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Meta Platforms' (META) Instagram Fined by Irish Regulators
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Meta Platforms’ (META - Free Report) Instagram has recently been slapped with a €405 million fine by Ireland’s data regulators for violating the European Union’s (EU) General Data Protection Regulation (GDPR) and failing to protect children’s information.
The Irish data protection commission fined Instagram following a two-year investigation. The investigation followed complaints regarding Instagram’s default settings in the accounts of all users, including children under the age of 18, to public settings. The complaint also included claims that information about children using business accounts on the platform was made publicly available.
The current fine is one of the largest under GDPR and the third largest that the Irish regulator has handed over to META. In March, META was fined €17 million by the Irish regulator following an investigation into a data breach on Facebook. Last year, it was fined €225 million for violating privacy laws on WhatsApp. While the company has accepted the Facebook decision, it is appealing against the WhatsApp ruling.
Similar legal proceedings were brought by the Australian competition watchdog for posting fake celebrity advertisements on its social media platform.
Per Independent, the Australian Competition & Consumer Commission (ACCC) complained that Meta failed to prevent scammers from promoting fake advertisements of celebrities endorsing misleading products.
Meta’s legal woes are ever-increasing and negatively impacting the share price movement. One of the biggest legal threats the company faced was launched by the Russian authorities. Russian prosecutors asked a court to mark Meta as an extremist organization. Instagram is banned in the country since Mar 11.
Geopolitical tensions like the Russia-Ukraine war reduced META’s monthly active users across its family of apps, namely Facebook and Instagram. Also, rising inflation weakened digital advertising revenues. The global economic downturn is currently witnessing a worse phase than what it was a quarter ago. This, in turn, hurt investors’ sentiments around ad-revenue-dependent companies.
Also impacting Meta’s ad-revenue growth are ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is very difficult and Meta expects these factors to hurt advertising growth in the third quarter and throughout 2022.
Shares of Meta Platforms, which currently has a Zacks Rank #5 (Strong Sell), have tumbled 52.4% in the year-to-date period compared with the Zacks Internet – Software industry’s decline of 50.7%.
Intensifying competition for ad dollars and user engagement from the likes of Snap (SNAP - Free Report) , Twitter and TikTok is another persistent headwind. Also, as META is trying to rebuild its e-commerce business, it is facing severe competition from Amazon in this segment.
Snap is benefiting from improving user engagement, particularly in the 13-34-year-old demography, which is expanding its advertiser base. SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters, globally.
Even as Meta Platforms is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
Rising legal woes, strong competition and geo-political headwinds have impacted revenues in the second quarter of 2022.
Revenues of $28.82 billion beat the Zacks Consensus Estimate by 0.44% but decreased 0.9% year over year. At constant currency (cc), the top line improved 3%.
Although Meta Platforms’ short-term revenue growth looks bleak, it is confident about its long-term prospects. META is pumping resources into developing AI to address solutions for megatrends like a hybrid work environment, which will drive its user base across various platforms like Meta Portal Go.
Investments in AI are also expected to draw higher revenues from Meta’s ad business.
Further, Meta’s investments in AI will allow social feeds in Facebook and Instagram to be more recommended by AI, which will reduce privacy breaches and protect the data of its users.
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Meta Platforms' (META) Instagram Fined by Irish Regulators
Meta Platforms’ (META - Free Report) Instagram has recently been slapped with a €405 million fine by Ireland’s data regulators for violating the European Union’s (EU) General Data Protection Regulation (GDPR) and failing to protect children’s information.
The Irish data protection commission fined Instagram following a two-year investigation. The investigation followed complaints regarding Instagram’s default settings in the accounts of all users, including children under the age of 18, to public settings. The complaint also included claims that information about children using business accounts on the platform was made publicly available.
The current fine is one of the largest under GDPR and the third largest that the Irish regulator has handed over to META. In March, META was fined €17 million by the Irish regulator following an investigation into a data breach on Facebook. Last year, it was fined €225 million for violating privacy laws on WhatsApp. While the company has accepted the Facebook decision, it is appealing against the WhatsApp ruling.
Similar legal proceedings were brought by the Australian competition watchdog for posting fake celebrity advertisements on its social media platform.
Per Independent, the Australian Competition & Consumer Commission (ACCC) complained that Meta failed to prevent scammers from promoting fake advertisements of celebrities endorsing misleading products.
Meta Platforms, Inc. Price and Consensus
Meta Platforms, Inc. price-consensus-chart | Meta Platforms, Inc. Quote
Meta’s Legal Woes Impacting Share Price Negatively
Meta’s legal woes are ever-increasing and negatively impacting the share price movement. One of the biggest legal threats the company faced was launched by the Russian authorities. Russian prosecutors asked a court to mark Meta as an extremist organization. Instagram is banned in the country since Mar 11.
Geopolitical tensions like the Russia-Ukraine war reduced META’s monthly active users across its family of apps, namely Facebook and Instagram. Also, rising inflation weakened digital advertising revenues. The global economic downturn is currently witnessing a worse phase than what it was a quarter ago. This, in turn, hurt investors’ sentiments around ad-revenue-dependent companies.
Also impacting Meta’s ad-revenue growth are ad targeting-related headwinds created by Apple’s (AAPL - Free Report) iOS changes.
Apple’s iOS changes have made ad targeting difficult, which has increased the cost of driving outcomes. Measuring these outcomes is very difficult and Meta expects these factors to hurt advertising growth in the third quarter and throughout 2022.
Shares of Meta Platforms, which currently has a Zacks Rank #5 (Strong Sell), have tumbled 52.4% in the year-to-date period compared with the Zacks Internet – Software industry’s decline of 50.7%.
You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Intensifying competition for ad dollars and user engagement from the likes of Snap (SNAP - Free Report) , Twitter and TikTok is another persistent headwind. Also, as META is trying to rebuild its e-commerce business, it is facing severe competition from Amazon in this segment.
Snap is benefiting from improving user engagement, particularly in the 13-34-year-old demography, which is expanding its advertiser base. SNAP is also giving competition to META in the metaverse space. It collaborated with Vogue to feature a virtual try-on experience of select pieces from Balenciaga, Dior and Gucci, which will be available for snapchatters, globally.
Even as Meta Platforms is investing aggressively in building the metaverse, Twitter surpassed it as the first social media giant to enter the non-fungible token marketplace by launching a tool to showcase and sell NFTs on its platform.
Rising legal woes, strong competition and geo-political headwinds have impacted revenues in the second quarter of 2022.
Revenues of $28.82 billion beat the Zacks Consensus Estimate by 0.44% but decreased 0.9% year over year. At constant currency (cc), the top line improved 3%.
Although Meta Platforms’ short-term revenue growth looks bleak, it is confident about its long-term prospects. META is pumping resources into developing AI to address solutions for megatrends like a hybrid work environment, which will drive its user base across various platforms like Meta Portal Go.
Investments in AI are also expected to draw higher revenues from Meta’s ad business.
Further, Meta’s investments in AI will allow social feeds in Facebook and Instagram to be more recommended by AI, which will reduce privacy breaches and protect the data of its users.