Meta Platforms (NASDAQ: META) stock is losing ground Wednesday. The tech giant’s share price was down 2% as of 2 p.m. ET and had been down as much as 2.9% earlier in the daily session.
Meta’s valuation is moving lower following news that its WhatsApp messaging platform will fall under new regulations in the European Union. Despite a modest pullback today, the stock is still up roughly 48.5% over the last year.
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Meta stock slips as WhatsApp crosses regulatory threshold
In a filing submitted on Feb. 14, Meta Platforms revealed that it had roughly 46.8 million average monthly active users on its WhatsApp platform across the six-month period that concluded on Dec. 31. While growth for WhatsApp is good news in many respects, the service is now above the 45 million user threshold that causes platforms to fall under the European Union’s Digital Services Act. A spokesperson from the European Commission confirmed that WhatsApp would now be subject to the tighter regulations that come with the “very large online platform” designation under the law.
What’s next for Meta Platforms?
Meta’s WhatsApp service has still not been officially designated as a large platform, but it’s likely that it will be included in the category in the very near future. As a result, the service will be subject to stricter content moderation and monitoring policies. The shift will also give users greater control over their data privacy on the platform and close off some monetization opportunities for Meta.
While the upcoming regulatory shift for WhatsApp isn’t favorable for Meta, it’s also unsurprising and doesn’t represent a material divergence in the company’s long-term outlook. As a messaging platform, content moderation costs should be relatively low compared to other types of social media platforms — and Meta is already dealing with the large online platform designation for its Facebook and Instagram services in the E.U.
Recent comments from national leaders of E.U. countries also suggest that the supranational organization may soon move to create more lax regulatory standards for the tech industry. Even if that doesn’t wind up impacting WhatsApp in a meaningful way, it’s likely that new regulations applying to the service will wind up being a small footnote for Meta within a year’s time.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool has a disclosure policy.
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