Facebook shares dip as Wall Street ponders news fallout

NEW YORK: Facebook Inc shares slipped around 1 per cent on Thursday as Wall Street assessed the wider ramifications of its move to block all news content in Australia.
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.

Bernstein analyst Mark Shmulik, however, said investors were likely to judge Facebook’s stand against the legislation as “prudent”, given the potentially wider implications of similar moves following in other big global markets.
“While I believe Facebook said that news links only account for 4 per cent 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.
Facebook has flagged commercial risks around copyright and content moderation consistently to investors in recent years, while successfully riding out the public relations fallout as its advertising revenue surged.
Along with Google owner Alphabet, it now controls more than half of the digital advertising markets globally.
The company’s shares, up 33 per cent last year even as the platform was widely criticized for its handling of hate speech and misinformation related to Covid-19, dipped 1 per cent in pre-market trade in New York.
Like others of the “stay-at-home” stock market winners from the past year’s Covid-19 lockdowns, Facebook has soared in value and is now worth almost $800 billion. Filings show that in the past three months, company insiders have sold $788 million of shares.
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.
Meanwhile, Facebook’s move to block all media content in Australia is a staggeringly irresponsible attempt to bully a democracy and will stiffen the resolve of legislators across the world to get tough with the tech giants, a senior British lawmaker said.
“This action – this bully boy action – that they’ve undertaken in Australia will I think ignite a desire to go further amongst legislators around the world,” Julian Knight, chair of the British Parliament’s Digital, Culture, Media and Sport Committee, said.
“We represent people and I’m sorry but you can’t run bulldozer over that – and if Facebook thinks it’ll do that it will face the same long-term ire as the likes of big oil and tobacco,” Knight said. The social media giant shocked Australia on Thursday when it blocked all media content from its platform in a stunning escalation of a dispute with the government over paying for content.
The move came after the government of Scott Morrison drafted a law to require Facebook and Google to reach commercial deals with news outlets whose links drive traffic to their platforms, or be subjected to forced arbitration to agree a price. — Reuters