Big Tech faces anti-competition probes, Twitter complies with India, Facebook updates politician policy and other notable stories from this week. Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.
FACEBOOK FACES CMA ANTITRUST PROBE:
The Competition and Markets Authority has launched a probe into whether Facebook (FB) has gained an unfair advantage over competitors in providing services for online classified ads and online dating, through how it gathers and uses certain data. The CMA will look into whether Facebook has unfairly used the data gained from its advertising and single sign-on to benefit its own services, in particular Facebook Marketplace – where users and businesses can put up classified ads to sell items – and Facebook Dating – a dating profile service it launched in Europe in 2020. The European Commission has also launched its own investigation into Facebook’s use of data. The CMA will seek to work closely with the European Commission as the independent investigations develop. The European Commission has opened a formal antitrust investigation to assess whether Facebook violated EU competition rules by using advertising data gathered in particular from advertisers in order to compete with them in markets where Facebook is active such as classified ads. The formal investigation will also assess whether Facebook ties its online classified ads service Facebook Marketplace to its social network, in breach of EU competition rules. Andrea Coscelli, chief executive of the CMA, said: “We intend to thoroughly investigate Facebook’s use of data to assess whether its business practices are giving it an unfair advantage in the online dating and classified ad sectors. Any such advantage can make it harder for competing firms to succeed, including new and smaller businesses, and may reduce customer choice. We will be working closely with the European Commission as we each investigate these issues, as well as continuing our coordination with other agencies to tackle these global issues.” Notably, this is the third investigation into a suspected breach of competition law the CMA has opened recently in digital markets. It is also investigating Google’s (GOOG) Privacy Sandbox and Apple’s (AAPL) AppStore. The uptick in antitrust probes against tech giants has not lessened optimism around these companies involved. Tigress Financial analyst Ivan Feinseth reiterated a Strong Buy rating on Facebook and initiated a 12-month target price of $430. Ongoing growth in digital advertising and the growth of social commerce will continue to drive further share price gains, Feinseth told investors in a research note. The analyst says Facebook will continue to benefit from the “massive growth” in digital advertising, driven by the growth of small and midsize businesses that advertise on its platform, along with the ongoing shift from traditional advertising.
Twitter (TWTR) said it blocked four accounts in India to comply with a new legal request from the country’s government, TechCrunch’s Manish Singh reported. The company said on Lumen Database, a Harvard project, that it took action on four accounts to be in compliance with a legal request from India it received over the weekend, the author says, noting that the accounts are geo-restricted within India but accessible from outside the nation. According to analysis by TechCrunch, these accounts have protested New Delhi’s agriculture reforms and some had posted tweets that criticized Prime Minister Narendra Modi’s governance in India. “If the content violates Twitter’s Rules, the content will be removed from the service. If it is determined to be illegal in a particular jurisdiction, but not in violation of the Twitter Rules, we may withhold access to the content in India only. In all cases, we notify the account holder directly so they’re aware that we’ve received a legal order pertaining to the account,” a Twitter spokesperson said. In other news, Twitter operations have been suspended by the Nigerian government following Twitter’s decision to remove a post by Nigeria’s president Muhammadu Buhari that threatened to punish those responsible for recent attacks on electoral offices and police stations, Business Insider’s Allana Akhtar noted. Alhaji Lai Mohammed, the Nigerian minister of information and culture, said the decision stemmed from citizens using the platform for activities “capable of undermining Nigeria’s corporate existence.”
FACEBOOK SUSPENDS TRUMP FOR TWO YEARS:
Facebook’s Nick Clegg, VP of Global Affairs, said in a statement: “We are today announcing new enforcement protocols to be applied in exceptional cases such as this, and we are confirming the time-bound penalty consistent with those protocols which we are applying to Mr. Trump’s accounts. Given the gravity of the circumstances that led to Mr. Trump’s suspension, we believe his actions constituted a severe violation of our rules which merit the highest penalty available under the new enforcement protocols. We are suspending his accounts for two years, effective from the date of the initial suspension on January 7 this year. At the end of this period, we will look to experts to assess whether the risk to public safety has receded. We will evaluate external factors, including instances of violence, restrictions on peaceful assembly and other markers of civil unrest. If we determine that there is still a serious risk to public safety, we will extend the restriction for a set period of time and continue to re-evaluate until that risk has receded. When the suspension is eventually lifted, there will be a strict set of rapidly escalating sanctions that will be triggered if Mr. Trump commits further violations in future, up to and including permanent removal of his pages and accounts.” Further, Facebook updated its policy regarding politicians in general. The company is planning to end its policy that has shielded politicians on the platform from content moderation rules that apply to other users, Alex Heath of The Verge reported. This decision comes after the Oversight Board, which is an independent group Facebook pays to review its content rulings, affirmed its decision to suspend Donald Trump from the platform, but also critiqued the special treatment given to all politicians on Facebook. The social media giant said in a statement: “We grant our newsworthiness allowance to a small number of posts on our platform. Moving forward, we will begin publishing the rare instances when we apply it. Finally, when we assess content for newsworthiness, we will not treat content posted by politicians any differently from content posted by anyone else. Instead, we will simply apply our newsworthiness balancing test in the same way to all content, measuring whether the public interest value of the content outweighs the potential risk of harm by leaving it up.”
NEWEST FEATURES ON TWITTER:
Twitter has rolled out its first iteration of Twitter Blue in Australia and Canada. The subscription offering is “meant to add enhanced and complementary features to the already existing Twitter experience for those who want it.” Those who sign up for a Twitter Blue subscription will get bookmark folders, the ability to set a customizable timer of up to 30 seconds to click ‘Undo’ before a tweet, reply, or thread posts to your timeline, and a reader mode. “Subscribers will also get access to perks, such as customizable app icons for their device’s home screen and fun color themes for their Twitter app, and will have access to dedicated subscription customer support,” Twitter added. Twitter Blue will cost C$3.49 or A$4.49 per month. Birdwatch, Twitter’s take on fact checking, also made its debut last week. Twitter said, in a tweet thread on Twitter: “Hey there! Exciting news Party popper. Now, when you’re browsing Twitter on Android, iOS, or URL you may see Tweets with Birdwatch notes. Notes will appear in a card on the Tweet. Right now, this feature is only visible to pilot participants.Why show notes on Tweets? Birdwatch wants to help people stay informed by adding helpful context to Tweets. This feature will allow those who are currently participating in Birdwatch to more easily identify and rate the most helpful notes. So, how does it work?! If a Tweet has a Birdwatch note that is “Currently rated helpful” then you’ll see that note right there on the Tweet, and you can rate it to help elevate the most helpful notes….Finally, if all notes on a Tweet are “Currently not rated helpful,” there won’t be a card on the Tweet. You’ll still be able to get to Birdwatch notes on that Tweet by clicking on the Birdwatch icon in the Tweet details page.” Mizuho analyst James Lee said the launch of Twitter’s “much anticipated” subscription service in Australia and Canada at $2.99 per month could yield “modest” revenue upside to 2022 consensus estimates. However, the timeline for the U.S. rollout is not certain, Lee tells investors in a research note. His sensitivity analysis with the assumption of a full rollout in the next six to 12 months suggests that there could be 1% to 7% upside to the consensus 2022 revenue estimate.
Zoom Video (ZM) has just completed what’s arguably the best ever four-quarter earnings stretch for any large public company, Eric Savitz wrote in this week’s edition of Barron’s. But barring some nightmarish, unexpected change in the path of the pandemic, Zoom’s days of incredible growth are over, the author contends, adding that for Zoom, the challenge now is how to leverage-and keep-the company’s vastly expanded user base. In other company news, Cathie Wood’s ARK Investment bought 96.1K shares of Zoom Video on Thursday.
Originally Posted on June 9, 2021 – SocialStocks: Antitrust Investigators Turn Up the Heat on Facebook
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