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Facebook threatens to block news on its platform

feeling bad, bad news, in the red, disappointed

Facebook, Inc. (NASDAQ: FB) has threatened to block Australians from sharing news on its widely used social media platform. This comes as companies such as News Corp (ASX: NWS) have pushed for regulations that will force social media giants to pay for news content on their sites. 

The regulations are being drafted by the Australian Competition and Consumer Commission (ACCC) and have not yet been legislated. They will introduce an independent arbitrator to determine the amount that websites and social media providers will be required to pay for news content shared on their platforms.

Facebook Australia and New Zealand managing director Will Easton said the regulations misunderstood the dynamics of the internet. He went on to say that Facebook would either need to block news content or allow news publishers to charge as much as they wanted for content.

The ACCC responded, stating: “Facebook’s threat today to prevent any sharing of news on its services in Australia is ill-timed and misconceived”.

Clash of the titans

The Newscorp share price has not moved dramatically since Facebook flagged that it was considering blocking its content in Australia. At the time of writing, the Newscorp share price was up 2.0% to $20.62. It has been reported that Newscorp has said online giants should pay $1 billion for the news content they were currently sharing with users.

If Facebook and other online giants do not comply with the new regulations, they could face penalties of up to 10% of their revenue from Australia.

If Facebook goes ahead with blocking news for Australian users, Facebook and its other social media platforms including Instagram will be affected.

About the Facebook share price

Facebook is an online social media conglomerate based in the United States. Along with its flagship Facebook platform, the company also owns Instagram, Whatsapp and various other internet-based platforms. It listed on the NASDAQ in 2012.

In the 3 months to 30 June 2020, Facebook had total revenue of US$18.3 billion, up 11% compared to the same period in 2019. The average number of daily active users in the June 2020 quarter was 1.79 billion, an increase of 12% compared to the same period in 2019.

The Facebook share price closed at $295.44 in US trade, up by 0.76%.

Facebook shares are up 115.49% since a 52-week low of $137.10. The Facebook share price has returned 40.83% since the beginning of the year and is up 61.98% since this time last year.

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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Chris Chitty has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Facebook. The Motley Fool Australia has recommended Facebook. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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