Facebook At The Wrong End Of A Privacy Controversy

Facebook (NASDAQ:FB), the social networking giant has once again found itself in a tight corner with regard to user privacy. Facebook has been in the news for over a week now, and this time we are not talking about its stock blasting through the IPO price and all the gains thereof. The other reason Facebook has been in the news is its unlawful use of user pictures and names in third party advertising. The company has been asked to make a compensatory payment to the each of the users who had joined the suit against the company. The financial impact of the claims may be a paltry sum for Facebook with each of the users getting $15 as compensation, taking the total claims paid by the company to $20 million. These claims will hardly make a dent in the finances of the company, which reported a cash balance of over $10 billion in its latest quarterly report. Following the claims settlement there were expectations that the company will change its behavior and it is exactly here that they have baffled everybody. The company announced a change to its privacy policy rather than a change to the way they use the information. The company made changes to their data use policy which can best be summed up as ‘the company has right to use your information the way they want to, if you do not agree then delete your account.’ The change in their privacy policy has raised concerns about their data use policy landing the company facing another legal fight with regard to the impact of the new policy on users below the age of eighteen. The company could raise a controversy following the change to their policy.  The controversy could have a far reaching impact on the Facebook users and if the script does turnout the way it seems, Facebook could find itself in a tight spot sooner than later. The stock price meanwhile has been scaling new highs to close the last trading session at $42.66, an all-time high, having gained over 60% since it announced its last quarterly earnings on July 24th.

To see Facebook’s latest stock price movement, click here (NASDAQ:FB)

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Neither Amigobulls, nor any members of its staff hold positions in any of the stocks discussed in this post. The author may not be a certified/registered investment advisor, and the opinions expressed should not be treated as investment advice. Buying and selling of securities carries the risk of monetary losses. Readers/Viewers are advised to carry out their own due diligence and consult their investment advisors before making any investment decisions. Neither Amigobulls, nor the author have any business relationship with any of the companies covered in this post.

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