Meta’s mulling a blanket political advertising ban in Europe, according to news out on Thursday.
What does this mean?
Political meddling is quite the headache these days, and European lawmakers are getting their feathers all ruffled over it. They're not too pleased that huge chunks of voters – who absorb all kinds of social media news – are being targeted by groups aiming to sway elections, so they're putting the final touches on new rules about how political ads are defined and treated. The catch: these rules tend to be thesis-level complicated, and all that red tape has got Meta thinking about completely dropping politics in the region.
Why should I care?
Zooming out: Not worth the hassle.
Nixing political ads isn’t likely to have shareholders in tears. After all, Meta pulled in $800 million in political ad revenue during the two years leading up to the big Trump-Biden face-off – and while that sounds impressive, it's actually a minuscule 0.5% of the ad giant's $156 billion total revenue over that time. What's more, Facebook and co. constantly find themselves in the firing line when it comes to politics, accused of being biased one way or the other. One solution is simply to say, “Merci but non merci” to political ads in Europe from now on.
For markets: Political rally.
Zoom out far enough, and politics don't matter much for stock markets: after all, there's little to no correlation between which party's ruling the White House and how stocks generally fare. But if you zoom back in, one tasty political tidbit does exist: stocks tend to rally in the months leading up to a win by a sitting president, but they’ve tended to be in negative territory before a challenger comes out on top. So sure, a red or blue president might not directly affect stock performance – but there’s still a thin thread connecting markets to the race for the White House.
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