Alexa’s Glaring Privacy Blunder Won’t Clobber Amazon Stock

April 24, 2019 15:52 UTC

By CCN: Since Amazon’s Alexa device was released in 2014, consumers have eagerly transformed it into a household staple. However, a bombshell Bloomberg report exposed a glaring privacy blunder in the “always on” device. That should be bearish for Amazon stock (NASDAQ: AMZN), right?

Not so fast. Just like with Facebook’s semi-regular “Oops!” apologies, consumers will quickly shrug it off – and so will AMZN shareholders.

Bloomberg Exposes ANOTHER Alexa Privacy Concern

Amazon auditors successfully accessed customers’ home addresses through Alexa devices. | Source: Shutterstock

The latest headache for Amazon and Alexa comes courtesy of Bloomberg, which reported that a team charged with “auditing” Alexa users’ commands could access customers’ home addresses and other personal information.

“Team members with access to Alexa users’ geographic coordinates can easily type them into third-party mapping software and find home residences, according to the employees, who signed nondisclosure agreements barring them from speaking publicly about the program.”

Sure, the auditors were trying to refine Alexa’s responsiveness, but what does this blatant privacy invasion have to do with improving the high-tech device?”

Bloomberg reported that at least two members of this team had some level of pause, too. They warned that Amazon was granting unnecessarily broad access to customer data that would make it easy to identify a device’s owner.

Lindsey Barrett, a staff attorney at Georgetown, warned that consumers should view this as a “big red flag.”

“Anytime someone is collecting where you are, that means it could go to someone else who could find you when you don’t want to be found,” she told Bloomberg. Widespread access to location data associated with Alexa user recordings “would set up a big red flag for me.”

Amazon’s response wasn’t particularly comforting:

“Access to internal tools is highly controlled, and is only granted to a limited number of employees who require these tools to train and improve the service by processing an extremely small sample of interactions. Our policies strictly prohibit employee access to or use of customer data for any other reason, and we have a zero tolerance policy for abuse of our systems. We regularly audit employee access to internal tools and limit access whenever and wherever possible.”

So that’s supposed to settle it. It might. There seems to be no broad backlash from Alexa owners. Many rely on them as much as they do their cell phones, resigned to the fact that Big Brother is listening to them one way or another.

Analyst Ratings Indicate Amazon Stock Has More Room to Run

Amazon stock fell just under 1% on Wednesday, but AMZN shares will weather this storm in short order. | Source: Yahoo Finance

And that’s why Amazon stock, down 0.9% for the day to $1,905.84, will quickly weather this storm.

Remember, analysts once thought that privacy concerns would derail Facebook. The social media giant currently boasts a $520 billion market cap. Just look at its performance over the scandal-ridden past five years.

Privacy scandals have barely fazed Facebook. They won’t hurt Amazon’s stock price, either. | Source: Yahoo Finance

Amazon analysts, all 45 of them, maintain buy ratings on the stock. They aren’t too fazed that Alexa’s privacy issues created a bearish narrative during a single news cycle.

Nor are they concerned that AMZN shares trade at a mammoth premium to their earnings estimate.

From MarketWatch:

“That is incredible, considering the shares trade for about 71 times the forward consensus earnings estimate, more than four times that of the benchmark S&P 500 Index.”

So end-story here is: consumers beware, Amazon investors be happy!

Last modified: April 24, 2019 15:52 UTC

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@tedradesue

If you can buy it, trade it, invest in it, or sell it, I write about it. For more than 20 years, I've covered all things finance. Based in Atlanta, Ga., I threw myself into covering the crypto space with a keen understanding that it would be an industry disruptor. I'm in constant search for the real Satoshi Nakamoto!