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Economic historian Niall Ferguson: It's hard to see how Facebook's business model remains intact

  • Facebook is vulnerable to a user revolt and a government crackdown, says Niall Ferguson.
  • Shares of Facebook were under intense pressure again Thursday morning in the wake of the Cambridge Analytica data scandal.
  • Facebook co-founder and CEO Mark Zuckerberg broke his silence on the matter Wednesday, in an apology tour.

Facebook is vulnerable to a user revolt and a government crackdown in the wake of the Cambridge Analytica data scandal, historian and prolific author Niall Ferguson told CNBC on Thursday.

"Over a five-year time horizon, it's hard to see that its business model is going to survive intact. Because the core of the business model is essentially selling the users' data, making it available indirectly to advertisers," Ferguson said in a "Squawk Box" interview.

Shares of Facebook were under intense pressure again Thursday morning after a brief respite in the previous session. But as of Wednesday's close, the stock was down about 8.5 percent since Friday.

"The lesson of economic history is that companies like Facebook are very vulnerable to two things. One [is] a shift in public sentiment where the users just say, 'We're not going to trust you anymore.' And No. 2 [is] a change in the regulatory environment," said Ferguson, whose most recent book, "The Square and the Tower: Networks and Power, from the Freemasons to Facebook," explores what the history of human connectivity portends for the future.

Regulators in the United States and Europe have been demanding answers since the weekend allegations that Cambridge Analytica, which worked with Donald Trump's presidential election team, misused the data of 50 million Facebook users.

Facebook co-founder and CEO Mark Zuckerberg broke his silence on the matter Wednesday, in an apology tour that included television and print interviews. He said he would be open to testifying before Congress, while seeming resigned to his company facing new regulations. He also said he has not seen a "meaningful number of people" deleting their accounts.

"The FTC is coming to Silicon Valley. And this time, I think, 'No more Mr. Nice guy,'" Ferguson said, adding regulators should re-examine whether Facebook and other social networks should be held legally responsible for the content that's posted on their platforms.

Ferguson said a possible regulatory solution could be to prevent Facebook from buying any more companies that it perceives to be a competitor, like it did with Instagram and WhatsApp. "You could [also] talk about breaking [up] these companies," such as Facebook.

The more than 2 billion people active on Facebook every month also need to take some responsibility, Ferguson said. "Users need to be skeptical. I think I detect amongst the younger generation great skepticism about Facebook. We all were slightly foolish. We gave away far too much about ourselves and about friends, and they basically sold it to the highest bidder."

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