Social media giant Meta Platforms (NASDAQ:META) is in trouble over privacy issues. In a setback for Meta, Judge Timothy Kelly of the U.S. District Court for the District of Columbia ruled that the U.S. Federal Trade Commission (FTC) can seek to lower the amount of money the company makes from users below the age of 18 years.
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Meta had filed a motion in the court and had appealed for the Court to take over its dispute with the FTC. This motion was denied. Earlier this year, the FTC accused Meta of deceptive practices regarding its Messenger Kids app. This was because the FTC believed that it misled parents about how much control they had over who their children were in contact with through the app.
As a result, the FTC had proposed changes to its 2019 settlement, which required the social media giant to pay $5 billion. These changes include barring META from profiting from users under 18 through the data collected on them and limiting facial recognition.
It is important to note that more than 98% of Meta’s income relies on targeted digital ads. Meta has rejected the FTC’s child privacy allegations as “without merit” and is considering legal options.
Meanwhile, in Europe, Meta has started offering a no-ads subscription service priced at €9.99 for Web users and at €12.99 for iOS and Android users. However, this service has run into trouble with the digital rights group NOYB (None Of Your Business), which has filed a complaint with the Austrian regulator.
NOYB stated, “EU law requires that consent is the genuine free will of the user. Contrary to this law, Meta charges a ‘privacy fee’ of up to 250 euros per year if anyone dares to exercise their fundamental right to data protection.”
In response, Meta commented that the ad-free subscription option met European regulators’ requirements and at the same time offered users a choice about data privacy, and ensured continued service in the EU, European Economic Area (EEA), and Switzerland.
What is the Target Price for Meta?
Analysts remain bullish about META stock, with a Strong Buy consensus rating based on 36 Buys and one Hold. Even as META stock has surged by more than 100% year-to-date, the average META price target of $387.65 implies an upside potential of 15.8% at current levels.
