Another day, another controversy about Facebook Inc (FB) and its ethics. While that certainly hasn’t been able to stifle FB stock — shares are up 40% in the last year — shareholders shouldn’t take that for granted.
The latest allegation regards the Brexit, the highly topical issue of the U.K.’s potential rift from the European Union.
Apparently, users looking through FB’s “activities” suggestions within the status update tool were given the option to say that they were “in favor of leaving the EU.” According to Fortune, there was an outlash on social media because many people weren’t shown “the in favor of remaining in the EU” option unless they searched for it.
Will this have an immediate impact on the FB stock price? Probably not. But could Facebook shares face long-term pressure if it turns out Facebook is actually manipulating its platform to influence politics?
Absolutely.
FB Stock: The Risk of Tinkering
This isn’t the first time the world’s leading social network has been charged with manipulating its user experience to push certain ideals. In May, there was an uproar that even attracted the attention of Congress, as a former FB employee claimed the site’s “trending topics” section was intentionally given a liberal bias.
Facebook launched an internal investigation and concluded that the charges were baseless, but needless to say it left many users skeptical.
In my opinion, one of the most insidious risks to FB stock is that these controversies continue to plague the company, which may very well see an exodus of users that feel ostracized, excluded or otherwise silenced.
I see this as a real threat because Facebook has some well-chronicled trust issues already. They originate with the start of the company itself, when in the early stages, CEO Mark Zuckerberg was caught in a message mocking the users for trusting him with their information.
FB has also conducted several secretive social experiments, where it manipulated users’ News Feeds in arguably very unethical ways. Reports the Wall Street Journal:
“To determine whether it could alter the emotional state of its users and prompt them to post either more positive or negative content, the site’s data scientists enabled an algorithm, for one week, to automatically omit content that contained words associated with either positive or negative emotions from the central news feeds of 689,003 users.”
Yikes.
I honestly don’t know what to make of this whole Brexit situation except to say that FB stock owners cannot afford to risk losing a big portion of the site’s audience, should trust and politics continue coming to the forefront.
Take note, Zuckerberg. Stay out of politics, or risk destroying shareholder value.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
