Does Facebook share have a problem? No, not really. Basically, the network is gigantic. A potential competitive advantage over competitors, no question about it. In addition, the growth market for social networks is right.
Nevertheless, there are always smaller construction sites. Regardless of whether it is about hate comments or data protection, or the overall way in which Facebook uses user data.
Now a problem could emerge that is potentially bigger than Foolish investors might initially think. Here’s what you should know And what to pay attention to now.
Facebook share: Problems with authorities
As we can see by looking at the latest news, competitive advantage may be at risk in monetization. Australia wants to regulate the market by law. Or distribute the important advertising money more fairly. That could be a fundamental problem, no question about it.
Facebook does not agree with such a step and vehemently protests against it. As a result, management decided to discontinue some services. For example, the content of news sites, which also includes disaster warnings. A sensitive blow, there is no question about that either.
However, this procedure leads to other actors also jumping on the line of criticism. Canada, for example, has joined the Australian draft law and would also like to regulate the market more closely in the future. If that in turn makes the rounds, the competitive advantage of the Facebook share could be permanently jeopardized. In the end, monetization is and will remain the salt in the soup.
The core problem, however, could be that other nations follow out of solidarity. And that a power struggle between the social network and the authorities begins. That, in turn, could have lasting damage to the quality of the Facebook network. Especially since the regulations are likely to occur anyway. Difficult, difficult.
Foolish investors should keep this in mind
As I said: You shouldn’t overestimate this power struggle. Solutions may be found. Maybe the effects are rather moderate. However, should there be a quasi-global protest action with regulations against Facebook or its monopoly position, this could hit the share seriously. There is therefore a risk.
Especially since it is indirectly about the competitive advantage and the size of the network. That could at least be a slight damper to this real growth story. Therefore: keep an eye out what the further process brings. As well as whether other nations join the fight. Australia and Canada could be markets where the damage might be rather limited.
The post Facebook share: The problem is bigger than expected appeared first on The Motley Fool Germany.
There’s one company whose name is very, very popular right now among analysts at The Motley Fool. For us it is THE top investment for 2021.
You could benefit from it too. To do this, you first have to know everything about this unique company. That is why we have now put together a free special report that presents this company in detail.
Click here to download this report now for free.
Vincent does not own any of the stocks mentioned. Randi Zuckerberg, a former head of market development and spokeswoman for Facebook and sister of CEO Mark Zuckerberg, sits on The Motley Fool’s board of directors. The Motley Fool owns shares of shares of and recommends Facebook.
Motley Fool Deutschland 2021
Foto: The Motley Fool
–
