Facebook Has a Trust Problem Among Its Users
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What is the main topic discussed in this episode?
Your Money Briefing. Money and Market Stories from The Wall Street Journal. I'm J.R. Whalen in New York. If social media users can't trust Facebook, who can they trust? We'll have those details in a moment, but first, here are some money items you need to know. The Wall Street Journal Market Data Group reports recent weakness in large tech stocks is reordering the list of the biggest U.S. firms.
What recent news triggered concerns about Facebook's handling of user data?
During this week's sell-off that's dragged down the broader market, Amazon's market value was in position to pass that of Amazon parent Alphabet. Amazon was edging closer Tuesday to close as the second biggest U.S. company, topping Alphabet for the first time ever. Apple remains the market cap leader in tech at $890 billion. The Wall Street Journal heard on the street team says small and mid-sized banks are eyeing a loosening of the regulation chains by Washington lawmakers, and they could have reason to be optimistic. The Senate last week passed a bill that would raise the threshold for stricter Federal Reserve oversight to $250 billion of assets.
How did market moves and tech stock shifts set the stage for this conversation?
from the current $50 billion. But the House won't vote on the bill as is, however, and wants to negotiate with the Senate. That's raised fears in the industry that House leaders could push for too much deregulation. And the MoneyBeat team also reports regulators looking into potentially widespread violations in cryptocurrency markets have taken a bite out of the once-soaring investor demand for token deals. More than 180 coin offerings are expected to launch in March. That would exceed January's total of 175 and fall only a bit below February's 197 offerings. But the March projects are expected to raise only $795 million. That's a 45% decline from February's $1.4 billion. This is your Money Briefing from The Wall Street Journal.
Welcome back everybody. Facebook's steep stock decline in response to the controversy surrounding Cambridge Analytica's collection and unauthorized use of user data has brought to light a crucial element of business for Facebook that's hard to quantify and that's trust. Wall Street Journal heard on the street columnist Dan Gallagher joins us from our San Francisco bureau to discuss. So Dan, in your column in the Wall Street Journal, you say trust is something you can put a price on, but for Facebook, the lack of trust among its users, well, that can get very expensive.
I think we're seeing that actually play out in the stock price. You know, Monday, the stock fell 7%. Today, it's down so far about 5%. That equates to about $50 billion, I think, in market value that is going just on this question of what happens to people's data when they're using Facebook. The stories we saw over the weekend concern this firm that a few years ago ended up getting possession of this data to use it in political campaigns. But it does, when you pile it on to all the concerns about Facebook over the last year about its role in elections, misinformation, and so forth, it really puts to that question for people who use the service Um, what, what's happening to, you know, what am I sharing with this service?
You know, how is it going to be used, you know, with me or against me or whatever in this? And these questions really build up and I think really get to the core value proposition that Facebook offers.
And for Facebook, which is now the target of an FTC investigation into this matter, this is just a fresh round of criticism. The social media company has had controversy in one form or another, chasing it around for some time.
Yeah, it is. And like we said, pretty much since the 2016 election, you know, there's been all these questions about it. I think this is the most significant impact we've seen on the stock because I think, one, there – Part of it is the notion – I think there was some misunderstanding out there that Facebook got hacked and the data was stolen. It was more a sense of it was shared with a firm under some policies the company had a few years ago. And it turns out that firm may have broken the policies and shared the data.
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Chapters
4 chapters
1
What is the main topic discussed in this episode?
0:00–0:23
2
What recent news triggered concerns about Facebook's handling of user data?
0:23–0:58
3
How did market moves and tech stock shifts set the stage for this conversation?
0:58–9:14
4
Why is Facebook's trust problem tied to the Cambridge Analytica controversy?
9:14–9:16
Speakers
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