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Dan Howley joins the Yahoo Finance Panel to discuss Facebook's scrutiny as the WSJ finds evidence of Facebook ignoring employees' concerns to protect users. Watch as the panel breaks down what this revelation could mean for the company in the future.
- Welcome back to Yahoo Finance Live. We're tracking the latest controversy surrounding Facebook after the Wall Street Journal published a scathing series of reports last week, suggesting the company has repeatedly fallen short in protecting users against known issues on its platform, around misinformation and self-image concerns perpetuated on Instagram, to name just a few.
Now, Facebook's vice president of global affairs, Nick Clegg, issued a defense of the company following the reports over the weekend, suggesting the articles contained what he said were deliberate mischaracterizations of the company's goals and leadership's motives. For more on this now, we have Yahoo Finance's tech editor Dan Howley joining us here.
And Dan, we know that with Facebook, the company has faced outcry about user health before. And it's always seemed to bounce back and be able to retain users nonetheless and keep growing. But is this time any different?
DAN HOWLEY: Yeah, I think the answer to that is just no. There's never been, really, a controversy where you've seen Facebook kind of take a serious hit to users. And as a result, advertising, and then as a result, investing.
You know, the biggest thing that we saw was after Cambridge Analytica, when there was the information that was kind of scraped by that third party political workshop that was trying to get President Trump or former President Trump elected at the time. We had saw the stock price fall.
But really that was the only other controversy to think of where we had seen the stock price really reflect some kind of issue. And now we're looking at this series of articles from the Wall Street Journal, basically saying that, as you pointed out, the mental health of users, especially young women using Instagram, the divisiveness in content that they didn't want to turn down because it would have impacted engagement, and things along those lines that really have been known.
These aren't exactly stunning revelations. What's interesting is, or at least what's newsworthy, is the fact that the company had realized this through their own studies. People kind of understood this by using the platforms, frankly. But the stock price obviously not taking too big of a hit on this.
Advertisers really are the ones that would drive that. And we've seen that even when there is outcry from some advertisers, the stock price doesn't move very much at all. We saw last year when there were the boycotts against Facebook because of the hate speech that was kind of rampant on the platform from different groups, we had seen advertisers set up a boycott and pull back ads.
We had seen a number of big names commit to that for a few months. And the stock price didn't move, and that's because the vast majority of Facebook's revenue doesn't come from big name advertisers. It comes from the army of smaller advertisers and people who are advertising for their small businesses that end up really powering Facebook in the long run.
So it doesn't appear that this is going to have any real demonstrable impact on Facebook's stock price. I think really the only thing that could possibly do that is some form of regulation. And look, we've seen with the FTC going back and forth with Facebook, that doesn't even seem to cause any kind of concern with investors either.
They refiled their antitrust case against them. And the overarching, I think, consensus seems to be that the company will not be broken up. And it may just have to clean up some of its practices. But I don't think it's going to be anything ever that we'll see that could really take down Facebook. Unless we start to see users pull back, it's the largest social network in the world, so that's probably not going to happen, or advertisers pull back, Facebook will continue unabated.