Facebook (FB), Google (GOOGL), and Microsoft (MSFT) are suing the Trump Administration in regards to a new rule that foreign students would be required to leave the country this fall if their colleges teach through online-only classes.
The U.S. Immigration and Customs Enforcement announced the change on July 6. Before this, if an international student opted to take online classes it would not jeopardize an international student’s visa. However, in light of the pandemic, many colleges in the US have moved to an online format for teaching. The in-person classes-only ruling will possibly result in many international student visas being revoked.
The tech giants joined a July 13 lawsuit, which was filed by Harvard and M.I.T. against the Department of Homeland Security. The suit notes that the new policy would impact 9,000 international students of both universities, in addition to hundreds of thousands of foreign students throughout the United States.
Colleges frequently rely on international tuition from many students while tech companies seek to diversify their talent pool with skilled workers from around the world.
Supporting his company’s decision to join the suit, Microsoft President Brad Smith tweeted, “America’s future competitiveness depends on attracting and retaining talented international students,” He added, ”Individuals who come here as international students are also essential to educating the next generation of inventors.”
Numerous other companies joined a brief in support of the suit, saying that the policy change will “inflict significant harm” on their respective businesses with an impact on their customer base. They noted that it would restrict their ability to recruit top talent from U.S. universities.
The brief includes support from such names as Twitter (TWTR), Linkedin, PayPal, Spotify, Salesforce, Adobe, and Dropbox. The companies stated, “These students contribute substantially to the U.S. economy when they are residents in the United States.”
The US Chamber of Commerce and attorney generals from 17 other states, including Washington D.C. also announced on July 13 that they are including themselves in the lawsuit.
In 2017, Google CEO Sundar Pichai and Facebook CEO Mark Zuckerberg slammed the U.S. government’s immigration policies particularly in regards to international students. The suit represents their first action in response to the Trump Administration’s rulings.
The involvement of Facebook is notable considering its history with politically charged issues. In June, the company changed some of its site policies in regards to hate speech and racism in light of an ad boycott aimed at the popular social media giant.
On June 26, Merrill Lynch analyst Justin Post noted, “As of now, our checks have suggested that the impact of boycotts may not be material, but if key influencers in other large sectors join in, there is risk of a near-term ‘snowball’ effect.” As of July 13, the analyst continues to maintain a Buy rating on Facebook’s stock and a price target of $265 implying 11% upside potential.
Facebook’s stock is up 16% year-to-date with a Strong Buy analyst consensus that breaks down into 28 Buy ratings versus 4 Hold ratings and no Sell rating. The $251.35 average price target suggests 6% upside potential for the shares in the coming 12 months. (See Facebook’s stock analysis on TipRanks).
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