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Privacy Problems for FANG Companies Might Beget M&A Action in Cybersecurity

Cybersecurity concerns could make for provoke acquisition action in Silicon Valley.

After a year of senate hearing scolding and international regulation, some of America's largest tech companies and social media giants could be eyeing acquisitions in cybersecurity to shore up their data and image.

Bill Conner, CEO at SonicWall, a California-based cybersecurity firm backed by Elliott Management and Francisco Partners, sees M&A coming soon as a result of industry dynamics.

"There is a shortage of talent," he said. "This is not something you can just go hire from the government or another large company."

He said that this will prove problematic in the "cyber arms race" and will fuel M&A to acquire talent where it already resides.

"Over the next few years you're going to have to see M&A within the space," he said. "[Companies] that have to raise their cyber protection frontier in the arms race, they're going to have to acquire."

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One of the more prominent examples of a company possibly in need of a protection partner would be Facebook (FB) - Get Facebook, Inc. Class A Report .

The Cambridge Analytica scandal has made Facebook the Hester Prynne of Silicon Valley with advertisers becoming cautious about associating with and providing data to the leaky platform.

As a sign of earnest in the effort to improve from Mark Zuckerberg, rumors have circulated that Facebook may acquire , with some proposing it even buy out a major cybersecurity firm like FireEye (FEYE) - Get FireEye, Inc. Report in order to stave off any further punishment from domestic or international regulators, backing Conner's thesis.

With recent scandals at Alphabet (GOOGL) - Get Alphabet Inc. Class A Report regarding its Google Plus product and Twitter (TWTR) - Get Twitter, Inc. Report regarding fake accounts spreading disinformation, Facebook might not be the only company adding to its defenses soon.

The industry action should make both social media and cybersecurity interesting sectors to watch for investors. 

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