Meta (FB) Forced by Canada Legislation to Pay News Publishers


Meta Platforms



FB

Facebook is being pressured by the Canadian Liberal government to negotiate commercial deals and pay news publishers for their own content.

Prime Minister Justin Trudeau’s Liberal government laid out details for the proposed legislation “Online News Act” on Tuesday. The new legislation will compel platforms like Facebook, which have a bargaining imbalance compared with news outlets considering global revenues, to make fair deals.

Canadian Heritage Minister Pablo Rodriguez

stated

in a news conference that the news sector in Canada is in crisis. The news media industry has been grappling with financial losses in Canada for years, while Meta has been steadily gaining market shares from advertising.

Since 2008, more than 450 news outlets have been closed, which include 64 closures in the last two years during the pandemic.

Meanwhile, Meta has garnered advertising revenues of $32.64 billion in the fourth quarter of 2021, which represents 96.9% of revenues in the reported quarter. Revenues from advertising increased 20.1% year over year.

The Zacks Rank #4 (Sell) stock fell on Apr 5 and ended the trading session down 0.88%. In the year-to-date period, Meta’s shares have tumbled 31.1%, compared with the Zacks

Internet – Software

industry’s and the Zacks

Computer and Technology

sector’s decline of 28.4% and 11.3%, respectively.

The Canadian government increased pressure on Meta to pay news publishers after Australia passed a similar law back in 2021, and Europe revised its copyright laws to compensate publishers.

Meta’s Legal Woes Rising: A Major Concern

Meta Platforms owned Facebook and Instagram enjoy dominant market share globally. Thus, different government organizations have complained that Meta is imposing unfair terms and conditions of usage and allowing the spread of false news.

With the ongoing Russia-Ukraine war, Instagram is banned in Russia. Russian authorities took this decision to counter Meta’s decision to allow violent posts against Russian forces.

The crackdown by Russia on Instagram and Facebook would cost the company nearly $2 billion in sales. Russia accounts for 1.5% of Meta’s advertising dollars, thus affecting the company’s top line in fiscal 2022.

Back in Jan 2022, Meta faced a class action lawsuit at the Competition Appeal Tribunal in London, the U.K. The lawsuit claims that Meta is misusing its market dominance and generating revenues from consumers’ data without providing proper compensation to them and has claimed £2.3 billion in damages.

However, the recent legislation in Canada is aimed at

Alphabet

‘s

GOOGL

Google apart from Meta.

Google has stated that they were reviewing the proposed legislation and are willing to work with the government, per Reuters.

Meta and Alphabet have also voluntarily agreed to invest around C$1 billion individually over the course of three years on journalism initiatives globally.

Stocks to Consider

While Meta Platforms is grappling with legal woes and geo-political tensions globally, the shares of the company have tumbled in recent times. Here are some better-ranked stocks to consider for your portfolio from the broader Computer and Technology sector.


ASGN


ASGN

carries a Zacks Rank #2 (Buy).

ASGN shares have fallen 7.5% in the year-to-date period, compared with the Zacks

Computers – IT Services

industry’s decline of 14.4%.


Axcelis Technologies


ACLS

sports a Zacks Rank #1 (Strong Buy). You can see


the complete list of today’s Zacks #1 Rank stocks here


.

Axcelis shares have fallen 12% in the year-to-date period, compared with the Zacks

Electronics – Manufacturing Machinery

industry’s decline of 18.3%.


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