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Does Google Have an Answer to Privacy Concerns?

Concerns of a regulatory clampdown on how tech and Internet companies handle user data are looming large on a number of companies.

Google parent Alphabet, Inc. GOOGL has decided to shut down the consumer version of Google+ four months earlier than it had originally planned. The decision comes after the search engine giant disclosed a new security leak that briefly exposed personal information of around 52.5 million Google+ users.

User data privacy has been an increasing concern for quite some time now. Tech companies have lately been under scrutiny on growing concerns of privacy breach. This has also been taking a toll on shares of companies like Alphabet and Facebook, Inc. FB, which had got embroiled in a data misuse scandal earlier this year.

Google+ to Close 4 Months Earlier Than Planned

Google+ has suffered another data leak, which has made Alphabet decide to close the consumer version of the social networking platform four months earlier than originally planned. Google+ will now close in April 2019 instead of August 2019. Moreover, the API access to the network will be closed within the next 90 days.

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The new security vulnerability briefly exposed the personal data of around 52.5 million users. The bug was introduced to Google+ in November, which allowed developers to access personal information like name, gender, birth date and nickname. In October, the tech giant had announced that it would shut down Google+ after it discovered a bug that enabled outside developers to access the data.

However, the company said that it found no evidence of any developer being aware of the bug or having misused the data. Google+ hasn’t been as successful as Facebook as a social media platform. That said, user data privacy has become a prime concern of late, with tech and Internet companies coming under regulatory scanner.

Social Media Under Scanner

Google’s second data-related glitch comes nine months after Facebook found itself in a sticky situation after data misuse that affected millions of its users was revealed.  On Mar 19, the social media giant’s shares tanked 6.8%, recording its worst decline in four years, after it was accused of a data misuse scandal involving Cambridge Analytica that affected the personal information of more than 80 million users.

Apple, Inc. AAPL on the other hand takes a far more conservative approach to user data privacy. Concerns of a regulatory clampdown on how tech and Internet companies handle user data are looming large on a number of companies. A regulatory clampdown means restricted use or ad-free paid service, which will weigh on the companies as they tend to lose users, who can’t afford pair service.

Summing Up

Concerns over data privacy have time and again affected the broader tech sector, particularly FAANG stocks that include Facebook, Amazon.com Inc. AMZN, Netflix Inc NFLX and Alphabet. Alphabet, Apple, Facebook, Amazon and Netflix, each carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

So much so, that this resulted in slow user growth for Facebook. In fact, following the data misuse scandal, Facebook missed earnings expectations for the first time in 11 quarters in its last-reported quarterly results. It now needs to be seen how Google emerges out this crisis.

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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
 
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