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Jim Cramer: Yeah, it's interesting, Google cloud services, Diane Greene runs it, they've often said listen Jim, we're the up and comer in the cloud, we can talk about the cloud obviously in a moment but, geez, they're really not in the room. And so I totally understand that, I happen to like them for other reasons, our travel trust owns Alphabet, now Google, but yeah, I mean, it's not certainly anything I would reference, their cloud business. Okay, go ahead Naomi, what do you think?
Naomi Shah: That's a really interesting question. I think that I'm more in Eric's camp where I don't think any of them have overstayed their welcome necessarily, however I do think that there are small things that you can point out in maybe Facebook's company that point to, there's a lot of regulation crackdown on it, users are becoming more wary of certain security issues, and if you look at user growth numbers, it might point to a trend that's, it was huge when it started, but maybe not as valuable today as it was at one point, and there are other ways that people are finding that they can have social networks in a more distributed way. Where all their data isn't in one spot.
Jim Cramer: No, I know that you have focused on the privacy issues, political issues, Travel Trust had a huge [inaudible 00:03:54] and Facebook kept some, alongside, and then I pick up another 14 million personal entries hacked, Facebook, trying to figure out whether it's in the stock I'm on, it literally I try to figure out the time, is this hack in the stock, is this negative piece of news in the stock. Where do you think we are in terms of regulation particularly overseas?
Naomi Shah: I think that regulation is just starting to come down on a lot of these companies. And its not only difficult for large companies to tackle these regulatory issues, it's also difficult for start ups in this space that are trying to find their way in the tough regulatory landscape but also trying to figure out where they play with large income [inaudible 00:04:40] like Facebook and Netflix and Amazon and Google.
So especially overseas like the European Union obviously is very outspoken about wanting to distribute all of the data to individual users, and not have it with large organizations that are easily hackable. And Facebook obviously is working on a lot of things to ensure security as are all these cloud companies that are working with small and medium size businesses.
However I think that it's only going to get tougher in the next few years from a regulation standpoint, especially overseas.

FAANG stocks (Facebook Inc.  (FB) , Apple Inc.  (AAPL) , Amazon.com Inc.  (AMZN) , Netflix Inc.  (NFLX) , Alphabet Inc. owned Google (GOOGL) ) may still be in high growth mode, but that doesn't mean they're not subject to real risks. 

Aside from the hit the FAANG stocks took in last week's two-day sell-off, a few risks exist for each stock in the group. Perhaps the biggest risk for the data-centric Facebook and Google is privacy regulation. Big questions over the sanctity of users' data privacy came to the surface after not just the Cambridge Analytica scandal, but also Facebook's latest few scares and Google's Google Plus scare. Also important to mention, Facebook's July quarter badly missed estimates and slashed full year guidance, partly because of slowing user growth in Europe, where the General Data Protection Regulation had an impact. 

It could get worse. 

"Regulation is just starting to come down on a lot of these companies," Naomi Shah analyst at Union Square Ventures told Jim Cramer at his October 13 investing teach-in event. She added, "especially overseas, like the European Union, obviously is very outspoken about wanting to distribute all of the data to individual users." Still, "it's only going to get tougher in the next few years from a regulation standpoint, especially overseas," Shah said. 

"Facebook's a company that points to -- there's a lot of regulation crackdown on it -- users are becoming more wary of certain security issues, and if you look at user growth numbers, it might point to a trend that's -- it was huge when it started -- but maybe not as valuable today as it was at one point," Shah said. 

Cramer's Action Alerts Plus team cut its position in Facebook significantly in January, and then trimmed a bit more after Facebook slashed full year 2018 guidance in July. The AAP team may eventually add some Facebook shares back into its portfolio if it sees faster Instagram monetization, and if Facebook continues to stay at its current price-to-earnings multiple of 24. 

FB, AAPL, AMZN and GOOGL are holdings in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells FB, AAPL, AMZN or GOOGL? Learn more now.