Whoever is running Investor Relations at Facebook is doing one hell of a job. Facebook had a bit of a week: two high-profile tell-alls of Execs that left the companies the social networking giant had bought, after long tenure and with leaving considerable money on the table, a major security breach potentially exposing 50 million profiles, and a new exposé by Kashmir Hill showcasing how the firm is mis-using data ostensibly collected for security purposes to better target advertising.
And yet, looking at the market data, you wouldn’t know it. The Fall Out from Techlash at the beginning of the year, from the Cambridge Analytica scandal, the election meddling, aiding genocide in Myanmar, have all been so minimal that the market has learned not to take this serious anymore. And so has Mr. Zuckerberg. Privacy scandal after privacy scandal, Facebook managed to ride it out and grow in the process.
And they’re not in poor company: Google has been in the news as well for their poorly hidden attempt at coupling the Chrome Browser to a Google Identity. But as we’ve seen with the company’s treatment of users opting to “disable location tracking” which didn’t actually disable location tracking, the fall-out of this will be minimal.
If ever there has been any doubt about the defensibility of business models built with network effects, it can be safely laid to rest. No other business can survive one scandal of this magnitude, let alone several in a week. For reference, have a look at the market capitalization of Tesla once the SEC announced to indeed pursue legal action against it’s CEO. The result was shareholders roughly $8bn poorer. And yet, this defensibility needs to be maintained, which doesn’t come cheap. Apparently, Google is willing to part with $12bn in 2019 just to stay the default search engine on rival Apple’s iOS.