Facebook: That Went Well

By Victor Anthony

We were skeptical of Mark Zuckerberg’s ability to withstand an onslaught of questioning from the lawmakers yesterday, but he was poised, mostly firm in his responses, and exuded confidence. He did well. As he gears up for another round of questioning in a few moments today, we point to a few key takeaways from yesterday: 1) the process with lawmakers will be ongoing and will be headline risk for the stock for sometime. The reality is that Facebook will continually face bad actors looking to exploit the platform, so issues of privacy will likely continue indefinitely; 2) Based on TV interviews with senators afterwards, we do think that some form of regulation on the online media sector is forthcoming. However, the questions from the senators were not adversarial, leading us to believe that legislation is unlikely to be heavyhanded and damage Facebook’s business model; 3) It appears that Facebook (& some senators) is open to regulation in the U.S. similar to GDPR (General Data Protection Regulation); and 4) Facebook is clearly open to a paid service with no ads. A paid service would need to include media content similar to Netflix rather than short-form content to be attractive, in our view. Pricing in the range of $3 to $5 per month looks
plausible.

Full Report: Facebook: That Went Well

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