In recent months, Facebook CEO and co-founder Mark Zuckerberg, has come under fire for his company’s role in Cambridge Analytica using the private data of more than 50 million Facebook users to influence the 2016 presidential election.
So damning was the breach of data that Congress called him on the carpet April 10 for two days of questioning about the matter. Naturally, as is often the case in Washington, nothing came of the two-day affair.
Tim Cook is Holier Than Thou
Apple Inc. CEO Tim Cook has been clear in the past where he stands on data privacy: he’s for it. In March, he told Recode’s Kara Swisher and MSNBC’s Chris Hayes in an interview that Apple wouldn’t be in the position Facebook’s in because his company doesn’t use its customers’ data to make money.
“We can make a ton of money if customers were our product,” Cook said in the interview. “We have elected not to do that.”
This is the Tim Cook that I love. Not the guy who initiates a $100 billion stock buyback.
Cook gave the commencement speech at Duke University over this past weekend reminding students that good technology need not take away from your right to privacy.
“We reject the notion that getting the most out of technology means trading away your right to privacy, so we choose a different path: collecting as little of your data as possible, and being thoughtful and respectful when it’s in our care,” Cook told Duke’s graduates. “Because we know it belongs to you.”
Of course, it does.
But that doesn’t mean businesses aren’t going to try to extract as much information about their customers as is humanly possible to gain an edge over their competition.
Do you remember the quote by Norm Peterson (played by George Wendt) from the TV series Cheers?
“It’s a dog eat dog eat world, Woody and I’m wearing Milk Bone underwear.”
It sure is.
Facebook was going to leverage its data to the hilt until it got caught. Well, it has, and now the company’s hold on advertising is a little less certain, which a good thing if you value privacy and user rights.
Calls for the Federal Trade Commission to force Facebook to sell Instagram and WhatsApp to increase competition in social media will and should continue until Facebook does the right thing and resolves the privacy concerns of Facebook users to the satisfaction of the federal government.
It’s hard to believe but almost 60% of Americans have no idea that Facebook owns Instagram. That means a good portion of the young people who’ve abandoned Facebook for Instagram have no idea they’re still supporting Mark Zuckerberg and company.
CBS News reported on the subject in April. One college student it spoke to about the incestuous relationship had no idea Instagram was owned by Facebook, but it could alter the student’s decision to continue using Instagram.
“It means they’re probably following me. Just like they do on Facebook,” the college student said. “I don’t like my privacy invaded.”
You and 365 million other Americans.
To break up Facebook would devastate the company’s ability to generate massive profits because Instagram is the engine that keeps it growing. Without Instagram, Facebook might as well be Myspace.
Which is the Better Stock: Apple Inc. or Facebook?
In April, I suggested that Facebook should increase its share repurchases given its tremendous free cash flow combined with a falling share price.
However, that was when FB stock was trading around $165. Now, nearing $190, I’m not nearly as enthusiastic given its uncertain future.
Meanwhile, Apple is undertaking a massive buyback program that everyone — except myself — seems to be enthusiastic about.
I guess we’ll find out in about 3-5 years whether Tim Cook’s capital allocation moves will pay off for shareholders.
Frankly, I’d still hold both FAANG stocks, but if you only can own one, it ought to be Apple.
As of this writing Will Ashworth did not hold a position in any of the aforementioned securities.