More Facebook Vulnerabilities Come to Light … But Does It Matter?

The short answer is no

FB - More Facebook Vulnerabilities Come to Light … But Does It Matter?

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Facebook (NASDAQ:FB) is in the headlines once again, this time alongside Google (NASDAQ:GOOG, NASDAQ:GOOGL) — the company that recently removed “do no evil” from its code of conduct.

You guessed it: We’re talking about privacy.

More than 30 consumer groups wrote to the FTC, alleging the companies intentionally trick users into giving up their data. The letters came in the wake of a report from Norwegian Consumer Counsel Forbrukerrådet on the topic. The report said that Facebook and Google are only giving the “illusion” of adhering to Europe’s GDPR requirements.

On top of that, a security researcher recently found that a popular Facebook quiz app called “Nametests” had a significant security flaw, exposing data for more than 120 million users. And yet, Facebook stock, while it was in the red last week, doesn’t seem too fazed by all the outcry that has come in the last year or so. FB shares have posted 11% gains year-to-date and 28% gains over the last 12 months.

I believe technology is under a closer microscope lately because it’s new territory. And once that novelty wears off, many of the criticisms will fade into the background. Just about every company “tricks” consumers into purchases — whether we’re talking about Starbucks (NASDAQ:SBUX) and all the people addicted to its sugar and caffeine-laced creations, food companies engineering products with extra flavor and less substance, the way grocery stores lay-out their aisles, or Apple (NASDAQ:AAPL) products and planned obsolescence. 

The difference with FB, arguably, is consumers aren’t paying for anything. Or, well, they’re paying with data. For consumers to be surprised about that is a bit head-scratching. You’re dealing with a free product made by a company that’s been public and profitable for years. Obviously something’s bringing in that revenue.

Granted, the scope of Facebook’s tracking is more extreme than many other ad companies. But every time more detail of it comes to light, the tech world panics, users claim they will delete Facebook, and then everything continues on as normal.

If we really want to unpack and analyze the ethics behind a company like FB, we need to do the same for companies across other industries. Much of the food industry is causing the same level of “destruction” to consumers who, when you really analyze it, are powerless to opt out — one of the main criticisms of Facebook right now.

The social media giant’s current ad campaign about “transparency” reminds me of the ad campaign for high-fructose corn syrup that made the rounds a few years back. It, too, was an overly utopian interpretation of something that had been vilified in the media.

Until criticisms of Facebook begin to show up in the company’s numbers — monthly users, ad revenue, and so on — there’s little to worry about FB stock from an investment perspective. Unless, of course, you care deeply about the ethics — the privacy, transparency, and so on — of your investments. In which case, there are plenty of other stocks to drop from your portfolio too.

As of this writing, Robert Martin was long FB.


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Article printed from InvestorPlace Media, https://investorplace.com/2018/07/more-facebook-vulnerabilities-come-to-light-but-does-it-matter/.

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