According to an article on CNBC, top Silicon Valley analyst, Ray Wang, suggested that Facebook as a problem and has “broken trust on many levels.” We at Classiarius have had a similar view making a series of audiovisual presentations and penned several articles over the past 4 months. We, like this analyst at Silicon Valley-based Constellation Research, focused on a series of woes that faced the media giant, one being that senior management has not communicated well with the public (this is our in-house view). Facebook, according to Wang, had a lot of concerns around privacy and cybersecurity. Wang suggests that this stock, Facebook, is the biggest concern in the FAANGs space. We tend to agree. Our focus of course is the trouble that in several mini-scandals, Mr Zuckerberg went silent, more or less allowing the press to have a shot at the firm, leaving many guessing.
The Communications Department of these firms, when suffering from a scandal, usually put the senior managers in front of the problem, thus controlling the information flow. Remember when Starbucks had a problem with the public about allowing members of the community to sit in its shops for free? There were protests and accusations but each day, the management team of Starbucks appeared on TV saying that they would get their staff retrained and facing the public with a new face. Even the owner spoke to the press daily. This type of damage control was lacking at Facebook and the press just wrote pieces that were guessing what the next step of Facebook would be. The stock was thus punished.
We think the good people at Facebook have lost control of the link between the firm and the public. As such, the stock has been damaged and the clients, the youth who would open accounts on Facebook are leaving. We at Classiarius see the senior staff and some of the younger staff leaving the firm. If so, the talent exodus would be a long-term negative impact that, in the end would do serious damage – will this be a firm that falls, that is taken over by another in the Valley? Will it be forced to embrace free speech?