Social media king Facebook Inc (NASDAQ:FB) can add another item to its growing list of gripes from the European Union, after EU regulators proposed major new privacy legislation that could negatively affect the ad revenue of messaging platforms.
Both Facebook Messenger as well as Facebook-owned WhatsApp, which both have over a billion global users, would be subject to the new rules. If enacted, the legislation would severely limit how these platforms can track their users, by forcing them to “guarantee the confidentiality of their customers’ conversations and get their consent before tracking them online to serve them personalized ads,” according to Reuters.
Facebook and other platforms depend on delivering personalized ads to their users for the bulk of their revenues. Generally speaking, the more deeply segmented an advertiser goes in targeting users, the more expensive ads become.
The new rules would also affect Apple’s iMessage and Google’s Gmail platforms, so Facebook certainly isn’t the only one with something to fear from the legislation. These rules have been in place for a while already for telecom operators, but the European Commission is seeking to extend them to web companies and mobile platforms that allow calls and messages using the internet.
Facebook Inc shares were trading at $125.08 per share on Tuesday morning, up $0.18 (+0.14%). Year-to-date, FB has gained 8.72%, versus a 1.59% rise in the benchmark S&P 500 index during the same period.