ESG Spotlight: Managing data privacy risk: comparing the FAANG+ stocks
- We assess how seven tech giants – the “FAANG+ stocks” – are positioned on the increasingly contentious issue of data privacy.
- Facebook and Amazon stand out as being particularly vulnerable, due to a combination of high risk exposure and weak data management programmes.
- Apple is comparatively well-positioned due to its strong data management policies and closed-loop user data business model.
Privacy emerges from the shadows
Collecting and processing personal data has become one of the most significant drivers of financial value in today’s economy. But as the upside of personal data grows, so too does the downside risk associated with data security, management and privacy.
Indeed, the Facebook-Cambridge Analytica controversy, which is estimated to have cost Facebook USD 100bn in market capitalization at the height of the crisis, dramatically illustrates the financial and reputational penalties that can result from the mismanagement of personal data. The European General Data Protection Regulation (GDPR), which took effect late last month, has further raised the stakes for companies and investors by imposing substantial fines for non-compliance. In this Spotlight, we look at how the FAANG+ stocks – Facebook, Apple, Amazon, Netflix, Google, Microsoft and Twitter – are broadly positioned on the issue of data privacy. Our approach includes an analysis of gross risk exposure, and the steps companies are taking to mitigate it.