Displaying items by tag: facebook

(San Francisco)

Two of Instagram’s founders have just left Facebook on acrimonious terms. The departures come six years after their company was bought by Facebook for about $1bn. They are leaving on poor terms because of recent changes Facebook has made which seem to prioritize Facebook’s growth at the expense of Instagram. Many analysts say the departures are a considerable negative for the stock, especially coming as part of a long string of troubles. There is also a serious threat that the two founders may come up with a competing product. Instagram accounted for 14% of Facebook’s revenue, or about $7.5 bn this year.

FINSUM: We don’t think a competing product is a worry, at least not yet. But image-wise, it does look like Facebook is a bit out of control.

(Washington)

Top tech industry executives have spent their week speaking with the Senate and answering tough questions about their data security, fake news, and political content. Many fear it is a preamble to a big regulatory crackdown on the sector by the Senate. Well, that has not occurred yet, but in a worrying development US attorney general Sessions has announced that his department is looking into the tech sector in regards to competition and free speech issues. Sessions said he would be meeting with state attorney generals to discuss a “growing concern” that tech companies “may be hurting competition and intentionally stifling the free exchange of ideas”.

FINSUM: This might be the beginning of a major regulatory move against the sector. We think the market will start handicapping the odds of a big crackdown as more news comes out.

(Washington)

Investors in tech have reason to worry. Not only is Trump saying that they should possibly be subjected to anti-trust regulation, but the tech sector is heading to Washington today to meet with the Senate. Top executives at Facebook, Google, and Twitter, are set to face questions and scrutiny about their practices, including on trust concerns, political content, and consumer privacy. The tide of public opinion has turned against tech over the last year, and congress has followed suit, with Senate GOP leader Orrin Hatch calling Google’s anti-trust behavior “disquieting” despite the fact that he used to staunchly defend the sector.

FINSUM: The big problem for tech is that a regulatory crackdown now seems to have bipartisan support. We think there will be some regulations imposed on tech, but the depth of the forthcoming rules will be the deciding factor. In other words, will it be something along the lines of GDPR (relatively light) or more like Glass-Steagal?

(New York)

The long-awaited (long-feared?) shake up of the S&P 500’s sectors will occur soon, and there is a lot of focus on how the tech sector, as traditionally defined, will change. Google and Facebook will be making the switch out of tech and into the new communications services sector. Netflix, as well as Walt Disney, Ford, and Nike will be joining them. There is some fear about the volatility that will be caused as big index trackers have to change their holdings on September 21st. Overall though, it seems like tech stocks (as traditionally thought of) will be winners, as having them distributed across multiple sectors will avoid the sector-weight limits many asset managers face.

FINSUM: Tech stocks will likely do well, but so will the companies getting grouped with them. As one analyst pointed out, AT&T and Verizon joining Google and Facebook is kind of liking outsiders getting invited to the cool kids’ party, which may help their share prices.

(San Francisco)

Talk about comments coming right from the source. Microsoft CEO Satya Nadella went on the record this week telling the market that tech companies should “expect” regulation. Nadella walked through current areas of tech and regulations, like facial recognition or GDPR, and explained their implications for the industry. He said that “As tech becomes more and more pervasive, I think for all of us in the tech industry we should expect—whether it’s on privacy or on cybersecurity or even ethics or AI—government and regulatory bodies to take interest in it”.

FINSUM: We think the writing is on the wall that tech is going to face some form of regulation, especially given that the Trump administration is rather hard on the sector. The question is when, not if.