Facebook (FB) has stopped negotiating licensing deals with publishers in Australia, reported Reuters, citing an email sent to the industry. The move to suspend negotiations comes just six months after the passing of a new law that requires tech giants to pay for news content. FB shares fell 3.99% to close at $343.21 on September 22.
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Facebook is a U.S. social networking company that operates platforms that enable people to connect and share data with friends and family through mobile devices and personal computers.
The law drove Facebook to block third-party content on newsfeeds at the start of the year. Additionally, Facebook and Google were also required to start negotiations with news outlets for content that drives traffic to their websites. (See Facebook stock charts on TipRanks)
The social networking company landed up reaching agreements with some of the country’s news outlets, including News Corp and the Australian Broadcasting Corp. In August, Facebook’s Andrew Hunter, the regional head of news partnerships, affirmed that the company had reached an agreement to pay some Australian companies for content on its newly launched ‘Facebook News’ channel.
However, there was outrage after Facebook excluded certain networks from the negotiations and failed to ink deals with smaller publishers. The Special Broadcasting Service (SBS) said that the tech giant declined to enter negotiations despite months of attempts.
Australia is currently the only country that allows the government to set the fees payable to news providers if negotiations with tech firms fail. However, disgruntled publishers will need to wait until the Australian government reviews the law in 2022 for any recourse against the tech giants to take place.
Yesterday, Robert W. Baird analyst Colin Sebastian reiterated a Buy rating on the stock with a $390 price target, implying 13.63% upside potential to current levels.
Consensus among analysts is a Strong Buy based on 25 Buys, 4 Holds, and 1 Sell. The average Facebook price target of $421.97 implies 22.95% upside potential to current levels.
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