Why Facebook’s latest controversies won’t hurt its bottom line

Yahoo Finance’s Dan Howley breaks down Facebook’s resiliency amid controversies and looming external threats.

Video transcript

ALEXIS CHRISTOFOROUS: Welcome back. Facebook is once again awash in controversy, but you wouldn't know it by the company's stock price. Our Tech Editor Dan Howley here now to tell us why all these PR nightmares may just have minimal impact on the company's bottom line. Hi, Dan.

DAN HOWLEY: That's right, Alexis. We're looking, you know, today, obviously, seeing Facebook suffering because of news that it said resulted from changes to Apple's iOS. Those are privacy initiatives that Apple has launched, and that's hitting Facebook pretty badly as far as advertisers go. And that seems to be weighing on the stock.

But this kind of reaction didn't come after we saw those revelations from the "Wall Street Journal" saying everything from Instagram impacts teens and that Facebook knew about that, to that there was human trafficking on the platform in other countries, and even hit men looking for new hires in Mexico being advertised blatantly on Facebook. None of those seemed to impact the actual stock price or, over time, the different controversies we've seen have hit their revenue.

And really, you know, the experts that I've spoken to on this essentially say, Facebook has users locked in. It's the largest social media platform in the world-- nearly 3 billion daily active users. And because people see all of their friends there, their family, they follow organizations on there, they're not about to leave the platform. Because of that, that means that advertisers will continue to plow their money into Facebook, and then that means that investors will naturally follow suit.

So that's why after controversy, after controversy, after controversy, we have not seen any real change to Facebook or really any major impact. I think the biggest hit we saw from a controversy was from Cambridge Analytica. And really, the company recovered quickly as far as its stock price goes. And as I said, today, the real issue has nothing to do with the controversies, it has everything to do with what Apple has done as far as privacy changes go.

So I don't really see Facebook ever being impacted by some of these negative news headlines or even threats of breakup. Look at the FTC, and the suit that it refiled, and how it wants to take apart Facebook-- investors just, frankly, aren't worried, because so many people still use the platform and the risk of an actual breakup doesn't really exist. So unless there's another company that can come along to really challenge its dominance, Facebook will continue to reap the benefits of its huge pile of users. And as a result, investors will continue to invest.

ALEXIS CHRISTOFOROUS: And it does seem, and you outline all of those outstanding issues with Facebook, and it seems to be sort of the Teflon stock. And you know who else seems to be Teflon is CEO Zuckerberg. I mean, there was some controversy around, you know, what he was doing in terms of trying to convince people to get vaccinated and how his own platform sort of worked against him. How is it that Zuckerberg is able to continue and hold the position that he does there?

DAN HOWLEY: Yeah. I mean, he is the controlling shareholder of Facebook, right? That was part of the go-to for the whole company. And now because he holds that position, he can override virtually anybody. And there are now movements in their PR department to move Zuckerberg away from controversies, have him no longer comment on them-- the "New York Times" just did a report yesterday on this-- and, essentially, he'll continue to post things positively about the company, or he'll ride his electric surfboard with an American flag, as we've seen, while others discuss the controversy.

And you know, according to that "Times" report, Facebook is no longer going to even apologize when it finds itself awash in such issues. It's going to take a more combative approach. So you know, this all despite the fact that, you know, the "Wall Street Journal's" reporting, reporting that we've seen in the past, obviously, Cambridge Analytica, the 2016 election, vaccine misinformation, hate speech-- these are all issues that Facebook has had thrown at it, and still, it and Mark Zuckerberg come out clean.

ALEXIS CHRISTOFOROUS: Yeah, it really is incredible. A lesser company probably would have had to make some changes along the way, but not yet for Facebook. Dan Howley, thanks so much.