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Facebook (FB), Google Accused of Illegal Ad Deal by US States
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Facebook is facing antitrust probes for violating competition law. Texas Attorney General Ken Paxton filed an antitrust lawsuit against Alphabet (GOOGL - Free Report) owned Google for colluding with Facebook in an illegal deal to manipulate auctions for online advertising.
Markedly, the two players entered into a deal in 2018 to start giving Facebook’s advertiser clients the option to place ads within Google’s network of publishing partners.
In exchange, Facebook received various benefits, including access to Google data and policy exceptions that enabled its clients to unfairly get more ads placed than clients of other Google partners.
Notably, Morgan Stanley analysts expect 29% year-over-year ad growth for Facebook during the fourth quarter and 27% growth in 2021 as cited by CNBC report.
Moreover, the suit — filed by Texas and eight other states — also alleged that Google and Facebook colluded to fix prices and divide up the market for mobile advertising between them by shutting out rival ad exchanges.
Coronavirus, Antitrust Probe Threatens Ad Revenue Growth
Facebook, thanks to its huge user base, has gained a significant market share in the advertising space. Online video is the most lucrative component of digital advertising. As video ads generate more revenues than its photo and text-based substitutes, Facebook is trying to incorporate more and more video-oriented content to bring in more ad dollars.
Facebook’s ad revenues increased 22.1% year over year (21% at cc) to $21.22 billion in third-quarter 2020. The company expects ad-revenue growth on a year-over-year basis to be better than the third quarter’s growth rate, driven by continued strong advertiser demand during the holiday season.
However, a number of companies including Starbucks, Coca Cola, Verizon among others have announced plans to freeze ad spending on the social media platform due to its failure to eradicate hate speech and misinformation. This is expected to hurt top-line growth, at least in the near term.
Markedly, the stock has returned 34.3% on a year-to-date basis, underperforming the Internet - Services industry’s rally of 35%.
Year-to-Date Performance
Moreover, the Federal Trade Commission (FTC), along with the 46 states, the District of Columbia and Guam have filed a lawsuit against Facebook, questioning the 2012 acquisition of Instagram for $1 billion and the subsequent 2014 acquisition of WhatsApp for $19 billion.
FTC claims such buyouts to be a strategy to neutralize the threat on Facebook’s monopoly power over social media. It further states that for future deals, this Zacks Rank #3 (Hold) company will need to seek prior approval of FTC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Tech Giants at the Center of Antitrust Target
Antitrust laws have been making a splash recently because of the lawsuits against big tech giants like Facebook, Google, Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) , among many others. Facebook has been dealing with controversies since the 2016 United States presidential elections-related Cambridge Analytica scandal.
The Department of Justice (DoJ) issued its antitrust lawsuit against Google on Oct 20, suggesting that the company is unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States.
Markedly, the European Union had in 2017 imposed the biggest fine to date, amounting to $2.7 billion, against Google, in the first ever antitrust case.
Additionally, Apple’s App Store has been facing backlash from third-party developers over the past year for forcing them to pay a 30% cut and only use the company's own in-app purchasing system.
Moreover, the European Union has brought antitrust complaints against Amazon over its treatment of third-party sellers.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Facebook (FB), Google Accused of Illegal Ad Deal by US States
Facebook is facing antitrust probes for violating competition law. Texas Attorney General Ken Paxton filed an antitrust lawsuit against Alphabet (GOOGL - Free Report) owned Google for colluding with Facebook in an illegal deal to manipulate auctions for online advertising.
Markedly, the two players entered into a deal in 2018 to start giving Facebook’s advertiser clients the option to place ads within Google’s network of publishing partners.
In exchange, Facebook received various benefits, including access to Google data and policy exceptions that enabled its clients to unfairly get more ads placed than clients of other Google partners.
Notably, Morgan Stanley analysts expect 29% year-over-year ad growth for Facebook during the fourth quarter and 27% growth in 2021 as cited by CNBC report.
Moreover, the suit — filed by Texas and eight other states — also alleged that Google and Facebook colluded to fix prices and divide up the market for mobile advertising between them by shutting out rival ad exchanges.
Coronavirus, Antitrust Probe Threatens Ad Revenue Growth
Facebook, thanks to its huge user base, has gained a significant market share in the advertising space. Online video is the most lucrative component of digital advertising. As video ads generate more revenues than its photo and text-based substitutes, Facebook is trying to incorporate more and more video-oriented content to bring in more ad dollars.
Facebook’s ad revenues increased 22.1% year over year (21% at cc) to $21.22 billion in third-quarter 2020. The company expects ad-revenue growth on a year-over-year basis to be better than the third quarter’s growth rate, driven by continued strong advertiser demand during the holiday season.
However, a number of companies including Starbucks, Coca Cola, Verizon among others have announced plans to freeze ad spending on the social media platform due to its failure to eradicate hate speech and misinformation. This is expected to hurt top-line growth, at least in the near term.
Markedly, the stock has returned 34.3% on a year-to-date basis, underperforming the Internet - Services industry’s rally of 35%.
Year-to-Date Performance
Moreover, the Federal Trade Commission (FTC), along with the 46 states, the District of Columbia and Guam have filed a lawsuit against Facebook, questioning the 2012 acquisition of Instagram for $1 billion and the subsequent 2014 acquisition of WhatsApp for $19 billion.
FTC claims such buyouts to be a strategy to neutralize the threat on Facebook’s monopoly power over social media. It further states that for future deals, this Zacks Rank #3 (Hold) company will need to seek prior approval of FTC. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Other Tech Giants at the Center of Antitrust Target
Antitrust laws have been making a splash recently because of the lawsuits against big tech giants like Facebook, Google, Amazon (AMZN - Free Report) and Apple (AAPL - Free Report) , among many others. Facebook has been dealing with controversies since the 2016 United States presidential elections-related Cambridge Analytica scandal.
The Department of Justice (DoJ) issued its antitrust lawsuit against Google on Oct 20, suggesting that the company is unlawfully maintaining monopolies in the markets for general search services, search advertising, and general search text advertising in the United States.
Markedly, the European Union had in 2017 imposed the biggest fine to date, amounting to $2.7 billion, against Google, in the first ever antitrust case.
Additionally, Apple’s App Store has been facing backlash from third-party developers over the past year for forcing them to pay a 30% cut and only use the company's own in-app purchasing system.
Moreover, the European Union has brought antitrust complaints against Amazon over its treatment of third-party sellers.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>