Facebook (NASDAQ:FB) has been rising in 2019 against a “wall of worry.” The more people worry the company might crash, the more money piles into it.
Since the start of January, Facebook is up over 50%, against a Nasdaq Composite gain of 36%. Its market capitalization Dec. 16 is $562.3 billion. It’s the fifth most valuable company in the world, behind only Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) and Amazon (NASDAQ:AMZN).
Facebook’s performance this year lies in the middle of the “cloud pack.” Apple is up 78%, Microsoft 53%, Alphabet 32% and Amazon takes up the rear at 17%. As governments have closed in on the whole lot of them, worrying about their use of data, their vulnerability to abuse and their political power, these cloud stocks are shining through.
Facebook Is Too Vital
For a quarter century internet companies have fought being defined as “common carriers” more than anything else. The idea that they would have to take traffic, and be regulated based upon that, as AT&T (NYSE:T) and Verizon (NYSE:VZ) are, terrified them.
But Facebook is more than a common carrier, and it turns out the government doesn’t want common carrier regulation. Because it takes all kinds of content, and displays it publicly, the government’s solution is to either shut it down or censor it.
That’s why such efforts have gone nowhere. Facebook (and subsidiaries Instagram and WhatsApp) have 1.6 billion daily active users. The largest number is in India. The user base in nations like Indonesia, Brazil, Mexico and Vietnam represents a larger portion of the countries’ residents than in the U.S..
That means all the talk about #DeleteFacebook among activists, government injunctions against uniting the apps, bans against foreign ads, even the idea that Facebook’s appetite for data makes it dangerous, are First World problems.
The fact is Facebook is free, as in beer. This makes it essential economic glue for a world that can’t afford paid services. What keeps that glue profitable is advertising. When Americans talk about “breaking up” Facebook, we’re talking about ripping up the developing world’s communication system.
Editorial Is the Problem
Advertising isn’t the problem, anyway. What a newspaper would call “editorial” is the problem. To speak — to others or to groups — or choose not to be heard, is quite the question.
For every bad actor reporters might want tossed from Facebook platforms, there’s a censor preventing communication. Every country wants to be China, defining what people are able to learn and believe. That’s why Facebook wants to spend $130 million on an independent board to monitor what passes editorial standards.
The Bottom Line on Facebook Stock
Speech is the snake that was coiling under the chairs of the founders when the web was spun.
Facebook is on the front lines. Facebook must embrace governance — it must become a global court of speech to maintain its position. This is its second act.
Like the American Civil War, it’s a nasty business. It makes Facebook and its founder unloved. But what Facebook does is essential to global growth. It sustains a global network of hyper-scale data centers. These do what dictators spent the first century of the communications revolution preventing through ridiculous pricing, exclusive licensing and limited infrastructure.
Now anyone with a cheap smartphone and a wireless connection can be part of the global conversation. It’s exhilarating. It’s also dangerous as hell. But no one can put Pandora back in the box.
Going after Facebook is going after the free web. If Facebook didn’t exist, something else just like it would. The problems it illustrates are bigger than even the largest cloud.
Dana Blankenhorn is a financial and technology journalist. His latest book is Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, essays on technology available at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned shares in AAPL, MSFT and AMZN.
