About 3 percent of Facebook's annual advertising revenue could be at stake because of the scandal involving its handling of user data, according to a widely followed tech analyst.
The social media giant may feel that lost revenue, which could range from $1 billion to $2 billion, as a result of the public revelations about Cambridge Analytica, according to Daniel Ives, the chief strategy officer at GBH Insights.
According to GBH's Tech Tracker user survey that monitors the public's sentiments toward Facebook, the company has not suffered overwhelming reputation damage: "About 15 percent of users" have decided to disengage from the platform due to the scandal, Ives said.
That survey finding, Ives said, is what led to his firm's estimate of Facebook's potential revenue loss. As of now, GBH Insights considers that damage to be "contained," he said.
Facebook CEO Mark Zuckerberg, himself, shared the importance of advertisements to the company's business model during a grilling on Capitol Hill. In reply to U.S. Senator Orrin Hatch's question on how Facebook's online platform was sustained when "users don't pay for your services," Zuckerberg answered: "We run ads."
In its annual report filed earlier this year, Facebook said: "We generate substantially all of our revenue from selling advertising placements to marketers."
According to the CEO, it is integral that Facebook is affordable for everyone so it can meet its mission of trying "to help connect everyone around the world, and to bring the world closer together."
