Facebook’s acquisition under EU antitrust review

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European regulators are to review Facebook Inc.’s acquisition of Kustomer, a CRM provider, for possible violation of European antitrust laws. The social media giant announced the acquisition in November 2020 when it reached a deal for about $1B. The deal is supposed to enhance WhatsApp capabilities, which have grown significantly during the pandemic. 

Reuters reported that the company would be able to avoid the investigation, started by request of Austrian authorities, until July 26th (today) by offering concessions. However, according to the same source, this is unlikely to happen due to the difficulties of finding remedies to competition concerns. Reports also state that German authorities are looking into the matter, as Kustomer’s existence there may cause the deal to violate domestic competition law. 

Facebook has defended the deal as being pro-competitive and beneficial to instant messaging as a whole. However, this is not a rare case; authorities of different jurisdictions are investigating many big tech companies as regulators are cracking down on corporations they believe are becoming monopolies. 

Q2 Earnings bring ad revenue expectations

The company is set to release Q2 earnings reports along with other tech giants during this week, specifically on the market close on July 28th. After first-quarter earnings reports, investors have regained their confidence in increasing Ad revenues from the social media giant. From that report until the end of the 2nd quarter, the Facebook stock has gone up about 30%. 

However, these expectations, or even positive Q2 results, may be stumped by antitrust and privacy worries among investors. Analysts believe that the move to let users change some crucial privacy settings may cause damage to AD revenue, and even Mark Zuckerberg admitted Facebook is not up to date with other social media such as Tik Tok and YouTube in attracting content creators and influencers who post videos and games. 

With these contrasting circumstances, the expectation on how the stock will behave is high. 

How do you see Facebook stock in the mid-term? Will earnings prevail? Or will the worries cause losses?  Let us know what you think in the comments.

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