Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Facebook and Google Face ‘Supercharged’ Regulatory Risk in 2020

Facebook and Google Face ‘Supercharged’ Regulatory Risk in 2020

The digital advertising market is expected to hit a milestone in 2020, providing a tailwind for industry-dominating names like Facebook Inc. and Google-parent Alphabet Inc. However, that growth is widely expected to be met with growing scrutiny from regulators on a number of major issues.
According to BofA, global online ad penetration levels are expected to grow to 52% next year from 48% in 2019, thereby surpassing the amount spent on non-digital advertising. The firm expects $144 billion to be spent on digital ads next year in the U.S. alone, a forecast that implies 16% growth from 2019 levels.

Facebook and Alphabet are expected to be the biggest beneficiaries of this growth by far, as the online ad market is “increasingly concentrated” between the two, in the words of Canaccord Genuity. The firm estimated that Alphabet would comprise 20% of next year’s digital ad market, while Facebook constitutes another 14%.

Growing ad revenue has fueled gains in both stocks in 2019. Alphabet is up nearly 30% this year and is trading near record levels, having shrugged off a couple of quarterly reports that raised concerns or failed to excite over the pace of its growth. Facebook has surged more than 50%, twice the performance of the S&P 500, although the social-media company remains below a peak from July 2018.

This “already fraught global regulatory environment” will be “supercharged by a U.S. election cycle that will heap scrutiny on everything from competition, to ad policies, to data privacy,” wrote Tamlin Bason, an analyst at Bloomberg Intelligence.

Facebook in particular is seen as at risk from heightened regulation, even though most analysts concede that major new policies “would take years to craft and implement,” as Bason wrote.

Regulations could force companies to spin off divisions like Facebook’s Instagram, or establish rules that mirror the EU’s General Data Protection Regulation. While Facebook has been spending big to address some of the issues raised by critics, Citi calculated that regulations could collectively shave as much as $60 from the share price. HSBC recently wrote that the “huge regulatory overhang” was potentially equivalent to nearly 40% of Facebook’s valuation.

“We’ve certainly heard some politicians vocally concerned about the idea that these big companies just seem to be getting bigger and garnering more and more market share,” said Savita Subramanian, head of U.S. equity and quantitative strategy at BofA, who spoke at a recent event hosted by the firm. “Breaking up or thinking about how to stop that continued steamroller effect” is an idea “that has essentially bipartisan support in Washington at this point.”

Amazon.com Inc. has also faced attention from regulators about antitrust issues, and it has been repeatedly attacked by President Donald Trump. Earlier this month, the company claimed it lost a cloud-computing contract from the Pentagon because Trump views Amazon founder Jeffrey Bezos as his “political enemy.”

The political element of the big-tech criticisms will likely keep this issue in focus as the U.S. approaches the 2020 election in November. Notably, Democratic presidential candidate Elizabeth Warren has proposed breaking up major tech companies, and if she is successful in the early contests -- the Iowa caucus will be held in early February, followed by the New Hampshire primary shortly thereafter -- that could act as a headwind to share prices.

“It’s still a little bit too early to try and assess what’s going to happen” in terms of regulation, said Liz Ann Sonders, chief investment strategist at Charles Schwab, who noted that the Democratic race was unsettled, and that it was unclear what the makeup of Congress would look like after the vote. However, “someone on the more progressive side might cause some worries, in terms of regulation.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
Elon Musk Unveils Grokipedia: An AI-Driven Alternative to Wikipedia
Russia’s President Putin Declares Burevestnik Nuclear Cruise Missile Ready for Deployment
US Administration Under President Donald Trump Reportedly Lifts Ban on Ukraine’s Use of Storm Shadow Missiles Against Russia
White House Announces No Imminent Summit Between Trump and Putin
China Presses Netherlands to “properly” Resolve the Nexperia Seizure as Supply Chain Risks Grow
Merz Attacks Migrants, Sparks Uproar, and Refuses to Apologize: “Ask Your Daughters”
Apple Challenges EU Digital Markets Act Crackdown in Landmark Court Battle
Shouting Match at the White House: 'Trump Cursed, Threw Maps, and Told Zelensky – "Putin Will Destroy You"'
‘No Kings’ Protests Inflate Numbers — But History Shows Nations Collapse Without Strong Executive Power
"The Tsunami Is Coming, and It’s Massive": The World’s Richest Man Unveils a New AI Vision
EU Moves to Use Frozen Russian Assets to Buy U.S. Weapons for Ukraine
Europe Emerges as the Biggest Casualty in U.S.-China Rare Earth Rivalry
“Firepower” Promised for Ukraine as NATO Ministers Meet — But U.S. Tomahawks Remain Undecided
The Sydney Sweeney and Jeans Storm: “The Outcome Surpassed Our Wildest Dreams”
Dutch Government Seizes Chipmaker After U.S. Presses for Removal of Chinese CEO
AI and Cybersecurity at Forefront as GITEX Global 2025 Kicks Off in Dubai
Ex-Microsoft Engineer Confirms Famous Windows XP Key Was Leaked Corporate License, Not a Hack
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
Wave of Complaints Against Apple Over iPhone 17 Pro’s Scratch Sensitivity
Munich Airport Reopens After Second Drone Shutdown
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Tokyo’s Jimbōchō Named World’s Coolest Neighbourhood for 2025
European Officials Fear Trump May Shift Blame for Ukraine War onto EU
The Personality Rights Challenge in India’s AI Era
Italy Considers Freezing Retirement Age at 67 to Avert Scheduled Hike
Italian City to Impose Tax on Visiting Dogs Starting in 2026
Study Finds No Safe Level of Alcohol for Dementia Risk
Trump Says Ukraine Can Fully Restore Borders with NATO Backing
Europe Signals Stronger Support for Taiwan at Major Taipei Defence Show
Germany Weighs Excluding France from Key European Fighter Jet Programme
Cyberattack Disrupts Check-in and Boarding Systems at Major European Airports
Björn Borg Breaks Silence: Memoir Reveals Addiction, Shame and Cancer Battle
When Extremism Hijacks Idealism: How the Baader-Meinhof Gang Emerged and Fell
JWST Data Brings TRAPPIST-1e Closer to Earth-Like Habitability
Trump Orders $100,000 Fee on H-1B Visas and Launches ‘Gold Card’ Immigration Pathway
France’s Looming Budget Crisis and Political Fracture Raise Fears of Becoming Europe’s “Sick Man”
Three Russian MiG-31 Jets Breach Estonian Airspace in ‘Unprecedentedly Brazen’ NATO Incident
European manufacturers against ban on polluting cars: "The industry may collapse"
Turkish car manufacturer Togg Enters German Market with 5-Star Electric Sedan and SUV to Challenge European EV Brands
Christian Brueckner Released from German Prison after Serving Unrelated Sentence
×