As his recent blistering Twitter attack on Amazon makes clear, Donald Trump is cashing in on the latest wave of outrage – a wave intensified by the recurring problem of personal data protection and especially Facebook’s most recent foul-up. The social media heavyweight is certainly less concerned over legal battles (as it is amply covered by the terms of service blindly agreed to by most users) than over possible damage to its image: Suppose the recent fiasco sends business and private users packing in droves? But that seems most unlikely.
Opinion polls clearly show that social network users already had very few illusions about the degree of privacy afforded by the systems they use. They know that the services provided by social networks are “free” only in the sense that you pay for them by supplying your personal data to the network owners – also for free.
In this area, it looks like we are heading inevitably towards stiffer regulation, in line with the EU’s General Data Protection Regulation (GDPR), which will become enforceable as of May 2018. Companies will unquestionably need to set up more robust systems to manage data usage, transparency and controls.
So we shouldn’t be surprised to see Occupy Silicon Valley moments like this one. GAFAM and the like have plenty of traditional media rivals – including in other countries – that have lost a tremendous amount of business to them and that can be expected to take advantage of any such flare-up to fan the flames of outrage. These competitors will no doubt put forward ethical arguments, and perhaps justifiably, that will lead to regulatory changes.
But let’s not kid ourselves. Whatever adjustments that may be required are unlikely to undercut the value of web technology – from the standpoint of users and advertisers alike. The qualified information that the latter get from digital platforms gives them a return on investment that conventional media are simply unable to match.
Furthermore, the whole tech sector is getting lumped together with Facebook and Amazon, although many of its smaller firms in fact have very different business models. This means that every correction to tech stock prices is likely to offer long-term buy opportunities to those investors who carry out in-depth analyses of those firms’ powerful, yet diversified business models.
Didier Saint-Georges is managing director at Carmignac.