News Feed Revamp May Help Facebook Avoid Federal Scrutiny

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The major revamp of the News Feed may help Facebook avoid federal scrutiny and being hit with heavy regulations in the future, said Laura Martin of Needham & Company, CNBC reports. The Internet giant received significant backlash from both investors and media publications last week after announcing its decision to purge the News Feed from the majority of third-party content it’s currently serving in a bid to provide a more personal experience dominated by content from friends, not counting for reshares. While its stock is still trading at under $180, more than four percentage points down, Ms. Martin maintained her $215 price target and dismissed the majority of concerns about potential long-term ramifications stemming from such a move.

In light of numerous controversies related to the so-called “fake news” that went viral on Facebook in recent times, the analyst believes the company’s decision to take away the control of its News Feed from publishers will ultimately pay off as it’s bound to reduce the number of misleading and outright false content circulating on the platform by virtue of the fact fewer people will encounter it. Such a trend would consequently relieve Facebook of some of the pressure it’s been subjected to from Washington over the course of 2017 and reduce the chance that its flagship product ends up being regulated. The revamped News Feed will prompt more publishers to start investing in promoting posts on Facebook and push those that already do so to spend more as the average ad unit price is likely to increase after brand-issued content becomes a less frequent occurrence on the social network, Ms. Martin suggested.

Many other Wall Street analysts also agree Facebook remains an attractive investment and one that’s likely to pay off in the long term, indicating that the News Feed redesign may not even impact the company’s bottom line in the immediate future. The Menlo Park-based company described the change as a return to its roots, with several senior officials including co-founder and CEO Mark Zuckerberg saying the main point of Facebook is connecting individuals and helping them stay in touch with people they care about. Facebook is expected to post its Q4 2017 financials next month.