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#SocialStocks: Meta Ireland fined EUR 390M by Data Protection Commission

Posted January 5, 2023 at 3:30 pm
Andrew Perez
The Fly

Twitter accused of dodging rent payments, social media rival refuses funding 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.

NOT FINE BY ME: 

The Data Protection Commission has announced the conclusion of two inquiries into the data processing operations of Meta Platforms Ireland Limited (META) in connection with the delivery of its Facebook and Instagram services. Final decisions have now been made by the DPC in which it has fined Meta Ireland EUR 210 million for breaches of the GDPR relating to its Facebook service, and EUR 180 million for breaches in relation to its Instagram service. Meta Ireland has also been directed to bring its data processing operations into compliance within a period of 3 months. The inquiries concerned two complaints about the Facebook and Instagram services, each one raising the same basic issues. One complaint was made by an Austrian data subject in relation to Facebook; the other was made by a Belgian data subject in relation to Instagram. Notably, it found that: In breach of its obligations in relation to transparency, information in relation to the legal basis relied on by Meta Ireland was not clearly outlined to users, with the result that users had insufficient clarity as to what processing operations were being carried out on their personal data. In circumstances where it found that Meta Ireland did not, in fact, rely on users’ consent as providing a lawful basis for its processing of their personal data, the “forced consent” aspect of the complaints could not be sustained.

Meta noted that the Irish Data Protection Commission, or DPC, has set out its findings on the legal basis that Facebook and Instagram use under GDPR for the purpose of serving behavioral advertisements. In a post to its site in reply, Meta stated: “The debate around legal bases has been ongoing for some time and businesses have faced a lack of regulatory certainty in this area. We strongly believe our approach respects GDPR, and we’re therefore disappointed by these decisions and intend to appeal both the substance of the rulings and the fines. There has also been inaccurate speculation and misreporting on what these decisions mean. We want to reassure users and businesses that they can continue to benefit from personalised advertising across the EU through Meta’s platforms.”

Twitter (TWTR) has been accused by Columbia Reit-650 California of failing to pay $136,260 of rent due on the office space at 650 California Street in San Francisco, The Wall Street Journal’s James R. Hagerty reported. According to the lawsuit, the landlord said it informed Twitter in mid-December that the company would be in default on its rent obligations for space on the building’s 30th floor if it didn’t pay the sum within five business days. 

SHARE PURCHASE: 

Cathie Wood’s ARK Investment bought 57K shares of Zoom Video (ZM) Thursday.

RIVAL SPURNS INVESTORS: 

Open-source microblogging site Mastodon has fended off several investment offers from Silicon Valley investors recently, but vowed to protect the sites non profit status, wrote Ian Johnston for the Financial Times. Mastodon has seen a “surge in users” amid worries about Twitter under the helm of its new owner Elon Musk, added the story. “Mastodon will not turn into everything you hate about Twitter,” said Eugen Rochko, Mastodon’s founder, according to the FT.

ANALYST COMMENTARY: 

New Street analyst Dan Salmon initiated coverage of Snap (SNAP) with an “out-of-consensus”. Falling U.S. engagement is the key risk, but he thinks revenue growth can rebound more than the Street expects in 2023 as new ad product gains traction, Salmon told investors. He also expects profitability and margin expansion to be “re-invigorated.” Salmon also initiated coverage of Meta Platforms. The “basic ‘FANG trade’ may be dead,” but he noted many U.S. Internet stocks offer attractive valuation entry points. While saying Meta is “still likely the most controversial name in the coverage,” he has conviction that near-term operating expense and capital expenditure growth will ease and thinks Meta’s ad revenue can outperform near-term.

Originally Posted January 4, 2022 – #SocialStocks: Meta Ireland fined EUR 390M by Data Protection Commission

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