The Zacks Analyst Blog Highlights: Facebook, Alphabet, Apple, Amazon, IBM And SAP
Zacks Investment Research | May 30, 2019 11:18PM ET
For Immediate Release
Chicago, IL –May 31, 2019 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Facebook (NASDAQ:FB) , Alphabet (NASDAQ:GOOGL) , Apple (NASDAQ:AAPL) , Amazon (NASDAQ:AMZN) , IBM (NYSE:IBM) and SAP AG (NYSE:SAP) .
Here are highlights from Thursday’s Analyst Blog:
Should Tech Titans Be Broken Up?
The conversation around splitting up technology companies is gathering momentum because of their attitude to governance in the face of growing discontent about the way they treat privacy and antitrust issues.
The two primary culprits are Facebook and Alphabet’s Google because of their size and the way they control the platforms for information dissemination in the world today.
Being the de facto gatekeepers of the world’s information, they have the onerous duty of maintaining honesty, integrity, fairness, neutrality, transparency and privacy in this activity, something that may at times be in conflict with their need to maximize profit. So the problem boils down to the need to satisfy users and lawmakers on the one hand and investors on the other.
As far as lawmakers are concerned, these mega platforms are to a large extent their making. It’s not by chance that the U.S. has its own Facebook, Google, Amazon and Apple. Policies have in the past supported the creation of behemoths that have today become a phenomenon beyond everyone’s control. And it comes with a feeling of entitlement for these companies that could do no wrong just a few years back by virtue of their representation of America’s power and progress.
That could be why Facebook executives Zuckerberg and Sandberg glibly ignored summons to testify before the international grand committee on big data, privacy and democracy, hosted by Canada’s parliament in Ottawa. While the company did send its subject-matter experts, the disrespect to lawmakers around the world didn’t go unnoticed.
Jim Balsillie, chairman of the Ontario Centre for International Governance Innovation said, “By displacing the print and broadcast media in influencing public opinion, technology is becoming the new Fourth Estate. In our system of checks and balances, this makes technology co-equal with the executive, the legislative and the judiciary… When this new Fourth Estate declines to appear before this committee — as Silicon Valley executives are currently doing — it is symbolically asserting this aspirational co-equal status ... The work of this international grand committee is a vital first step toward redress of this untenable current situation.”
New Democratic Party lawmaker Charlie Angus added, “Facebook has serious responsibilities in terms of the misuse of the platform that has led to mass killings in Myanmar, the undermining of electoral systems around the world, the attack on private rights and citizen rights.”
As legislators around the world get together to control the influence of American technology companies, it’s high time the government did something about the situation. This could be why representatives on both sides have started calling for a split up of Facebook, which could open the door to splitting up other companies as well.
Is Splitting the Solution?
The big question here is whether this is the solution, i.e. whether it addresses the problem at all.
Take Facebook for example.
Splitting up the company would mean that WhatsApp, Instagram and Facebook will be different companies. While this could garner undivided management time to solve privacy and other issues, it’s still a practically insurmountable task given that there are billions of posts every day. So filtering fake news remains a problem.
Facebook has already stepped up hiring to manually remove offending posts and is supplementing this with artificial intelligence-inspired suggestions/algorithms. The results are disastrous. Until the government can come up with a viable solution to the fake news problem, splitting up the company won’t help.
The privacy problem on the other hand may be easier to solve by regulating the business as a utility. If Facebook doesn’t have a financial need to capture or sell user data (to advertisers), it can be more scrupulous about it and collect data only when it’s required to improve the service.
Read about Facebook’s antitrust problem here and why I disagree with Zuckerberg’s comment that it isn’t a monopoly: Zacks Investment Research
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