Russia fines Twitter and Facebook, Zoom builds whiteboard experience, and other notable stories from this week. Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
U.S. Senators Richard Blumenthal, D-CT, and Marsha Blackburn, R-TN, chair and ranking member of the Senate Commerce, Science, and Transportation Subcommittee on Consumer Protection, Product Safety, and Data Security, announced that their subcommittee would take additional steps to look into Facebook’s (FB) knowledge of its platforms’ negative impact on teenagers and young users revealed in the Wall Street Journal: “It is clear that Facebook is incapable of holding itself accountable. The Wall Street Journal’s reporting reveals Facebook’s leadership to be focused on a growth-at-all-costs mindset that valued profits over the health and lives of children and teens. When given the opportunity to come clean to us about their knowledge of Instagram’s impact on young users, Facebook provided evasive answers that were misleading and covered up clear evidence of significant harm. We are in touch with a Facebook whistleblower and will use every resource at our disposal to investigate what Facebook knew and when they knew it – including seeking further documents and pursuing witness testimony. The Wall Street Journal’s blockbuster reporting may only be the tip of the iceberg,” said the Senators in a statement.
Facebook knows just how bad Instagram is for teens’ mental health, The Wall Street Journal’s Georgia Wells, Jeff Horwitz and Deepa Seetharaman reported earlier. According to the report, Facebook researchers found that Instagram makes teen girls feel worse about themselves, with some attributing suicidal thoughts directly to the platform. “Thirty-two percent of teen girls said that when they felt bad about their bodies, Instagram made them feel worse,” the researchers said in a March 2020 slide presentation posted to Facebook’s internal message board, reviewed by The Wall Street Journal. “Comparisons on Instagram can change how young women view and describe themselves.” “We make body image issues worse for one in three teen girls,” said a slide from 2019, summarizing research about teen girls who experience the issues. “Teens blame Instagram for increases in the rate of anxiety and depression,” said another slide. “This reaction was unprompted and consistent across all groups.” According to a internal presentation, among teens who reported suicidal thoughts, 13% of British users and 6% of American users traced the desire to kill themselves to Instagram.
ILLEGAL CONTENT FINES:
The Tagansky district court in Russia said it had fined Facebook 21M roubles, or $287,850, and fined Twitter (TWTR) a total 5M roubles for failing to delete content that the country deems illegal, reported Reuters’ Alexander Marrow. Telegram, a messaging app, had also been fined 9M roubles, the court said. Moscow’s effort to strengthen its control of the internet have reportedly included a push to require foreign internet companies to open full offices in Russia and to store Russians’ personal data on its territory.On Tuesday, the Russian government published plans to impose new taxes on foreign-owned digital services, a move aimed at supporting its domestic tech sector. read more.
GOLDMAN POSITIVE ON SOCIAL MEDIA STOCKS:
Goldman Sachs analyst Eric Sheridan initiated coverage of multiple social stocks on Monday. He initiated coverage of Facebook and Snap (SNAP) with a Buy, Pinterest with a Neutral and started Twitter with a sell rating. The industry still has “ample opportunities” for secular revenue growth and increased operating efficiencies on the back of building scale in the coming years, the analyst told investors in a research note. Sheridan believes Facebook is the industry leader in social media and its utility in mobile computing won’t be receding in the coming years. On Snap, the company will capitalize on past investments and a “forward mindset” on platform/product innovation to capture a mixture of user growth and monetization, said Sheridan. For Pinterest, the analyst sees a more evenly balanced risk/reward skew from current share levels. Lastly, regarding Twitter, he says an advertising recovery is pried into shares while the company’s innovation is a “show me story.”
Zoom (ZM) said in a blog post that it is building a new persistent whiteboard experience that enables powerful, easy-to-use visual collaboration before, during, and after a virtual meeting. “Zoom Whiteboard will be your powerful virtual hub for real-time and asynchronous collaboration, creating more engaging and efficient meeting experiences,” the company said. “Any team, from enterprise to education, can use the Zoom Whiteboard experience to create, annotate, and share ideas from any device whether you’re in a Zoom meeting or not. This persistent collaboration using powerful tools on any device will allow your teams to have the creative space to work together, wherever. We plan to offer Zoom Whiteboard in beta later this year.” In addition, the company said that it and Facebook (FB) are working together to offer a more immersive product experience, anticipated next year, using virtual reality. “Facebook’s Horizon Workrooms is a new VR app that lets people come together in the same VR room for meetings, regardless of physical distance,” Zoom said. “This integration will bring Zoom Meetings and Zoom Whiteboard into the VR space using Oculus headsets to enable users to visualize their entire canvas without the need for a large screen.” On Tuesday, Cathie Wood’s ARK Investment bought 235.6K shares of Zoom.
Separately, Zoom Video announced that its reseller partners will have the opportunity to sell Zoom Phone Bring Your Own Carrier licenses. They will also be able to connect customers who use enhanced cloud peering to access PSTN to Zoom Phone Provider Exchange, a new way to discover providers and follow a self-service journey to provision phone numbers securely. Zoom is currently running a pilot program for select resellers that meet the requirements to sell Zoom Phone BYOC and expects to welcome a wider pool of resellers by the end of the year. Previously, only Zoom Master Agents had the opportunity to refer deals for Zoom Phone and Zoom Phone BYOC. Now Zoom’s reseller partners from around the world who meet the requirements and qualify will be authorized to resell Zoom Phone BYOC.
CLOUD BACKUP ENCRYPTION:
In a company blog post, Facebook software engineering managers Slavik Krassovsky and Gabriel Cadden said, “For years, in order to safeguard the privacy of people’s messages, WhatsApp has provided end-to-end encryption by default so messages can be seen only by the sender and recipient, and no one in between. Now, we’re planning to give people the option to protect their WhatsApp backups using end-to-end encryption as well. People can already back up their WhatsApp message history via cloud-based services like Google Drive and iCloud. WhatsApp does not have access to these backups, and they are secured by the individual cloud-based storage services. But now, if people choose to enable end-to-end encrypted backups once available, neither WhatsApp nor the backup service provider will be able to access their backup or their backup encryption key. ..To enable E2EE backups, we developed an entirely new system for encryption key storage that works with both iOS and Android. With E2EE backups enabled, backups will be encrypted with a unique, randomly generated encryption key. People can choose to secure the key manually or with a user password. When someone opts for a password, the key is stored in a Backup Key Vault that is built based on a component called a hardware security module – specialized, secure hardware that can be used to securely store encryption keys. When the account owner needs access to their backup, they can access it with their encryption key, or they can use their personal password to retrieve their encryption key from the HSM-based Backup Key Vault and decrypt their backup. The HSM-based Backup Key Vault will be responsible for enforcing password verification attempts and rendering the key permanently inaccessible after a minimal number of unsuccessful attempts to access it. These security measures provide protection against brute-force attempts to retrieve the key. WhatsApp will know only that a key exists in the HSM. It will not know the key itself.”
Originally Posted on September 15, 2021 – #SocialStocks: Facebook Faces New Probe Regarding Negative Impact on Teenagers
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