When Meta announced its quarterly results last week and warned about the strong competition that is facing from other companies like TikTok, the price of its shares plunged, wiping out $230 billions of market value. The biggest one-day loss in history.
But maybe this big loss could offer a silver lining for the social media giant. Meta’s current market value stands at $612 billion, which is just $62 billion above the threshold established in the American Innovation and Choice Online Act.
The American Innovation and Choice Online Act is a bill passed by the Senate Committee which aims at preventing Big Tech firms from favoring their own services over others. This bill, if approved, would make unlawful to unfairly preference a platform’s own products, services or lines of businesses over those of another business user and to limit the ability of another business user’s products, services to compete on the platform. Competitors and businesses have complained regularly that Google and Amazon systematically favored their own products when consumers use the search engine or a marketplace. Google was fined 2.7 billion euros for this practice in Europe and is in the spotlight for allegedly favoring its vertical businesses like Google Maps or Google Flights. If approved, this bill would put an end to this type of practice, or at least make it very hard for these companies to engage in it.
Read more: Senate Judiciary Committee Approves Big Tech Antitrust Bill
Tech companies in the U.S. have argued the bill would hamstring innovation, put privacy and security at risk by opening some platform functions to their competition and damage products that customers enjoy.
But Meta (formerly Facebook) may be off the hook if its market value keeps on falling. This bill, which was amended just before the vote at the Senate committee to widen its scope, it is applicable to online platforms with 1 billion monthly global users or $550 billion in yearly net sales, as well as a threshold of a $550 billion market capitalization.
The bill could still be amended before a final vote in the Senate and this threshold of market capitalization could also change, either up or down but as it stands right now, Meta is just $62 billion far from not falling under this regulation.
This doesn’t mean that Meta could dodge all the regulatory threats that is facing. In Europe, the European Parliament recently approved a similar bill, the Digital Markets Act, which also aims at imposing on the way Big Tech firms operate on their platforms. However, one of the big differences with the American Innovation and Choice Online Act is that the European law would be applicable to online platforms with a market capitalization of 80 billion euros.
The significant drop in Meta’s market valuation may be just temporary and the company may still have to comply with the law in the long term, but this scenario shows the risks of adding specific figures in a bill that in theory, provide safeguards, but markets may decide otherwise.
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