a tricky one to unpack because there's so much to it: it arrives alongside other signals that iPhone sales are beginning to slow.
First, there's Apple stopping reporting unit sales before a traditionally key quarter, which is interesting even on its own. Second, an array of manufacturers are cutting production of iPhone parts due to what some reports say is weak demand.
Third, it appears that consumer interest in new products is fizzling much faster than in the past. Fourth, Goldman Sachs is now raising the alarm. Fifth, Apple just resumed manufacturing the iPhone X to meet minimum contract demands for OLED panels.
None of these things are unexpected! Smartphone sales growth can't go on forever, and we knew that the industry was about to experience a slowdown when HTC essentially imploded in late 2017, leading to a Google acquisition of thousands of engineers.
Every year, around this time, there have historically been reports of cuts just like these ones, however this is how prudent supply chain management works. Often, you order too many, then you adjust demand according to how well it sells.
This time may be different, largely because it's inevitable eventually, and to pretend otherwise is insanity. Like before, Apple's results won't be affected in the short term, because the average sale price of an iPhone is growing dramatically enough to hide slowing sales.
Foxconn, however, is in an interesting position: if sales are really slowing down it's exposed to risks more than anyone else in the world. More than 50 percent of the company's business relies on the iPhone, which surprised me, and it's already frantically looking to diversify as much as possible.
Lucky for Apple, it's the richest company in the world, so the people most upset will be the stock brokers if the inevitable has finally arrived. At least until the next platform war, of course.
