Facebook shares dip as Wall Street ponders Australia news fallout
As Wall Street assessed the broader repercussions of its bid to block all news content in Australia, Facebook Inc shares slipped about 1 percent on Thursday.
The surprise escalation of the battle over a law which would require Facebook and Google to reach deals to pay news outlets was denounced by media, politicians and human rights groups as it became clear that official health pages and emergency warnings had been scrubbed along with news sites.
However, Bernstein analyst Mark Shmulik said investors were likely to judge the position of Facebook against the legislation as “prudent,” given the potentially broader consequences of similar moves in other large global markets.
“While I believe Facebook said that news links only account for 4% or so of content, the danger here is contagion if other countries pursue similar legislation with broader definitions of who is a publisher – could this spiral into Facebook paying influencers for their posts?”, Shmulik said.
In recent years, Facebook has consistently flagged commercial risks to investors around copyright and content moderation, while successfully riding out the public relations fallout as its advertising revenue surged.
It now controls more than half of the digital advertising markets worldwide, along with Google owner Alphabet.
Facebook shares, up 33% last year even as the platform was widely criticized for its handling of hate speech and misinformation related to COVID-19, dipped 1% in pre-market trade in New York
Another analyst, Mirabaud Securities’ Neil Campling, contrasted Facebook’s “PR disaster” with Google’s unveiling this week of a multi-year deal for news content with Australian tycoon Rupert Murdoch’s News Corp.
