#SocialStocks: Meta Fined EUR 1.2B in Ireland for Infringing on Data Laws

Ron DeSantis to announce presidential bid on Twitter, Meta commences latest round of layoffs and other notable stories from this week

Welcome to “#SocialStocks,” The Fly’s weekly recap of Wall Street’s reactions to social media stock news.

LAYOFFS: 

Meta Platforms (META) has initiated its latest round of layoffs, targeting members of the company’s various business groups, CNBC’s Jonathan Vanian reported. The new layoffs, which follow a previous round of layoffs in April that affected employees in technical roles. The disintegration of these roles is part of Meta’s “year of efficiency,.” Approximately 10,000 workers will lose their jobs, following the company’s first round of layoffs in November that affected 11,000 employees, according to CNBC..

UNSUCCESSFUL CHALLENGE: 

The EU General Court has dismissed Meta’s challenge to EU regulators seeking vast amounts of data in an antitrust case, ruling that Meta had failed to prove that the request “went beyond what was necessary” or that EU measures taken since didn’t sufficiently protect sensitive data, Bloomberg’s Stephanie Bodoni reported. Meta first opposed the request in 2020, the report noted.

SHARE SALES: 

Cathie Wood’s ARK Investment bought 237K shares of Zoom Video (ZM). Separately, in a regulatory filing, Snap (SNAP) disclosed that its CFO Derek Anderson sold 40K shares of common stock on May 16 in a total transaction size of $340K.

AI INQUISITION: 

The White House will ask workers how their employers use use artificial intelligence, AI, to track them, as “it allocates” technology funding, “expected to change the nature of work,” Reuters said. ” The White House will hold a listening session with workers to understand their experience with employers’ use of automated technologies for surveillance, monitoring and evaluation. The call will include gig work experts, researchers, and policymakers,” added Reuters. 

MAKING A RUN: 

Florida Governor Ron DeSantis will announce his bid for U.S. president during a Twitter (TWTR) discussion with Elon Musk the company’s CEO, wrote Dasha Burns and Matt Dixon for NBC News. “Musk and DeSantis will host an event on Twitter Spaces, the site’s platform for audio chats, on Wednesday at 6 p.m. ET. It will be moderated by David Sacks, a tech entrepreneur who is a Musk confidant and DeSantis supporter,” wrote NBC News.

DIVESTITURE: 

Shutterstock (SSTK) announced that it entered into a definitive agreement to acquire GIPHY from Meta Platforms. GIPHY is the world’s largest collection of GIFs and stickers that supplies casual conversational content. Financial Highlights: Consideration for the transaction consists of $53M of net cash paid at closing, inclusive of working capital. Cash consideration funded through cash-on-hand and existing revolving credit facility. In connection with this transaction, GIPHY’s current owner, Meta Platforms, is entering into an API agreement to ensure continued access to GIPHY’s content across Meta’s platform. Shutterstock is maintaining its 2023 revenue and adjusted EBITDA margin guidance. GIPHY is expected to add minimal revenue in 2023 with focused monetization efforts taking place over the course of 2024. The transaction is targeted to close in June 2023, subject to customary closing conditions.

EARNINGS RECAP: 

Zoom shares were marginally higher on Monday following the company’s first quarter earnings report.. The company beat analyst expectations and provides guidance inline with the consensus. Zoom highlighted that Zoom Phone surpassed 10% of revenue in Q1. “The Zoom platform is designed to support limitless human connection to empower the modern workday and strengthen customer relationships. Our customers see Zoom as mission-critical in how they collaborate internally and externally across the globe,” said Eric S. Yuan, Zoom founder and CEO. “This relationship with our customers helped us to exceed our guidance due to Enterprise growth and stabilizing Online revenue while driving greater efficiencies in our business to deliver strong profitability and free cash flow margin. The solid start to the year has enabled us to raise our outlook for fiscal year 2024 while continuing to invest in innovations such as AI to help make interactions more meaningful and communications more effective.”

LICENSED: 

Meta Platform’s Bombyx is “taking the next steps in its development.” Meta will license the technology to Japanese robotics company, Hibot, the company said. “We see this as a great opportunity for our business expansion. It is also an honor to have been selected by Meta to carry on this exciting endeavor,” said Michele Guarnieri, CEO of Hibot. “We will be moving with our current global partners, while seeking new and valuable alliances to help us leverage this great innovation.” By combining a novel, miniature fiber cable and pairing that with a unique, spool-free cable geometry, Bombyx allows long spans of fiber to be packed into a small volume and for it to be spun around a powerline conductor without the need for counterweights. Bombyx also introduces the first robot capable of traversing energized conductors and automatically crossing obstacles, including pin and post insulators that must be passed from above. It does this through a combination of machine vision and custom sensors, combined with thruster fans, drive/lift/rotation subsystems, and advanced stabilization control that allows it to balance itself and pass over obstacles like a tightrope walker. Bombyx was developed as a means to address the cost and complexity of fiber installation. It is an evolution of an older, less common fiber installation technique called helical wrapping, where a fiber optic cable is wrapped around an existing powerline conductor. However, the need to shut the power off for extended periods of time to allow for fiber installation, the cumbersome fiber wrapping process, and the limited contiguous spans of fiber that can be installed are all key challenges for adopting the helical wrapping technique.

EDIT BUTTON: 

In a company blog post, WhatsApp said, “For the moments when you make a mistake, or simply change your mind, you can now edit your sent messages. From correcting a simple misspelling to adding extra context to a message, we’re excited to bring you more control over your chats. All you need to do is long-press on a sent message and choose ‘Edit’ from the menu for up to fifteen minutes after. Edited messages will display ‘edited’ alongside them, so those you’re messaging are aware of the correction without showing edit history. As with all personal messages, media and calls, your messages and the edits you make are protected by end-to-end encryption. This feature has started rolling out to users globally and will be available to everyone in the coming weeks.”

ONE SMALL LEAP: 

Meta Platforms is in talks with augmented reality startup Magic Leap to form a multiyear agreement, The Financial Times’ Hannah Murphy and Patrick McGee reported. Meta is exploring ways in which Magic Leap could provide both intellectual property licensing and contract manufacturing in North America to help it build mainstream AR products, according to people familiar with the discussions.

DATA INFRINGEMENT: 

Ireland’s Data Protection Commission announced the conclusion of its inquiry into Meta Platforms Ireland Limited, examining the basis upon which Meta Ireland transfers personal data from the EU/EEA to the U.S. in connection with the delivery of its Facebook service. The decision records that Meta Ireland infringed Article 46 GDPR when it continued to transfer personal data from the EU/EEA to the USA following the delivery of the CJEU’s judgment in Data Protection Commissioner v Facebook Ireland Limited and Maximillian Schrems. Consistent with its obligations to adopt its final decision “on the basis of” the EDPB’s decision, the DPC’s decision of May 12 records the exercise of the following corrective powers by the DPC: an order requiring Meta Ireland to suspend any future transfer of personal data to the US within the period of five months from the date of notification of the DPC’s decision to Meta Ireland; an administrative fine in the amount of EUR 1.2 billion; an order requiring Meta Ireland to bring its processing operations into compliance with Chapter V of the GDPR, by ceasing the unlawful processing, including storage, in the US of personal data of EU/EEA users transferred in violation of the GDPR, within 6 months following the date of notification of the DPC’s decision to Meta Ireland.

Meta Platforms said in a statement, “Today, the Irish Data Protection Commission has set out its findings into Meta’s use of this common legal instrument to transfer Facebook user data between the EU and the US. Despite acknowledging we had acted in good faith and that a fine was unjustified, the DPC was overruled at the last minute by the European Data Protection Board. We are appealing these decisions and will immediately seek a stay with the courts who can pause the implementation deadlines, given the harm that these orders would cause, including to the millions of people who use Facebook every day…Ultimately, the invalidation of Privacy Shield in 2020 was caused by a fundamental conflict of law between the US government’s rules on access to data and the privacy rights of Europeans. It is a conflict that neither Meta nor any other business could resolve on its own. We are therefore disappointed to have been singled out when using the same legal mechanism as thousands of other companies looking to provide services in Europe….Without the ability to transfer data across borders, the internet risks being carved up into national and regional silos, restricting the global economy and leaving citizens in different countries unable to access many of the shared services we have come to rely on.”

TWITTER COMPETITOR IN THE WORKS: 

Meta’s Instagram is currently testing a text-based app to compete with Twitter with celebrities and influencers and may release the app, which will be separate from Instagram but allow users to connect accounts, as soon as June, according to Bloomberg’s Sarah Frier, citing sources, including Lia Haberman, who teaches social and influencer marketing at UCLA.

IMPROPER USE OF DATA: 

Twitter sent a letter to Microsoft’s (MSFT) CEO Satya Nadella accusing the tech giant of improperly using Twitter’s data, Kate Conger, Ryan Mac, and Cade Metz of The New York Times reported. Twitter said Microsoft violated an agreement over its data and declines to pay for that usage, according to the letter, which was reviewed by the Times. Twitter also accused Microsoft of sharing its data with government agencies without permission, the letter said.

BLUE VIDEO: 

Elon Musk announced that Twitter Blue subscribers can now upload videos that are two hours long,. “Twitter Blue Verified subscribers can now upload 2 hour videos (8GB)!,” said Musk in the tweet.

AI PLAN: 

Meta Platforms said in a blog post that it is now now executing on a plan to build the next generation of Meta’s infrastructure backbone, specifically built for AI, and shared new details on projects related to AI. The company announced Meta Training and Inference Accelerator, its first in-house, custom accelerator chip family targeting inference workloads. MTIA provides greater compute power and efficiency than CPUs, and it is customized for our internal workloads. By deploying both MTIA chips and GPUs, we’ll deliver better performance, decreased latency, and greater efficiency for each workload, the company said. “Meta’s next-generation data center design will support our current products while enabling future generations of AI hardware for both training and inference,” the Facebook parent added. “This new data center will be an AI-optimized design, supporting liquid-cooled AI hardware and a high-performance AI network connecting thousands of AI chips for data center-scale AI training clusters. It will also be faster and more cost-effective to build, and it will complement other new hardware, such as Meta’s first in-house-developed ASIC solution, MSVP, which is designed to power the constantly growing video workloads at Meta.” In addition, Meta said that its Research SuperCluster AI Supercomputer, which it believes is one of the fastest AI supercomputers in the world, was built to train the next generation of large AI models to power new augmented reality tools, content understanding systems, real-time translation technology, and more. “These AI-focused efforts enable us to take advantage of exciting new software advances like PyTorch 2.0,” Meta noted. “The latest version of this open source AI framework, which was created by Meta in 2016 in partnership with the AI community, offers the same powerful, flexible, easy-to-use workflow. But it fundamentally changes and accelerates how the framework operates at the compiler level under the hood. With 2.0, PyTorch now provides faster performance and support for new features, like accelerated transformers and dynamic shapes.”

SECTION 230: 

In a decision posted to the Supreme Court website, the court stated: “In 2015, ISIS terrorists unleashed a set of coordinated attacks across Paris, France, killing 130 victims, including Nohemi Gonzalez, a 23-year-old U. S. citizen. Gonzalez’s parents and brothers then sued Google, LLC, under 18 U. S. C. Section 2333(a) and (d)(2), alleging that Google was both directly and secondarily liable for the terrorist attack that killed Gonzalez. For their secondary-liability claims, plaintiffs alleged that Google aided and abetted and conspired with ISIS. All of their claims broadly center on the use of YouTube, which Google owns and operates, by ISIS and ISIS supporters. The District Court dismissed plaintiffs’ complaint for failure to state a claim, though it offered plaintiffs leave to amend their complaint. Instead, plaintiffs stood on their complaint and appealed, and the Ninth Circuit affirmed in a consolidated opinion that also addressed Twitter, Inc. v. Taamneh, _ U. S. _ (2023). 2 F. 4th 871 (2021). With respect to this case, the Ninth Circuit held that most of the plaintiffs’ claims were barred by Section 230 of the Communications Decency Act of 1996, 110 Stat. 137, 47 U. S. C. Section 230(c)(1)… Since we hold that the complaint in that case fails to state a claim for aiding and abetting under Section 2333(d)(2), it appears to follow that the complaint here likewise fails to state such a claim. And, in discussing plaintiffs’ revenue-sharing claims, the Ninth Circuit held that plaintiffs plausibly alleged neither that ‘Google reached an agreement with ISIS,’ as required for conspiracy liability, nor that Google’s acts were ‘intended to intimidate or coerce a civilian population, or to influence or affect a government,’ as required for a direct liability claim under Section 2333(a)… We need not resolve either the viability of plaintiffs’ claims as a whole or whether plaintiffs should receive further leave to amend. Rather, we think it sufficient to acknowledge that much (if not all) of plaintiffs’ complaint seems to fail under either our decision in Twitter or the Ninth Circuit’s unchallenged holdings below. We therefore decline to address the application of Section 230 to a complaint that appears to state little, if any, plausible claim for relief. Instead, we vacate the judgment below and remand the case for the Ninth Circuit to consider plaintiffs’ complaint in light of our decision in Twitter.”

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Originally Posted May 24, 2023 – #SocialStocks: Meta fined EUR 1.2B in Ireland for infringing on data laws