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A Risk Facebook Might "Like" -- To Manage

|Includes: Facebook (FB)

The Wall Street Journal ran a piece this morning that might be giving Mark Zuckerberg and Sheryl Sandberg a little something to lean in to. The article details ways in which ads are being served to teenager which parents, the public, and Facebook (NASDAQ:FB) itself really don't want them seeing. Ads for things like "opportunities" to enter growth industries such as nude webcam modeling being offered to teenage girls, or holsters for concealed carrying served to inner-city youths. Not good.

Aside from the reputational concerns, this is a big operational problem for Facebook: it's difficult to control what's being shown to a billion users. I imagine they have some sort of rules-based system that tries to govern this kind of thing based on some flavor of metadata, but there are too many ways around that. Recently, for instance, Facebook has been putting ads in front of me with pictures of well-endowed ladies that say things like "French speakers! Click here to learn the shocking truth." Needless to say, I don't click, because I don't want to be in anyone's database as having shown curiosity in such stuff, lest they show me more. Who knows what they're actually selling, but I tend to doubt it has much to do with La Francophonie.

Facebook should get out in front of this problem and launch some lean, skunkwork-like project to create some type of social rating/reporting tool for users to offer feedback on ads. Make it quick and easy to rate the appropriateness of ads, maybe just with a like/unlike function or something, and provide some sort of minor incentive (frequent clicker points to buy stuff at Amazon???) before regulators jump on this hard. We saw the impact that the Journal's reportage had on the desire of investment banks to be in metal warehousing. Facebook may be having a similar moment. It will be interesting to see how this plays out.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.