Facebook in the Naughty Corner
The Federal Trade Commission (FTC) is littering fines. Sat in Mark Zuckerberg’s in-tray is a hard-to-swallow $5 billion fine, and you can guess why! After a year-long probe into the privacy policies at Facebook, the social media giant had it coming. But what bodes for the investor?
Just days ago, Joe Simons, Chairman of the FTC, signed off on a damning verdict against Equifax. In-keeping with his crackdown campaign on guilty data mishandlers, he’s now brought the gavel down again — this time, against Facebook. If fining 10% of last year’s revenue wasn’t enough, the SEC had already brandished a one hundred million dollar fine to the company for lying to investors about its privacy lapses. Talk about flogging a dead horse!
Untrustworthy management teams are usually a death sentence for a stock, but with Facebook soaring 52% this year, investors aren’t in the mood for setbacks. The market had almost forgotten the impending government investigation, with the stocks recovering from the $130 doldrums of last year when these were the only issues on investors lips! Still, even if the market has too many dollar signs in its eyes, the FTC will watch over Zuck going forward.
None of these headlines help the resistance effort against calls for a break-up. With the size of many tech companies ballooning in their winner-takes-all markets, some politicians will use these fines as evidence that Facebook is a candidate to be split up. Could that be the final Jenga brick to bring down Facebook’s 2019 tower of gains? It’s playing out before our very eyes!