Facebook is one of the most valuable companies in the world. But the time has come for investors to rethink their interest in Mark Zuckerberg’s toy.
Sustainable investing, responsible investing ... These terms are flying our heads. And there is a whole lot of criteria that companies have to meet if they want to be listed as sustainable or socially involved.
Jessica Ground, ESG specialist at Schroders, recently wrote about it. "Looking at ESG (Environmental, social and corporate governance) is inevitable, a must", she wrote in her outlook for 2018. Of course, Schroders mainly concerns environmental and governance aspects, but Ground also explicitly talks about social aspects and if we look into that, then the question arises whether Facebook is still such a neat investment.
Because social media is no longer as innocent as we’re supposed to believe. Facebook is, perhaps unwillingly, the biggest distributor of fake news. In addition, it has become a stage where people without any form of censorship can call each other for everything that is beautiful and ugly. And for some people; the more distasteful the contribution, the more likes one gets. Facebook says to do everything, but beyond the removal of innocent naked breasts, the inspectors of the concern are not making any progress to stop humiliation, racism and even sexism.
Dissatisfied people
The stage that Facebook offers to all the dissatisfied people in the world creates high and often unnecessary social tensions. In addition, it has become the place to permanently damage people, especially young people, digitally. It might be worse: it is also the place where people digitally nail themselves to the pillory by making statements that, perhaps two seconds after they have pressed the button ‘send’, they are extremely sorry for.
Investors who praise the fact that they have thrown out all kinds of companies and sectors from their portfolio because they would not be neat, should also look at the effects that Facebook has on society. People become addicted to it or become depressed. Facebook uses every possible means to strengthen those feelings. In an article for Bloomberg, Timothy Lavin and Michael Newman describe very adequate the status in which Facebook currently is.
Armed with fixed troves or data, companies have deduced clever ways to keep users on their sites. They have developed powerful tools - push notifications, "like" buttons, auto-play videos, and so on - that exploit quirks in human psychology to create something close to addiction. Add all this up and uncomfortable truth emerges: People are being drawn inexorably to a product that makes them feel terrible.
So: it is all going very well with Facebook. Since the IPO the share has gained more than 300%. But that profit gets a bad taste when you look at how the company functions in society. Investors should be aware of that. In the meantime, it would adorn Facebook if in 2018 they really start working on the things they say they would like to do better in near future. In other words: the future is now!