The newspaper around Facebook (NASDAQ: FB) cannot be called favorable. Australian users criticize the platform that has blocked news websites as part of the fight against the proposed media law, which will force the giant of social networks and Google (NASDAQ: GOOG) to pay national publishers for news content.
According to Bloomberg, this unexpected step of Facebook has deprived the main source of news of almost every fifth Australian (including recommendations regarding the control of coronavirus, warnings from meteorological service and even access to the publications of children's hospitals).
17 million users of Australia can now not share news of national or foreign publishers. This step is also deprived of 2.8 billion global Facebook users of the ability to publish articles of Australian publishers.
A project that is still discussed in parliament can force media giants to pay news organizations for articles that are published in their networks. According to the law proposed by the Australian Commission on Competition and Consumer Protection, and Google, Facebook will have to negotiate with publishers and pay for content placed on platforms. If the law is approved and ratified in the current form, a precedent will be created.
AlphaBet (NASDAQ: GOOGL) went more conciliatory way, starting to enter into payment agreements with publishers. The company has already announced a three-year agreement with News Corp (NASDAQ: NWSA) Rupert Merdok on payment of content. This step was preceded by similar transactions, which was announced recently.
Facebook shares lagging behind the market
This "Battle for Australia" became the last episode of the Antimonopoly War, which the regulators of the United States and the European Union were launched in the framework of efforts to limit the influence and monopoly practices of social networks and search engines.
In December, the Federal Trade Commission and 46 states filed antimonopoly claims against Facebook, accusing it to buy and freeze small startups in order to suppress competition.
It is difficult to predict when and in what form these legal problems will begin to damage Facebook and its ability to generate money, but it is quite obvious that FB shares are in less demand.
This year, the papers of the company significantly gave way to their competitors, including Google, Twitter (NYSE: TWTR) and SNAP (NYSE: SNAP). Since the beginning of the year, Facebook fell by 2%, while the capitalization of his colleagues increased by 20-35%.
So, really facebook will not be able to win in this battle, which pushes the faith of investors in the company?
In the short term, the pressure is obviously, but even taking into account all regulatory and political problems, the company Mark Zuckerberg (and its division of digital advertising) confidently recovers from a decline caused by a pandemic. In the last quarter Facebook recorded record indicators of revenues and profits against the background of a sharp burst with sharp online purchases during the holiday season, which led to an increase in the activity of the company's platform users.
BMO analysts mark:
"Antimonopoly and political risks remain high, but taking into account the recent rollback, they are generally taken into account in prices. While the antimonopoly proceedings against FB is now formal, we consider it unlikely to make specific decisions in the next 12 months. "
While Facebook reduces its news business, investors carefully follow the success of the company as part of the diversification of the income base.
E-commerce tools, such as MarketPlace, ultimately can become a large direction of growth. According to Morgan Stanley's recent post, Instagram Shopping, Reels and Facebook Marketplace services this year can bring the company an additional income of $ 3 billion.
Summarize
In the near future, Facebook shares are likely to continue to lag behind the market, as the company turned out to be drawn to the fight against politicians and regulators. However, more than a 2-billion user base of the company and the unique opportunities that it offers to small business makes its shares with an attractive investment in the long run.
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