This Is a Big Deal for FB Stock
Social media brands like Facebook Inc (NASDAQ:FB) stock make a lot of money and they make investors happy. However, a recent lawsuit filed against the company could have broader implications for social media, gaming, messaging platforms, and maybe the tech industry in general. What’s the massive problem that could drain the accounts of many flush tech companies? It’s social responsibility.
Social media sites and messaging platforms have become central to the way many people communicate. On Facebook, users share 4.75 billion pieces of content daily. On Twitter, users send, on average, 6,000 tweets per second, or 500 million tweets per day. The record number of messages processed on a single day through “WhatsApp” (a messaging app owned by Facebook) is 64 billion.
That’s a lot of information changing hands. Most of it is innocuous stuff that no one but the recipient could possibly care about, and even then that statement is open for debate. But not all of this information is harmless. The proliferation of social media has made it one of the best tools for terrorist groups to communicate with each other.
While no communication tool—including Facebook, Twitter, and the U.S. Postal Service—can block those who use the tool for evil with 100% certainty, many have been calling out tech companies to do more to disrupt terrorism. What this means is that people are asking these companies to take on more responsibility for the way their technology can be used for terrorist activity.
Facebook Stock Hit with $1.0-Billion Lawsuit
In particular, Facebook stock was recently hit with a $1.0-billion lawsuit filed by five families who were either killed or injured from ongoing conflict between Palestine and Israel. Four of the victims held dual Israeli-U.S. citizenship and one was an American tourist. (Source: “Facebook Accused in $1 Billion Suit of Being Hamas Tool,” Bloomberg, July 11, 2016.)
The lawsuit alleges that Facebook is knowingly violating U.S. anti-terrorism laws by providing a service to militant groups to recruit, raise funds, facilitate, and carry out terrorist attacks.
Some people will no doubt say that it is difficult to control everyone who uses Facebook and that the lawsuit is frivolous, but that’s not the point. In this case, the tech company should take proactive steps to ensure its technology is safe to use. Yes, statistically, some people are going to figure out how to misuse even the most iron-clad infrastructure, but companies like Facebook and Twitter still need to make sure they are doing everything they can to cut down on that misuse.
Banks have had to be more responsible and transparent when it comes to money transfers and if they drop the ball, whether it’s on purpose, by mistake, or through willful ignorance, they have to pay a fine. In today’s era, content is king and it is a very valuable currency, so why shouldn’t tech companies be held to the same standards?
I’m sure Facebook stock will come back saying the lawsuit is without merit and they will fight it vigorously. And who doesn’t say that? Essentially, $1.0 billion is nothing for a company with more than $20.0 billion in cash. But again, that’s not the point. It’s all about perception and corporate responsibility.
Even if this case doesn’t go forward—and chances are it won’t—it has shone a light on the seedier uses of technology and it could have far-reaching implications.
Far-Reaching Implications for Tech Companies
This isn’t the first lawsuit brought against a social media company.
Last month, a father of a woman killed in the Paris attacks back in November is suing Google, Facebook, and Twitter, saying that these companies provided “material support to ISIS” in violation of U.S. laws. (Source: “Father of Paris Attacks Victim Sues Facebook, Twitter and Google,” The Wall Street Journal, June 15, 2016.)
There are also fears that “Pokémon Go,” the wildly popular mobile augmented reality game, could be used for evil. In fact, the game is barely a week old and already it’s been used to lure a dozen victims into armed robberies. (Source: “What Pokémon GO has to do with armed robbery and a dead body,” CNN, July 11, 2016.)
Admittedly, the chances of any of the lawsuits against these tech companies being successful is remote. Technology companies traditionally argue that they are protected from liability under the Communications Decency Act (CDA 230), which provides them with legal protection from what users do with their technology. (Source: “Keeping Terrorists Out of Facebook Is a Tech Problem, Not a Legal One,” Bloomberg, July 12, 2016.)
The Bottom Line on FB Stock
Case closed? Not quite.
Social media companies like Facebook aren’t popular because they wax eloquence about legal statutes. People like using Facebook because it enables users to safely engage with others. But if the billion plus users no longer feel like it’s a safe environment or that Facebook is soft on terrorism, they may not log in.
If responsibility and perception doesn’t motivate these companies to implement better algorithms, the loss of ad revenue certainly will. Make sure to keep your eyes on Facebook stock.