The past two weeks have been tough for Facebook, Inc. (NASDAQ:FB) — and a rough ride for investors, who have seen FB stock shed 17% of its value. It looks as though the Cambridge Analytica scandal that’s rocked the company since March 17 has claimed another victim. According to a Bloomberg report, the Facebook smart speaker that was expected to be unveiled at the company’s May F8 developer conference has been shelved, at least for now.
Given the crisis the company finds itself in over data privacy, launching an always-on, always-listening Facebook smart speaker equipped with a face recognizing camera for video chat is pretty much a non-starter.
Facebook Smart Speaker Rumors
Everyone who is anyone is on the smart speaker train. The devices have turned into the hottest consumer electronics product category, with sales up 300% in Q4. Amazon.com, Inc. (NASDAQ:AMZN) — the company that kicked off this whole rush with the Amazon Echo — continues to dominate the market. Meanwhile, Alphabet Inc’s (NASDAQ:GOOGL) Google Home is playing catch up. And earlier this year, Apple Inc. (NASDAQ:AAPL) finally released its HomePod.
Facebook has been missing from this party, which has morphed into a social sharing opportunity as well, with both Amazon and Google adding free voice calling to their speakers. And the Amazon Echo Show added video calls the mix. For Facebook, other speakers having communication abilities changes smart speakers from missed opportunity to potential threat.
And Facebook wasn’t going to sit out much longer. The company’s secretive Building 8 hardware division has been primed to start pushing out gear. Product sales would help reduce FB stock’s reliance on ad revenue, while making the entire platform stickier for consumers.
Rumors have been swirling that the company was planning a big reveal on May 1 at F8, its annual developer event. The marquee product set to be unveiled was a Facebook smart speaker with voice command, an integrated touch screen, video and music streaming and a wide angle lens capable of face recognition. Also in the pipeline was a more affordable, more traditional smart speaker that would compete directly against the Amazon Echo and Google Home.
Report: Facebook Smart Speaker on Hold
According to a report from Bloomberg, the Facebook smart speaker launch is now on hold, a victim of the fallout from the Cambridge Analytica crisis.
Facebook is currently under a regulatory microscope and facing consumer wrath over its treatment of user data after the March 17 reveal that Cambridge Analytica had obtained information about 50 million Facebook users. The scandal has rocked trust in the company and pummelled FB stock. Facebook is scrambling to put measures in place to shore up security and user privacy. But in the meantime the Facebook smart speaker plans are on hold.
Bloomberg notes that focus groups had already raised concerns about Facebook hardware in their homes. And that was well before the current situation.
Any smart speaker raises privacy concerns. The always-on nature of the microphones and what companies do with the data collected is an ongoing question. The flagship Facebook smart speaker reportedly not only had the always-on microphones, it supposedly had a camera and AI smarts that could identify people it spotted and link them to their Facebook account.
In the current climate, Facebook was smart to shelf the smart speakers — at least for now. Assuming things eventually blow over, it can always try again.
Then again, after watching Apple’s slow start with the HomePod, the company may decide Amazon and Google are currently too dominant in the space. And it might make sense to scrap the Facebook smart speaker altogether rather than risk Building 8’s first big hardware release being a flop.
As of this writing, Brad Moon did not hold a position in any of the aforementioned securities.