Sri Lanka’s decision to block US social media sites after the Easter Day bombings might have provoked a cynical response in the West. After all, this is not a government renowned for human rights and freedom of speech.
But on this occasion, there was no such rolling of the eyes.
Instead, Facebook’s repeated failures to control its content meant the world largely nodded in approval. When Colombo explained Facebook, WhatsApp and the rest would allow their sites to be used to foment further violence, we figured: yep, probably true.
It’s not just unstable countries that have been enraged by Facebook’s refusal or inability to control its output, of course. After it hosted a livestream of the Christchurch massacre which quickly spread across the internet, the information commissioner of New Zealand branded its managers “morally bankrupt pathological liars”.
Few market-leading multinationals, if any, have been so vehemently condemned by regulators in a liberal democracy.
This week, Facebook will announce a fall in its quarterly profits from $5 billion to $4.7 billion. It will claim the decline reflects the cost of trying to clean up its content.
The deeper truth, though, is that revenues and user numbers will show yet more massive growth. Shareholders may take comfort from that, but the flipside is the bigger Facebook gets, the harder it will find controlling its content.
Perhaps it’s only a matter of time before other governments frustrated by Facebook’s continued failure to get a grip look at countries like Sri Lanka and realise there is an alternative solution. Switch it off.
Hedge funds aren’t so clever over Cook
Handkerchiefs out, please, for the hedge funds AQR, TT and Whitebox. All took out big bets against Thomas Cook’s shares in recent weeks, only to get their fingers burned today after reports of a juicy takeover battle triggered an 18% share price jump.
Cook is in a tough, commoditised market where it has little pricing power and way too much debt.
But the “shorts” underestimated one factor; its Chinese joint venture partner and 17% owner, Fosun. Cook is a valued partner for the owner of Wolverhampton Wanderers, which uses its expertise and brand to help it serve burgeoning demand for tourism from China’s middle classes.
It was never going to let Cook — or its share price — disappear into oblivion. Now, it will be in the front line of potential bidders, and has the deep pockets to pay a decent premium.
Hedge funds aren’t always as clever as they like to think.