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Privacy Revamp Makes Facebook Inc (FB) Stock Even More Attractive

The ACLU's recent digging has forced change in practices for the social network, and that only helps FB stock

By James Brumley, InvestorPlace Feature Writer

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Score one for civil liberties. This week, social networking giant Facebook Inc (NASDAQ:FB) overhauled its privacy policies, blocking police departments from using the site as a means of keeping tabs on users who may also be associated with violent protesting.

On the surface, it may seem irrelevant to the current and future value of Facebook stock. Most members of the ad-driven platform know they’re of no interest to law enforcement officials, and the protestors that were making themselves known on the social media site likely didn’t know they were being watched (and therefore didn’t alter the way and frequency with which they used the website).

In other words, so what?

Thing is, it’s more than conceivable there were enough users of the Facebook platform that had been steering clear due to privacy concerns — just on principle — to expect them to log on now that their privacy is being protected.

Privacy Remains Contentious Topic

It’s neither a new debate, nor is it a minor one.

So, in the grand scheme of things, it’s not difficult to believe that Facebook was looking the other way when it knew law enforcement officials were using its platform as a new tool in the war on crime.

The question Facebook stock holders should be asking: At what point does accommodating every policy and agency request make the website too alarming for even the average user to visit?

FB stock chart

The American Civil Liberties Union asked the question, and then answered it in a way that put Facebook in a questionable light. The company responded with a change in its policy.

New Policies Curtail Pinpointing

As of Monday, police and other law enforcement agencies can no longer tap Geofeedia’s data, which was built to pinpoint where Facebook users are — Facebook completely cut off Geofeedia’s access to the site. It’s not necessarily a permanent hurdle, but it is one that will remain in place indefinitely on the location-based analytics platform.

Facebook’s deputy chief privacy officer Rob Sherman commented: “Our goal is to make our policy explicit.”

New Page

The clarified policy does not preclude FB from assisting law enforcement officials on a case-by-case basis. Indeed, the company says it still intends to assist police when appropriate. Presumably, this would mean instances where a search warrant has been issued, which requires a reasonable suspicion that retrieving such information would help lead to a successful prosecution.

Twitter Inc (NYSE:TWTR) and Facebook unit Instagram also booted Geofeedia from using their websites to gather and sell user information following the ACLU’s exposure of the organization’s invasive tactics.

Bottom Line for Facebook Stock

On the surface it seems like a potential setback for Facebook, and by extension for Facebook stock. One of the most compelling features of the social media platform to advertisers was the deep, broad, and well-defined data the company could collect about each and every user.

If it’s scaling that detail back — and presumably it’s doing so to more developers than just Geofeedia — then the potential value to advertisers is crimped.

Don’t overthink it, though, and don’t assume there’s a cut-and-dried if/then relationship between how invasive a website can be and how valuable detailed user data is to an advertiser. They say they want stratification, but many advertisers are content to promote their product or service to any reasonably targeted consumer.

On the other hand, consumers are more apt to use caution when it comes to websites that may nefariously collect data on a consumer, even without their consent or knowledge. People have a decent sixth sense when it comes to being unreasonably monitored.

In other words, a FB that’s more interested in basic civil rights is a better investment than one that’s not. The trade-off is more than palatable.

As of this writing, James Brumley did not hold a position in any of the aforementioned securities.


Article printed from InvestorPlace Media, https://investorplace.com/2017/03/new-privacy-policy-makes-facebook-stock-ownable/.

©2017 InvestorPlace Media, LLC