One advantage of Facebook’s declining market capitalization may be the prospect of avoiding additional antitrust liability as a result of its declining market capitalization.
The corporation, which was recently rebranded Meta, finished Tuesday with a market capitalization of less than $600 billion for the first time since May 2020. The stock declined 2.1 percent, bringing its market capitalization to $599.32 billion, a decrease from the previous day.
Aside from being the market capitalization threshold for a “covered platform” under a package of competition legislation targeted specifically at Big Tech, the $600 billion figure also happens to be the number chosen by House legislators as the threshold for a “covered platform” under the legislation. If Meta can keep its market capitalization below that threshold, it will be exempt from the additional restrictions that the legislation would impose on its ability to conduct business and close deals, while its larger competitors such as Amazon, Alphabet, Apple, and even Microsoft will be subject to the regulations.
It is possible that none of the legislation will become law by the end of the year, assuming they do so at all. In the meanwhile, the language might still be changed, and even in their current form, the legislation would continue to apply to the platforms for a period of time after they had fallen below the threshold for market capitalization. One Senate bill, which just passed through the Judiciary Committee, actually utilizes a lower market capitalization criteria than its House counterpart, with a $550 billion market capitalization requirement.
Nonetheless, the achievement highlights one of the difficulties in drafting legislation that specifically targets the IT industry. In addition to ensuring that the bills do not address issues that have already been resolved by the time they are passed, legislators must make an effort to include a select group of businesses.
The Platform Competition and Opportunity Act, assuming it is regarded a covered platform by the time it is passed, has the potential to have a large influence on Meta if it is passed. Rep. Hakeem Jeffries (D-N.Y.) first sponsored the legislation, which has now been joined by Sen. Amy Klobuchar (D-Minn.) to make it more difficult for covered platforms to recruit young prospective competitors.
Facebook is already defending itself against an antitrust action brought by the Federal Trade Commission under existing legislation, which claims that the company leveraged its acquisitions of Instagram and WhatsApp to preserve monopolistic power. The passage of this new legislation, and the subsequent application of its provisions to Meta, might make it much more difficult for the business to undertake comparable purchases in the future.
According to the House version of the bill, when federal regulators designate a platform as covered by the law, the company must have net annual sales or a market capitalization of $600 billion, adjusted for inflation, at the time of the designation or during the two years prior to the designation or a lawsuit brought under the act, whichever is greater.
It is stated in the Senate version of the bill that the market capitalization of a covered platform should be calculated using a “simple average of the closing price per share of common stock issued by the person for each trading day in the 180-day period ending on the date of enactment of this Act.”