The Relationship Between data privacy discourses and company performance at Facebook (2004-2021)

Abstract

We use Facebook as a case study to investigate the complex relationship between the firm’s public discourse (and actions) surrounding data privacy and the performance of a business model based on monetizing user’s data. We do so by looking at the evolution of public discourse over time (2004–2021) and relate topics to revenue and stock market evolution. Drawing from archival sources like Zuckerberg LDA topic modelling is implemented to reveal 19 topics regrouped in 6 major themes. The paper aims to understand and put a value on the extent to which privacy disclosures tuned with specific topic keywords have a potential impact on the financial performance of social media firms. There we found significant relationship between the topics pertaining to privacy and social media/technology, sentiment score and stock market prices. Revenue is found to be impacted by topics pertaining to politics and new product and service innovations while number of active users is not impacted by the topics unless moderated by external control variables like Return on Assets and Brand Equity.