Meta Platforms (NASDAQ:META) has threatened to remove news from Facebook if the U.S. Congress passes the Journalism Competition and Preservation Act (JCPA) that would help publishers collectively negotiate compensation with tech companies like Alphabet’s Google (GOOGL) (GOOG) and Facebook.
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Lawmakers are contemplating adding the bill to a must-pass annual defense bill with the intention of helping the languishing local news industry.
Meta spokesperson Andy Stone tweeted that if Congress passes the bill, the company would remove news from its platform instead of agreeing to “government mandated negotiations that unfairly disregard any value we provide to news outlets through increased traffic and subscriptions.”
Meanwhile, per Reuters, The News Media Alliance, a trade group of newspaper publishers, is requesting Congress to attach the bill to the defense bill as it contends that local papers cannot withstand more years of “Big Tech’s use and abuse.” The group further feels that in the absence of relevant actions, social media could become America’s “de facto local newspaper.”
It is worth noting that Facebook briefly removed news from its platform after a similar law was passed in Australia last year. The company later restored news on its platform following some changes to the legislation. Canada and New Zealand are also considering similar legislations to ensure that tech giants don’t unfairly benefit from news shared on their platforms by not paying media organizations.
Is Meta a Buy, Sell, or Hold?
Meta is under pressure as companies are reducing their ad budgets due to a challenging macro backdrop. Wall Street is cautiously optimistic about Meta stock, with a Moderate Buy consensus rating based on 26 Buys, nine Holds, and three Sells. The average META stock price target of $147.24 suggests 20.3% upside potential.
Shares have plunged nearly 64% year-to-date. Meta is trading at a forward P/E of 13.5x, which is about 44% below its five-year average. Investors with a long-term horizon can take advantage of the pullback in the stock.
