Facebook $250 bln slump punctures antitrust case

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A 3D printed Facebook's new rebrand logo Meta and Facebook logo are placed on laptop keyboard in this illustration taken on November 2, 2021. REUTERS/Dado Ruvic/Illustration

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WASHINGTON, Feb 7(Reuters Breakingviews) - Facebook’s $250 billion hit may be a helpful antitrust defense. That’s the amount wiped off of parent Meta Platforms’ (FB.O) market capitalization since it reported last week that user growth has stalled. TikTok is partly to blame, yet a U.S. watchdog that has sued social network over monopoly power argues the Chinese-owned app isn’t a rival.

Facebook’s ability to cast aside obstacles, from advertising boycotts to political scrutiny, has come to an end. Last week when Meta reported fourth-quarter earnings, it said daily active users for its core platform grew just 5% year-over-year, but fell compared to the previous quarter. Revenue forecast for the first three months of this year fell short of analyst expectations.

Meantime TikTok appears to be eating its lunch. The viral video service said last September that it had reached 1 billion monthly global active users, about a 45% jump from July 2020.

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In its lawsuit filed last year, the Federal Trade Commission doesn’t acknowledge TikTok competes with Facebook. The antitrust agency only lists disappearing messaging app Snap (SNAP.N) as read more a substantive competitor with 319 million daily active users, adding that TikTok was not an “acceptable substitute” for Mark Zuckerberg’s platform because content isn’t used to connect with friends and family.

Zuckerberg’s interest in chasing TikTok’s business shows it is a threat. Last year he said Facebook would pivot to focusing on attracting a younger audience, and it launched Reels, short videos that land onto feeds without a clear connection to friends. With nearly 2 billion daily active users, Facebook won’t fall off of watchdogs’ radars. But the competitive market read more is doing its job of puncturing their case.

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CONTEXT NEWS

- Meta Platforms’ stock has fallen by about 26% in the trading days between Feb. 2 and the morning of Feb. 7, following an earnings report that showed user growth was slowing. Facebook’s daily active users fell for the first time in the 2021 fourth quarter compared to the previous quarter.

- The company also forecast 2022 first-quarter revenue in the range of $27 billion to $29 billion. Analysts were expecting $30 billion, according to Refinitiv data. Chief Executive Mark Zuckerberg said on Feb. 2 video app TikTok is a big competitor that is growing at a fast rate.

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Editing by Lauren Silva Laughlin and Sharon Lam

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