Is Technology Moving too Fast for Privacy Regulators?

Phillip is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.

A slew of privacy issues have surfaced about major technology firms, and this has some shareholders wondering if regulators are going to slow profits from new and developing products.

Google (NASDAQ: GOOG)Samsung (NASDAQOTH: SSNLF) and Facebook (NASDAQ: FB) all face scrutiny from global watchdogs about new and developing devices.

People suspect Google could be spying

Google is being challenged by several countries because of alleged privacy issues. Google Glass is likely the biggest concern to investors who are eager for the release of the eyewear. Each device is equipped with a hidden camera that can record potentially unsuspecting people. A U.K. survey stated that 20% of people believe Google Glass should be banned because of privacy problems.

The UK Information Commissioner's Office warned Google to amend its privacy policy or face a fine of up to about $750,000. The UKICO takes exception to the policy, claiming it doesn't allow users to opt out and that it breaks down silos of personal data. France and Spain have already ordered the tech giant to make changes to the policy.

These concerns are relatively nitpicky, and I believe they are largely prompted by paranoia. It is good to have regulators keeping an eye on possible privacy issues, but I don't think this recent spat of attention on Google's privacy policy -- and potential issues related to Google Glass -- are causes for concern. The company will likely still release Google Glass in 2014, and the technology could catch on quickly. Analysts believe the firm's share price will increase by over 13% this year and another 16% next year, though I think once the sales figures from Google Glass come in, 2014's figure could be much higher if the device is released early that year.

Samsung challenged over Jay-Z app

As of July 3, about 500,000 people had purchased the app, which allows the first million users access to Jay-Z's new album "Magna Carta Holy Grail." Samsung reportedly paid the rapper $5 million to allow the company access to the new CD prior to its official release. But privacy concerns were raised by users, including fellow rapper "Killer Mike," who posted some of the terms and conditions of those who use the app. They included provisions allowing Samsung to "modify or delete contents of your USB storage," "prevent phone from sleeping," access "approximate network location" and "precise GPS location," complete access to network communication and "read phone status and identity."

Amid those privacy concerns, Samsung reported its most profitable quarter ever on July 5, but shares fell by about 4% due to doubts about the firm's ability to keep up growth in its smartphone business. Operating profit rocketed in the quarter to $8.3 billion, which is up by about 47% from Q2 2012, and 8% higher than Q1 2013. The firm, however, missed the consensus analyst forecast. If Samsung is to meet the lofty expectations of its Galaxy S4, which has been dominating in sales, it will need to lower marketing costs. The company is burdened by developing countries reaching full saturation for smartphones, and technology doesn't look to be improving enough to prompt people to buy new devices.

Facebook admits to exposing data

Facebook admitted last month that it had a bug in its system that exposed over 6 million users of the social networking site. That flaw exposed email addresses and phone numbers. The company admitted the mistake, but the issue has raised concerns. Still, the problem is a blip on Facebook's radar and won't affect share price.

The company is continually trying to broaden its scope through initiatives such as Facebook Home, which is essentially a Facebook smartphone operating system that integrates Facebook and smartphone features. While the system isn't very popular, the firm is working on making it more attractive in a relaunch. Analysts also believe the stock will begin to gain momentum, with 21 ranking it as a strong buy, two as a buy, and four as a hold. While earnings per share are only expected to be $0.39 this year, by 2016 that is expected to increase to $1.63.

No cause for concern

Concerns about data are only natural in a technological environment that hinges on the delivery of mass amounts of information. All of these firms will likely have to be more explicit in their policies, but I don't see these issues being significant enough for people to lose confidence. Google Glass will likely face the most scrutiny up to its release, but as long as the company cooperates in being legally bounded to not collect unauthorized data, the 2014 slated release of the gadget is not in jeopardy.

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Phillip Woolgar has no position in any stocks mentioned. The Motley Fool recommends Facebook and Google. The Motley Fool owns shares of Facebook and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!

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