What Australia's Social Media Ban Means for Meta Platforms Stock?
Australia's social media ban for children is a first-of-its-kind but Meta will not be meaningfully impacted, for now
Australia’s new law passed last Thursday (November 28, 2024), preventing individuals under 16 years old from using social media is one of the strongest obstacles thrown on social media platforms, including Facebook and TikTok, in recent memory. This controversial move reflects the government’s attempts to protect children from harmful content. The same sort of emotions can be felt in the national governments of France and the UK and even in the local state governments of Florida and Texas. We believe this blanket ban is a stringent restriction on Internet usage outside of a non-democratic regime. As close followers and investors of Meta Platforms, Inc. (META), we were surprised by this decision and wanted to dive deep to understand what it means to the social media behemoth.
The Background
The World Health Organization (WHO) issued a warning in September, saying the rise in problematic social media use can cause far-reaching consequences for adolescent development and their long-term health, following a study on social media use among nearly 280,000 school-aged children in 44 countries and regions. WHO called for “immediate and sustained action,” and Australia responded to it, seemingly.
The fear of social media taking a toll on teenagers’ lives has always been a concern for parents, and they wanted the government to step in. It has even been reflected in a YouGov survey where 77% of Australian voters support the move to ban social media for kids. The country's biggest newspaper publisher, News Corp., led by Rupert Murdoch, backed the ban with a campaign named "Let Them Be Kids" as part of a parliamentary inquiry through 2024 that heard evidence from parents of cyberbullying victims.
What The Law Mandates
Earlier last week, social media companies urged the Australian government to delay the bill. However, the bill was approved by the Senate (34 votes to 19) late on Thursday and was returned to the House of Representatives, where it passed the next day.
The new law, which will take effect in around 12 months, holds social media platforms responsible for enforcing the age limit. However, the law does not specify how the verification should be made. The Australian government has already ruled out the use of official documents, such as passports, citing privacy concerns. In case of failing to successfully enforce the law, social media companies may have to pay penalties of as much as AUD 50 million ($32 million). However, neither the kids nor their parents will be fined if the former finds a way to bypass the verification. The law enforces age thresholds regardless of parental permission, which is a new step toward social media age limitation, where social media platforms usually require users to be at least 13 years old.
YouTube, however, is an exception to this new law as the government categorizes it as a health and education-related platform. Online gaming and messaging services (WhatsApp and Discord) are also exempted from the law, says minister Michelle Rowland, even though these platforms can be (and are accused of) used for bullying and grooming. This law does not include exemptions for existing users or those with parental consent.
Commenting on the passing of the new law, Australian Prime Minister Anthony Albanese said, “We want Australian children to have a childhood.” He further added that legislation is needed to protect young people from the harms of social media, highlighting many parents’ concerns. The prime minister thinks this law will position “Australia to lead the world” in securing the safety of young people. The government will carry out some form of age-verification mechanism in the coming months, and companies should take responsibility for adding these processes to their respective platforms.
What’s the Reception?
Elon Musk-owned X platform questioned whether such a move is lawful in the first place, saying the country is slipping from the international regulations and human rights treaties it has signed. Google criticized the legislation for not providing more detail.
Even though Meta said it would respect the law, it was concerned about the rushed process of the legislation, which failed to properly consider the evidence, the industry measures that are already in place to ensure age-appropriate experiences, and the voices of young people. Commenting on the decision, former Australia and New Zealand region head of Facebook Stephen Scheeler said:
“It is impossible to be a teen in most parts of the world without social media and controlling that access from a parental point of view or government point of view is not as easy as it sounds.”
TikTok said the legislation was rushed and unworkable, with many unanswered questions and unresolved concerns. Snap Inc (
SNAP) said such broad and mandatory age verification attempts have been proven ineffective in the past.
Even the academics are concerned about the unintended consequences of the ban. Lisa Given, a professor of information sciences at RMIT University in Melbourne, said, “This legislation is really ill-conceived,” and platform owners should invest more in digital literacy for children and parents and focus on disabling negative algorithms that harm users. She argues kids are being pulled into this equation unnecessarily.
Even UNICEF said such a ban would compromise children’s rights to access information and push them into darker and unregulated places on the Internet, in turn harming their welfare, which the law plans to protect. UNICEF further said that social media companies should be held accountable for providing age-appropriate, secure, and supportive online environments.
Digital researchers have warned that one cannot bet on the effectiveness, safety, and viability of unspecified technology in affirming age. Also, services like VPNs can easily bypass the protection barriers, making the law pointless in the real world.
Will This Be The Beginning Of The End For Social Media?
Several state and national governments have been planning legislation similar to Australia for a while now. Florida has discussed a bill that prohibits children under 14 from having social media accounts. Arkansas and Ohio require minors to get parental approval to use social media. Utah and California also introduced similar laws to make social media spaces safer for children, but most of these attempts are on hold as few groups allege the child safety laws violate constitutional rights.
Regardless of the efficacy of Australia’s new law, many nations will follow the same path, said Simon Kemp, founder of Singapore-based digital consulting firm Kepios. Following data showing many children under 13 use social media, Norway is planning to impose a minimum age limit of 15. France wants to keep under 15 off social media, and the French Education Minister wants the EU to mirror similar policies. The UK, which is trying to understand the Australian government’s reasoning behind the ban, could also lean towards the idea, as the country’s technology secretary said a similar ban has been considered.
How Australia’s Social Media Ban Will Impact Meta
Meta Platforms operates in Australia primarily through its family of apps, including Facebook, Instagram, Messenger, and WhatsApp. The company leverages its vast user base to generate substantial advertising revenue in Australia.
Australia is a sizeable market in terms of Internet penetration, amounting to 25.21 million Internet users in Australia at the start of 2024, representing 94.9% of the population. There are about 20.80 million social media users as of January 2024, a whopping 78.3% of the total population.
Data from Meta’s advertising resources indicates that Facebook had 16.65 million users in Australia in early 2024, marking an increase of 1.8 million (+11.7%) between January 2023 and January 2024. Facebook’s ad reach in Australia was equivalent to 74.1% of the “eligible” audience aged 13 and above. Instagram, on the other hand, had 13.95 million users in Australia in early 2024, with an ad reach of 62.1% of the “eligible” Instagram users. Instagram’s potential ad reach in Australia increased by 2.3 million (19.7%) from January 2023 to 2024. In summary, Meta Platforms owns the most widely used social media brands in the country. Facebook remains the most popular platform, with 24.2% of user preference, followed by Instagram with 19%.
The focal point of the case, the users aged between 13 and 17, represent around 9.1% of the country’s population. Even though the younger users are overrepresented in social media usage, typically aged between 18 and 34 years, the 13–17 age group is actually underrepresented overall. And this age group represents less than 5% of Meta’s Australian ad audience.
When looking at all the minors aged between 13 and 15, only 4% of children are using Facebook and no Instagram, which is very low compared to TikTok (33%) and Snapchat (25%). Out of the 4% of Facebook users, only 42% are active. This user group only spends around 15 minutes daily on the platform, compared to 121 minutes they spend on TikTok and 93 minutes on Snapchat. Therefore, the new ban is not going to hurt Meta’s Australian revenue in any meaningful way.
In 2023, Meta reported gross revenues of around $850 million through targeted advertising on its platforms in Australia, which is relatively modest compared to Meta's global revenue of $134.9 billion.
But what Meta is worried about is the growing interest in setting higher age limits for social media platforms. In the U.S., around 7% of Meta Platform users are under 18, and globally, 8% of Instagram users are under 18 with 2.9% of individuals between the ages of 13 and 17 using Facebook. These account for massive figures when looking at 3.59 billion individuals who use Meta. Given Facebook has the option to target advertisements to users under 18 years old (except in Thailand and Indonesia), this will impact Facebook’s advertising growth potential, which can reach over 2.18 billion people.
Conclusion
Meta Platforms, in the short run, is very unlikely to see a major impact from Australia’s new law that bans children from using social media platforms. However, Meta investors may have to closely monitor the next actions taken by governments in developed regions to assess whether the company’s advertising reach is likely to be impacted meaningfully in the long run if other governments join Australia in banning the use of social media for certain age groups.