London Daily

Focus on the big picture.
Saturday, Jul 05, 2025

Facebook and Google Face ‘Supercharged’ Regulatory Risk in 2020

Facebook and Google Face ‘Supercharged’ Regulatory Risk in 2020

The digital advertising market is expected to hit a milestone in 2020, providing a tailwind for industry-dominating names like Facebook Inc. and Google-parent Alphabet Inc. However, that growth is widely expected to be met with growing scrutiny from regulators on a number of major issues.
According to BofA, global online ad penetration levels are expected to grow to 52% next year from 48% in 2019, thereby surpassing the amount spent on non-digital advertising. The firm expects $144 billion to be spent on digital ads next year in the U.S. alone, a forecast that implies 16% growth from 2019 levels.

Facebook and Alphabet are expected to be the biggest beneficiaries of this growth by far, as the online ad market is “increasingly concentrated” between the two, in the words of Canaccord Genuity. The firm estimated that Alphabet would comprise 20% of next year’s digital ad market, while Facebook constitutes another 14%.

Growing ad revenue has fueled gains in both stocks in 2019. Alphabet is up nearly 30% this year and is trading near record levels, having shrugged off a couple of quarterly reports that raised concerns or failed to excite over the pace of its growth. Facebook has surged more than 50%, twice the performance of the S&P 500, although the social-media company remains below a peak from July 2018.

This “already fraught global regulatory environment” will be “supercharged by a U.S. election cycle that will heap scrutiny on everything from competition, to ad policies, to data privacy,” wrote Tamlin Bason, an analyst at Bloomberg Intelligence.

Facebook in particular is seen as at risk from heightened regulation, even though most analysts concede that major new policies “would take years to craft and implement,” as Bason wrote.

Regulations could force companies to spin off divisions like Facebook’s Instagram, or establish rules that mirror the EU’s General Data Protection Regulation. While Facebook has been spending big to address some of the issues raised by critics, Citi calculated that regulations could collectively shave as much as $60 from the share price. HSBC recently wrote that the “huge regulatory overhang” was potentially equivalent to nearly 40% of Facebook’s valuation.

“We’ve certainly heard some politicians vocally concerned about the idea that these big companies just seem to be getting bigger and garnering more and more market share,” said Savita Subramanian, head of U.S. equity and quantitative strategy at BofA, who spoke at a recent event hosted by the firm. “Breaking up or thinking about how to stop that continued steamroller effect” is an idea “that has essentially bipartisan support in Washington at this point.”

Amazon.com Inc. has also faced attention from regulators about antitrust issues, and it has been repeatedly attacked by President Donald Trump. Earlier this month, the company claimed it lost a cloud-computing contract from the Pentagon because Trump views Amazon founder Jeffrey Bezos as his “political enemy.”

The political element of the big-tech criticisms will likely keep this issue in focus as the U.S. approaches the 2020 election in November. Notably, Democratic presidential candidate Elizabeth Warren has proposed breaking up major tech companies, and if she is successful in the early contests -- the Iowa caucus will be held in early February, followed by the New Hampshire primary shortly thereafter -- that could act as a headwind to share prices.

“It’s still a little bit too early to try and assess what’s going to happen” in terms of regulation, said Liz Ann Sonders, chief investment strategist at Charles Schwab, who noted that the Democratic race was unsettled, and that it was unclear what the makeup of Congress would look like after the vote. However, “someone on the more progressive side might cause some worries, in terms of regulation.”
Newsletter

Related Articles

0:00
0:00
Close
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
Poland Implements Border Checks Amid Growing Migration Tensions
Political Dispute Escalates Between Trump and Musk
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
US Senate Votes to Remove AI Regulation Moratorium from Domestic Policy Bill
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
Jury Deliberations in Diddy Trial Yield Partial Verdict in Serious Criminal Charges
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
King Charles Plans Significant Role for Prince Harry in Coronation
Two Chinese Nationals Arrested for Espionage Activities Against U.S. Navy
Amazon Reaches Major Automation Milestone with Over One Million Robots
Extreme Heat Wave Sweeps Across Europe, Hitting Record Temperatures
Meta Announces Formation of Ambitious AI Unit, Meta Superintelligence Labs
Robots Compete in Football Tournament in China Amid Injuries
Trump Administration Considers Withdrawal of Funding for Hospitals Providing Gender Treatment to Minors
×