Over the past year, Facebook (NASDAQ:FB) courted controversy for providing too much information to the wrong people. At first, the Cambridge Analytica scandal rocked the social-media giant’s image. Later, accusations that the company revealed its users’ private messages to partner corporations confirmed our worst fears. Not surprisingly, Facebook stock suffered an awful 2018.
But now, the organization may have a different problem on its hands. Recently, a conspiracy website that masquerades as serious news made headlines, accusing Facebook of unwarranted and arbitrary censorship. Zero Hedge representatives claimed that FB has banned its users from sharing links originating from the doom-and-gloom resource.
While I generally loathe censorship — freedom dies when we can’t freely express ideas — I can’t fault Facebook stock. Attempting to provide supposedly truthful content, Zero Hedge from the beginning has offered zero credibility. For example, who’s the shot-caller for the website? Some guy who hides behind a computer monitor under the moniker “Tyler Durden.”
Zero Hedge is a gateway to Alex Jones, and Alex Jones is a gateway to doomsday bunkers and MREs. Frankly, I want my money back.
By censoring this and perhaps other sites like it, Facebook is doing us all a favor. Therefore, I don’t personally view this latest censorship incident as a negative for FB stock. Of course, individual opinion should have no impact on corporate policy.
We also can’t ignore the fact that fiscal libertarians, right-wing conservatives, racial realists and actual racists lever significant market value. You may not like what they have to say, but they represent a powerful element in American society.
We saw this play out in real-time on election day 2016. If Facebook is not careful, attacking right-wingers could harm FB stock.
Facebook Stock Is Both a Financial and Political Moat
After the Cambridge Analytica controversy, angered users took to rival social media platforms like Twitter (NYSE:TWTR) with a unified message: #DeleteFacebook. It generated buzz, even persuading high-profile individuals to jump ship. However, the movement failed to dent Facebook’s massive global reach.
As of the fourth quarter of 2018, the company enjoys 2.3 billion monthly active users. Remarkably, this metric has never experienced negative growth. While the rate of increase may slow down here or there, the platform constantly attracts new subscribers.
Therefore, Facebook stock enjoys a financial moat. Despite the poor optics, nothing — not Twitter, not Snap (NYSE:SNAP), not even Tencent (OTCMKTS:TCEHY) — touches FB stock in terms of scope, magnitude and engagement. As a business owner seeking to market products and services, you don’t have too many comparable options.
Similarly, Facebook’s dominant position also shields it from political criticism. When the Cambridge Analytica scandal broke, left-leaning individuals felt betrayed that their favorite social-media network inadvertently helped the “enemy.” But over time, that scandal faded, as do most scandals.
Now, right-wingers have expressed their outrage over alleged content censorship. But those hoping to upend Facebook stock will more than likely experience bitter disappointment.
For one thing, far-right conservatives, compared to progressives and middle-of-the-road types, are vastly outnumbered. But more critically, they don’t have the moral high ground.
Most conservatives of any magnitude are typically staunch capitalists. They believe in the free market, and have a laissez-faire attitude toward economic policies. But by inordinately complaining about Facebook’s user guidelines, they’re denying the same dynamic for which they otherwise voice support.
The reality is that most people want nothing to do with fringe right-wing content. Therefore, it doesn’t make sense for Facebook to enable such material. A true free-market supporter would understand this, albeit begrudgingly.
Censorship Has Benefits for FB Stock
While the social-media firm absorbed some painful hits, I doubt that this latest dust-up will do anything to Facebook stock. Yes, the company absolutely deserves criticism for possibly violating user privacy. And although the reaction to the Cambridge Analytica fiasco was overdone, it was an unnecessary PR blemish.
But censuring Zero Hedge? That might actually benefit FB stock in the long run. After a series of ugly and tragic incidents shortly following President Trump’s electoral victory, several retail firms distanced their brand — which some hate-groups misappropriated — from ultra-conservative organizations.
In a similar fashion, educators and policymakers have pressured social-media outlets to better combat hate speech. One effective, though extremely controversial approach, is to stymie “gateway speech” that leads to more dangerous rhetoric.
But the bottom line is this: Facebook can do whatever it wants. No matter who they offend on the political spectrum, more people jump onboard than jump off because it’s indispensable. On a long enough timeline, the survival rate for anyone doubting Facebook stock drops to zero.
As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities.
