Thumbs down

Social media has changed the way we communicate, interact and source our daily news.  Facebook is a US$500 billion listed company, yet at CareSaver we don’t invest in it.

For several years we have been concerned about its governance standards – it is a global media company yet effective control is vested in one person (Facebook founder Mark Zuckerberg).  With one man dominating this incredibly powerful and influential company, there are huge governance risks. We believe things will inevitably go wrong in terms of risk management – which will be reflected in long term financial performance.

We have seen controversies around fake news, election interference, the Cambridge Analytica scandal and live streaming.  The US Federal Trade Commission recently confirmed it is hitting Facebook with a US$5 billion fine for privacy violations and the US Justice Department announced a review of the market power concentrated in platforms like Facebook. We see this regulatory focus as very positive. Earlier this year we joined the NZ Super Fund’s initiative for asset managers globally demanding higher standards from social media companies.

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