Facebook: That Went Well

By Victor Anthony

We were skeptical of Mark Zuckerberg’s ability to withstand an onslaught of
questioning from the lawmakers yesterday, but he was poised, mostly firm in his
responses, and exuded confidence. He did well. As he gears up for another round of
questioning in a few moments today, we point to a few key takeaways from yesterday:
1) the process with lawmakers will be ongoing and will be headline risk for the stock
for sometime. The reality is that Facebook will continually face bad actors looking to
exploit the platform, so issues of privacy will likely continue indefinitely; 2) Based
on TV interviews with senators afterwards, we do think that some form of regulation
on the online media sector is forthcoming. However, the questions from the senators
were not adversarial, leading us to believe that legislation is unlikely to be heavyhanded
and damage Facebook’s business model; 3) It appears that Facebook (& some
senators) is open to regulation in the U.S. similar to GDPR (General Data Protection
Regulation); and 4) Facebook is clearly open to a paid service with no ads. A paid
service would need to include media content similar to Netflix rather than short-form
content to be attractive, in our view. Pricing in the range of $3 to $5 per month looks
plausible.

Full Report: Facebook: That Went Well

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