Trust is the foundation of strong customer and business relationships, but many technology companies have failed to protect customer data from unscrupulous marketers and security breaches. Politicians have taken notice and have called for increased regulation of companies, which has taken a toll on some tech stocks. While some companies like Netflix have eluded major scrutiny, others like Facebook, Google, Amazon and Apple are in the line of fire.
So Investor’s Business Daily and polling partner TechnoMetrica Market Intelligence conducted an IBD/TIPP poll that surveyed U.S. consumers about how much they trust tech companies with their personal information. The goal was to develop a Trust Index to gauge which tech companies are perceived as the best stewards of people’s data.
TechnoMetrica surveyed 4,029 U.S. adults from April through June. Each respondent rated seven companies randomly selected from a list of 24 companies chosen by the IBD editorial team. Every company was shown to about 1,150 respondents. Along with Amazon, consumers were surveyed about top tech stocks like Apple (AAPL), Facebook and Google.
Rating The Trust In Tech Stocks
Survey respondents were asked to rate their level of trust with major tech companies when it comes to protecting users’ personal information. They could answer: very high, high, moderate, low, very low or not sure.
TechnoMetrica calculated a trust score for each company surveyed. The Trust Index scale runs 0 to 100, with higher numbers associated with higher levels of trust. TechnoMetrica started by taking the difference between the percent of respondents with high or very high trust in a company and the percent with low or very low trust. It then scaled the responses to create a score where above 50 represents a positive level of trust and under 50 indicates negative trust.
“Consumers have been burned as a result of their unquestioning faith. Too much blind trust, whether personal or societal, can and has had negative consequences, such as the 2008 financial crisis. We hear about data breaches all the time, smart TVs listening in on private conversations, and virtual assistants like Alexa being monitored offshore,” said Raghavan Mayur, president of TechnoMetrica. “As a result, Americans are more concerned about their personal identity and information they share with tech companies.”
“Trust is a proxy for how you feel about a company,” said Roger Kay, an analyst with Endpoint Technologies Associates. Consumer trust probably includes not just trust but also general likability and how the company is portrayed in the news media, Kay said. “It’s a combination of things.”
Amazon.com Ranks First In Trust Index
Washington politicians like to bad-mouth Amazon.com, but consumers think more highly of the e-commerce giant than they do of all other tech stocks included in the survey. In fact, Amazon emerged as the No. 1 most-trusted tech company in the IBD/TIPP poll.
Seattle-based Amazon earned an overall Trust Index score of 69.6, topping the list of two dozen tech companies in the survey. It might not be a surprise then that Amazon also has been among the top-performing tech stocks.
The e-commerce leader performed especially well with younger people. Amazon had a Trust Index score of 71.5 among respondents ages 18 to 24 and a 78 score with those ages 25 to 44.
“Customer trust is a top priority for Amazon, and we work to earn it every day,” an Amazon spokesperson said in a written statement. “We appreciate customers recognizing our commitment to keeping their information safe by putting us at the top of Investor’s Business Daily’s tech Trust Index.”
The IBD/TIPP poll found a big political divide between Democrats and Republicans over Amazon. Democrats gave Amazon a Trust Index score of 79.9 vs. 60.2 from Republicans. Independents and other party voters gave Amazon a score of 63.3.
The political split isn’t a shock given that former President Donald Trump, a Republican, often criticized Amazon while he was in office.
Amazon’s Excellent Service Fosters Trust
Politicians of both major parties have slammed Amazon in recent years for a range of issues. They include possible anticompetitive behavior, its treatment of workers and whether Amazon is paying its fair share in taxes.
But consumers see Amazon as a convenient service with reasonable prices and fast delivery.
“Amazon provides an excellent service that fosters trust,” TechnoMetrica’s Mayur said. “People expect their personal data to be handled in the same high-quality manner in which Amazon fulfills orders and meets delivery deadlines.”
But trust levels can change over time, Mayur says. Just a few years ago, people were concerned about Amazon listening in on private conversations through its Echo smart speakers, he notes. Then, Amazon scored a lot of goodwill during the Covid-19 pandemic as shut-ins relied on its product delivery service.
“That gave them a huge aura of helpfulness and reliability,” said Bob O’Donnell, an analyst with Technalysis Research. It also likely contributed to its high trust score, he says.
Amazon does collect a lot of personal data. However, it only uses that data internally to make a better service for its customers, O’Donnell says.
Netflix, PayPal Tie For Second Place
Since internet television network Netflix offers a commercial-free service, it avoids the problems that other video services face in using customer data for targeted advertising. Among respondents 18-24, Netflix earned a trust score of 83, the highest among the subgroups in the survey.
The survey found a big political split in opinions on Netflix. Democrats gave the streaming video service a high score of 81.1 while Republicans gave it a mediocre rating of 59.1.
Conservatives have criticized some of the content on Netflix. Last year, they pushed for a boycott of the service after it aired French movie “Cuties,” claiming it sexualized young girls. They’ve also complained about “woke” liberal content on Netflix, including the company’s production deal with Barack and Michelle Obama.
A high trust score is particularly important for financial services like PayPal and its popular mobile payment app Venmo.
How Privacy Champion Apple Scored In Trust Index
Also scoring highly in the poll were search engine Google, a unit of Alphabet (GOOGL), and consumer electronics giant Apple. Google earned an overall Trust Index score of 64.6, while Apple got a score of 64.4. Both tech stocks recently notched record highs.
Even though Google has been widely criticized for tracking user activities, it managed to score slightly higher than Apple in the survey. That might be surprising since Apple promotes data privacy as a core tenet.
“Apple is a closed system with total control over you,” Mayur said. “You live in its bubble, and it keeps you there. Some people are not fond of this aspect.”
TikTok Rated Lowest For User Trust
Five companies ended up with negative scores in the corporate trust survey. China-based social media service TikTok came in dead last with an overall Trust Index score of 41.1.
President Trump tried to block TikTok from operating in the U.S. over concerns that it is monitoring U.S. citizens. Republicans gave TikTok a trust score of 30.6 compared with 56.3 from Democrats. Independents and other party voters gave TikTok a low trust score of 26.3.
Other companies on the negative side of the trust ledger were Twitter (TWTR) with a score of 44.6, Snapchat parent Snap (SNAP) at 45 and Facebook at 46.2. User review site Yelp (YELP) also had a negative score at 49.6.
Those tech stocks have been a mixed bag of late.
Social Media Tech Stocks An Easy Target
In general, social media services ended up as the least trusted companies in the survey.
The low trust scores from both Democrats and Republicans should worry social media companies, said Rob Enderle, an analyst with the Enderle Group. That makes them an easy target for legislative and regulatory actions, he says.
“They look like a very attractive target for those wanting to advance politically, putting the firms at higher risk of being broken up or more aggressively regulated,” Enderle said.
Given negative news coverage of social media companies, the low trust scores for those firms shouldn’t be surprising.
“Even the general public understands that there are some serious concerns there,” O’Donnell said.
Middle-Of-The-Road Tech Firms
Respondents viewed a bunch of tech stocks in the IBD/TIPP poll as just mildly positive for trust. They included ride-hailing services Lyft (LYFT) and Uber. Those firms received trust scores of 54.2 and 51.6, respectively.
What The Trust Index Means For Tech Stocks
On average, younger consumers are more trusting of tech companies. The average company trust score among respondents ages 18 to 24 was 63. The average score among those 25 to 44 was 68.
However, those ages 45 to 64 gave tech companies an average score of 50.5. And those 65 and older slapped a low score of 38.3 on tech firms.
Survey results like the Trust Index could shape political debates in Washington about reining in Big Tech, O’Donnell says.
“The implications of this are profound,” O’Donnell said. “If there’s data about how companies are or are not trusted, that could potentially influence how they’re viewed.”
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
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