NEW YORK (TheStreet) -- Facebook (FB) - Get Report has a problem when it comes to the potential regulation debate because it sells a product to its users, said University of Memphis professor of law John Newman on CNBC's "Closing Bell" Friday afternoon.
His comments come after Facebook (FB) said that it had miscalculated video metrics over the past two years, which has upset some advertisers.
"Does it need regulation?" CNBC's Kelly Evans asked.
"Here's the key. You can't just look at Facebook on the advertising side of the market because from that perspective, they don't look that big. The key is that they also sell a product to users, and that's where the problem lies, I would argue," he answered.
Although Facebook says its social networking services will always be free, users do pay the company with their "attention to advertisements and with surrendering our personal information," he explained.
"When a company like Facebook merges with a company like Instagram, it may look like a drop in the bucket on the advertising side, but to users, that's a big deal," he noted.
Instagram was acquired by Facebook in 2012 for $1 billion.
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TheStreet Ratings team rates Facebook as a Buy with a ratings score of A-. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that the team rates.
You can view the full analysis from the report here: FB