Facebook is ‘raising the walls around its garden’ after the Cambridge Analytica data scandal

Mark Zuckerberg at a tech and media conference in Sun Valley, Idaho.

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Mark Zuckerberg at a tech and media conference in Sun Valley, Idaho.
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Getty Images

Facebook’s stock might be down 16% since the Cambridge Analytica privacy scandal first came to light in mid-March, but advertisers aren’t going anywhere, interviews by both Business Insider and Morgan Stanley confirm.

What’s more, the bank says that the social network’s changes in response to the scandal so far – like shutting down use of third-party data for ad targeting – will help strengthen its moat in the style of other tech giants.

“In some ways, Facebook’s changes make it look more akin to Google as Facebook is raising the walls around its garden,” analyst Brian Nowak said in a note to clients Wednesday.

“Going forward, the two largest online ad platforms will now be more aligned…focusing on their first party data offerings and tool sets…which we expect to enable Facebook and Google to continue to drive 90%+ of the online ad market.”

Here’s a more visual comparison of how the two platforms maintain walled gardens, from Morgan Stanley:

Facebook vs Google

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Morgan Stanley Research

Despite the compliments on removing third-party data, the bank is still cutting its target price for Facebook stock to $200 – 30% above where shares were trading Wednesday afternoon – while maintaining its overweight rating.

In an update on its privacy plans on Wednesday, Facebook raised the number of people potentially affected by the scandal, saying “up to 87 million people – mostly in the US – may have been improperly shared with Cambridge Analytica.”

Shares of Facebook were down 1.7% Wednesday afternoon and down 15% since the beginning of the 2018.