If Facebook is worried about attempts to make it more accountable for the content it hosts - such as those announced by the UK Government today - you wouldn’t know it from its share price.
Facebook shares have moved higher in the past week, continuing to recover ground lost since last July, when a weak earnings report gave rise to doubts about its future growth.
The recovery was apparently unaffected when Facebook founder Mark Zuckerburg wrote in the Washington Post on 30 March that he welcomed greater regulation of his company, and news today that the UK Government wishes to impose a new regime of oversight of online social network companies seem unlikely to make a dent either.
British ministers want to make it a ‘duty of care’ for social media companies to tackle harmful content, including that which exploits children, spreads disinformation, terrorism or bullying. It would make Facebook senior management personally liable for breaches of the rules.
This kind of attention from government is exactly what many fear will hurt giant tech firms like Facebook in the years ahead. So far these companies have mostly escaped the attention of regulators, helped by the fact that they operate in brand new areas of industry that regulation is still catching up with.
In the case of Facebook, it has stuck to the line that it is simply a delivery system - a bit like a mail service - so should not be responsible for the content it delivers. Critics counter that it is actually much more like a publisher, and should therefore stick to rules that govern the traditional press and broadcasters.
The moves in the UK this week suggest that regulators are beginning to catch up, and the fact that Mr Zuckerburg himself decided to invite this kind of regulation suggests the company understands that it will not escape the attention of regulators completely.
For now, the market appears relaxed about the prospect of more rules - or is perhaps unconvinced that governments can make them stick. Cynical observers have suggested that Facebook’s apparent openness to regulation is driven by its desire to create barriers for rivals. As one of history’s great disruptors, Facebook understands that established players can be overtaken before they even know they are in a race. Extra regulation adds dramatically to business costs, and Facebook is better able to pay than smaller rivals.
As one of the largest companies in the largest market in the world, Facebook matters to investors. They can expect rows about regulation to become a permanent backdrop for Big Tech and for share prices to move about in responses to the latest crackdown. Game-changing regulation could arrive at some point but the evidence so far is the market sees no big threat in the rules being talked about.
The Fidelity Select 50 list offers funds for both those who wish to back US tech, and for those who worry companies like Facebook have risen too far, too fast.
The JPM US Select Fund includes many giant US tech names among its largest holdings. Conversely, Rathbone Global Opportunities takes the view that Facebook could run into trouble, and sold its position in the company last year. The Fidelity American Special Situations Fund has avoided the tech altogether.
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