WSJ : Meta Floats Charging $14 a Month for Ad-Free Instagram or Facebook

Meta Floats Charging $14 a Month for Ad-Free Instagram or Facebook
European users would have option to pay fee or agree to personalized ads, according to company’s pitch to regulators

Would people pay nearly $14 a month to use Instagram on their phones without ads? How about nearly $17 a month for Instagram plus Facebook—but on desktop?

That is what Meta Platforms META 2.20%increase; green up pointing triangle wants to charge Europeans for monthly subscriptions if they don’t agree to let the company use their digital activity to target ads, according to a proposal the social-media giant has made in recent weeks to regulators.

The proposal is a gambit by Meta to steer around European Union rules that threaten to restrict its ability to show users personalized ads without first seeking user consent—jeopardizing its main source of revenue.

Meta officials detailed the plan in meetings in September with its privacy regulators in Ireland and digital-competition regulators in Brussels. The plan has been shared with other EU privacy regulators for their input, too.

Meta has told regulators it hopes to roll out the plan—which it calls SNA, or subscription no ads—in coming months for European users. It would give users the choice between continuing to access Instagram and Facebook free with personalized ads, or paying for versions of the services without any ads, people familiar with the proposal said.

Under the plan, Meta has told regulators it would charge users roughly €10 a month, equivalent to about $10.50, on desktop on a Facebook or Instagram account, and roughly €6 for each additional linked account, the people said. On mobile devices the price would jump to roughly €13 a month because Meta would factor in commissions charged by Apple’s and Google’s app stores on in-app payments.

Planning to launch a subscription option for core Meta services is a major turnaround for the company. Meta Chief Executive Mark Zuckerberg has long insisted that his core services should remain free and supported by advertising so that they can be available to people of all income levels.

“You don’t need thousands of dollars to connect with people who use our services,” Zuckerberg said at a 2018 conference in a not-so-thinly veiled dig at rival Apple, where CEO Tim Cook for his part decried what he called a “data industrial complex.”

Privacy-conscious users in the U.S. shouldn’t expect to be offered the option to pay for ad-free Instagram or Facebook soon. Meta’s proposals have been pitched specifically as a way to navigate demands by EU regulators to seek consent before crunching user data to select highly personalized ads.

To be sure, Zuckerberg has also said he would be open to the idea of a paid service to cope with tougher scrutiny about privacy. And earlier this year, amid a broader tech slump and a growing trend toward subscriptions from apps such as Snapchat and X, formerly Twitter, Meta introduced a paid user-verification service.

It isn’t clear if regulators in Ireland or Brussels will deem the new plan compliant with EU laws, or whether they will insist Meta offer cheaper or even free versions with ads that aren’t personalized based on a user’s digital activity.

One issue for regulators, some of the people familiar with the proposals said, is whether the prices Meta is proposing to charge will make the ad-free service too expensive for most people, even if they don’t want to have their data used to target ads.

A Meta spokesman says the company believes in “free services which are supported by personalized ads” but is exploring “options to ensure we comply with evolving regulatory requirements.”

A spokesman for Ireland’s Data Protection Commission, which leads enforcement of EU’s privacy law for Meta because it has a regional headquarters in Ireland, didn’t immediately have a comment. The European Commission, which enforces the digital-competition law, didn’t immediately have any comment.

Meta’s proposal to regulators and specifics of the plan such as the price and timing haven’t been previously reported. The New York Times reported last month that Meta was considering offering ad-free versions of its apps for a fee.

Driving Meta’s proposal has been demands by privacy regulators, led by Ireland, that Meta seek user consent before showing so-called behavioral ads, targeted with user activity data. In response, Meta had offered to seek such consent as soon as the end of October, The Wall Street Journal previously reported.

Separately, the EU’s executive arm said last month that Instagram, Facebook and Meta’s advertising network would fall under the scope of the bloc’s new digital-competition law, the Digital Markets Act. That law requires user consent before mingling user data among its services, or combining it with data from other companies.

Meta has said it hopes its subscription plan could comply with both edicts. Under the EU law, a user who declines to give consent for certain data use must still be able to access a service.

Meta reported its overall revenue in Europe worked out to roughly $17.88 per Facebook user in the second quarter, or just under $6 per user across all of its apps, on average, per month. The real average-revenue-per-month figure for EU users is likely somewhat higher, however, because Meta’s broader Europe region includes several non-EU countries including Turkey and Russia where lower revenue may drag down the average.

Meta estimates it has 258 million monthly Facebook users and 257 million Instagram users for the first half of the year in the EU, according to data it publishes under the bloc’s content-moderation law. The company said in a U.S. securities filing that it had 3.88 billion monthly active people on its apps as of June 30.

Meta has been pushed toward a subscription service by tightening enforcement of EU rules. A July decision from the bloc’s top court ruled Meta would need consent for certain kinds of targeted ads based on users’ online activity. That led privacy regulators in Ireland to tell Meta it had to change its practices.

Norway’s privacy regulator said it wanted a faster resolution and in July ordered Meta to suspend its ads targeted based on user activity in the country. Last week, the Norway regulator asked a board of all EU regulators to expand its ban across the bloc. Such an order, if approved, would likely face court appeals.

Meta has in pushing for its plan pointed to previous examples of how some other companies, such as music-streaming service Spotify, offer users a choice between a free ad-supported service or a subscription service without ads. Meta’s proposed pricing on mobile is similar to what YouTube charges for its ad-free premium service in Europe.

The company has also pointed to a paragraph in that July EU court decision that said social-media companies could charge a “reasonable fee” to users who decline to let their data be used for certain ad-targeting purposes, saying that opens the door to a subscription service.

FT : Secretive billionaire Harald McPike sues over collapse of Spac deal

Secretive billionaire Harald McPike sues over collapse of Spac deal
Lawsuit accuses gaming investor Jason Ader of misrepresenting investment in Spac that tried to buy Manila casino

The family office of secretive billionaire Harald McPike has accused US gaming investor Jason Ader of fraudulently inducing it into backing his special purpose acquisition company because he was under pressure to return $16mn to his mother.

Rimu Capital alleges Ader pocketed the $25mn it had invested in the Spac to use for his “own personal purposes”, according to a filing made last month in the Southern District of New York. Ader’s mother had hired lawyers to help dispose of a $16mn stake in SpringOwl, her son’s investment firm, the filing states.

Ader faces a growing number of legal headaches from the ill-fated attempt in 2021 to merge his Spac, 26 Capital Acquisition Corporation, with a casino business in the Philippines owned by Japan’s Universal Entertainment in a deal that would have seen it list in New York at a $2.6bn valuation.

Once a gaming analyst on Wall Street, Ader shot to prominence in 2016 as an activist investor when he took on US media company Viacom and helped oust its chief executive.

McPike began his career as a blackjack player and once admitted in a deposition that he had been banned from about 20 casinos for card counting, but went on to amass an estimated $1bn fortune investing in financial markets. Based in the Bahamas, he is the largest shareholder in London-based Starling Bank, founded a decade ago to challenge Britain’s biggest lenders.

His family office first filed a lawsuit against Ader this year, alleging that he had misrepresented the investment in Capital 26 by failing to disclose that the shares Rimu had agreed to buy in the Spac were owned by Ader.

The creators of Spacs, known as sponsors, typically purchase stakes to align their interests with those of the investors they raise money from. Ader pocketed significant profits from the Rimu transaction as he only originally paid $7.5mn for his so-called founder’s shares, according to court filings.

The dispute between McPike and Ader has laid bare the underbelly of the 18-month Spac boom that catapulted hundreds of companies on to the stock market and enriched bankers but often left investors with heavy losses.

Spacs and their sponsors raise cash by listing on the stock market before then seeking a merger with a private company. The case also highlights how during the Spac frenzy that unfolded in the final throes of the US equity bull market sponsors were able to reap multimillion-dollar windfalls before even completing a merger.

“We firmly believe the claims against us are frivolous and without merit. Our stance on this issue is clear and unwavering,” Ader said in a statement to the Financial Times. “It’s important to note that Rimu is a sophisticated billionaire investor and hedge fund manager who fully understood the details and risks involved.”

The ties between Ader and McPike date back to at least 2018, when SpringOwl amassed a $100mn stake in Playtech, a UK company that provides software for the gambling industry. At the same time, SpringOwl agreed to oversee an investment McPike’s family office had also made in Playtech, according to the court filing.

Three years after the Playtech deal, Ader approached Rimu with another investment idea: his Spac.

Rimu alleged it only discovered that Ader had used $16mn of its investment to pay his mother thanks to disclosures made in a separate lawsuit Ader filed in Delaware earlier this year against Universal. The suit was intended to force the Japanese group to complete the merger two years after the Spac bubble had largely burst.

Universal had put the brakes on the deal after a group loyal to its founder and former chair, billionaire Kazuo Okada, had stormed the Manila casino in May last year as part of a dispute over who controls it.

The Delaware lawsuit also exposed an apparently secret agreement struck between Ader and Alex Eiseman, a hedge fund manager who Universal said was acting as an adviser to it on the proposed deal.

In July 2021, Eiseman, the founder of New York hedge fund Zama Capital, agreed to buy almost 60 per cent of Ader’s stake for $4.5mn, a price far below that paid by Rimu.

This month Travis Laster, the Delaware judge overseeing the case, ruled against Ader. The deal between Ader and Eiseman gave the latter a significant incentive to secure the best terms for the Spac rather than Universal and put Zama “in a position to work as a double agent”, Laster noted in his judgment.

The case also revealed that Eiseman had reached a similar agreement with a Spac backed by former New York Yankees star Alex Rodriguez, but the possibility of it merging with Universal vanished after the baseball player broke up with music star Jennifer Lopez.

According to Laster, “the additional value that his Spac could bring . . . was a concert by Lopez, so without that tie-in, Universal lost interest”.

Laster delivered a withering description of Eiseman, noting that “at bottom, he seems fundamentally amoral and willing to say anything that might be personal advantageous”. 

In a statement to the FT, Eiseman said he was disappointed with the decision and that the proposed merger would be a “good deal” for both Universal and 26 Capital Acquisition.

“Unfortunately, both my relevance to and my role in the transaction were grossly mischaracterised by Universal. I’ve never acted or purported to act as its financial adviser. I’ve been sued by Universal in New York and will tell my side of the story there,” he added.

Ader told the FT: “Had the company asked me, and they had lots of legal advisers and a lot of smart people, if they’d just asked me, is Eiseman an investor [in the Spac]? I would have said yes.” 

The court battle also showed the lengths Ader went to try to ensure the Spac deal happened, including allegedly backing a plan to enlist Philippine politicians to help wrest back control of the casino business from Universal’s founder.

Okada was ousted from Universal by its board in 2017 after company officials accused him of embezzling funds, allegations the tycoon has vigorously denied.

In May 2022, allies of Okada led a “platoon of police” to the Manila casino and “forcibly ejected” its management, according to the judgment from Laster. A month later, Universal’s executives, with the blessing of Ader and Eiseman, agreed what Laster described as a “dodgy bargain” to regain control of the casino from Okada and force the Spac deal through.

The plan failed but the country’s Department of Justice subsequently declared Okada’s takeover “illegal” and in September last year national police helped Universal take back control.

After losing the Delaware case, Ader said he intended to pursue monetary damages “vigorously” against Universal on behalf of investors in Capital 26, which has now liquidated. But the decision to sell his shares allowed him to walk away from the wreckage of the Spac boom with a windfall, according to court documents.

FT : Brookfield swoops for UK wind farms in $1bn deal

Brookfield swoops for UK wind farms in $1bn deal
Canadian investment firm is buying Banks Renewables, one of the UK’s largest renewable developers

Canadian investment firm Brookfield is buying one of the UK’s largest renewable developers, in a boost for the country’s onshore wind industry after recent setbacks.

Brookfield will acquire Durham-based Banks Renewables in a deal worth almost $1bn, according to people with knowledge of the details. 

Banks Renewables, part of the family-owned Banks Group, owns operational onshore wind farms in northern England and Scotland, and also has a large portfolio of onshore wind, solar and battery assets in development. 

The transaction comes as other developers have warned of a challenging environment for wind power because of rising costs, with developers Vattenfall and Community Windpower recently halting an offshore and an onshore project respectively in the UK.

Sebastian Perl, the Brookfield vice-president who led the transaction, said he thought there was “generally a very positive outlook” for renewables in the UK and that cost pressures for onshore wind were short-term. 

“We have a long-term view as a long-term investor,” he said. “There might be some challenges along the road but you have that with every market, every business. It hasn’t changed our view on the market or the investment environment in the UK.”

He added that he did not see the UK government’s windfall tax on low-carbon electricity generators, singled out by Community Windpower as one reason for halting its development, as a “showstopper”. 

The deal is being done by Brookfield’s second Global Transition Fund, which started raising money this year to invest in projects advancing the shift away from fossil fuels. 

Its first Global Transition Fund raised $15bn last year and its investments include buying nuclear fuel and reactor developer Westinghouse in partnership with Cameco, and leading a takeover of Australian energy group Origin Energy.

Brookfield is already present in the UK’s onshore wind market, having kept hold of some farms in development after selling a handful of operating wind farms in 2021 to Danish company Ørsted.

It is also currently developing a 60MW wind farm in Scotland and has agreed that the electricity will be sold to real estate developer Canary Wharf Group.

Banks Renewables’ total portfolio comprises just over 4GW: about 300MW of operational wind farms, 300MW of onshore wind farms, solar and battery projects that have received planning permission, and another 3.5GW in the pipeline.

Most of its onshore wind pipeline is in Scotland, reducing its exposure to more restrictive planning rules in England. The UK government last month eased rules that in effect banned new onshore wind farms in England, but industry experts have warned that the changes may not go far enough to bring forward new developments. 

The Banks Group, which was founded in 1976, also develops property in the north of England and Scotland and it mined coal for more than 40 years until 2020. Harry Banks, chair and founder, said Brookfield’s “greater resources” would help develop the renewables portfolio. 

“It will be good for Brookfield because they are acquiring a renewables business with a proven record and a capability to take the business forward,” he added. The deal is due to be completed by the end of November.

>>> After Hours Summary: ODD +13.2% up on guidance; SCU +5.5% higher after Boaz

After Hours Summary: ODD +13.2% up on guidance; SCU +5.5% higher after Boaz Weinstein raises bid; TAK -5.9% down after providing EXKIVITY updates

After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: ODD +13.2% (guidance)
Companies trading higher in after hours in reaction to news: SCU +5.5% (Boaz Weinstein raises bid for the company, according to Bloomberg), TNYA +4.8% (publishes preclinical data), ATAI +3.2% (completes Phase 1 study of VLS-01), ADEA +2.4% (files lawsuit against Shaw; Samsung enters into long-term agreement), CIFR +2% (September operational update), MORF +1.9% (Point72 Asset Management discloses 5.2% stake), AOUT +1.3% (approves $10 mln for share repurchases), MDB +0.6% (names new CTO), SYM +0.5% (CFO retiring), BF.A +0.1% (approves $400 mln for repurchases)

After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: None
Companies trading lower in after hours in reaction to news: TAK -5.9% (updates EXKIVITY), BHVN -4.5% (files mixed shelf; files $200 mln public offering), RLGT -1% (acquires Daleray Corp operations), TPB -1% (files $500 mln mixed shelf), JBL -0.6% (reducing headcount), V -0.4% (announces $100 mln Gen AI initiative), WE -0.2% (withholding interest payments), SAFE -0.1% (credit ratings upgraded)

>>> US Close Dow -0,22% S&P +0,01% Nasdaq +0,67% Russell -1,58%

Closing Stock Market Summary
Today was the first trading day of the new month and second calendar day of the fourth quarter. Stocks followed a familiar pattern, though, and struggled alongside rising market rates. The final standing for the S&P 500 was a bit misleading, as it belied broad weakness below the surface.
The Invesco S&P 500 Equal Weight ETF (RSP) fell 1.1% and nine of the 11 S&P 500 sectors saw a decline. The rate-sensitive utilities sector was noticeably weak, plunging 4.7%. The energy sector (-2.1%) was another laggard, sliding with oil prices ($89.71/bbl, -1.10, -1.2%), which was partially a reaction to a stronger dollar and a Reuters report that OPEC's oil output rose in September.
Relative strength in the mega cap space proved to the be the difference for the market-cap weighted S&P 500 and Nasdaq Composite. The Dow Jones Industrial Average and the Russell 2000, meanwhile, registered losses of 0.2% and 1.6%, respectively.

Following a big move in September, the 10-yr note yield jumped another 11 basis points to 4.68% after hitting 4.70% earlier. The 2-yr note yield settled seven basis points higher at 5.11%. Those moves occurred in the midst of a better-than-expected ISM Manufacturing Index for September and some pleasing construction spending data for August, although yields were rising in front of those 10:00 a.m. ET releases.
The S&P 500 tested the 4,300 level at its high this morning, but failed to break above it. That failure, along with the 10-yr note yield hitting 4.70% at its high of the day, invited additional selling activity.
Mega cap stocks took on a safe-haven visage that mitigated broad market losses. They were not immune to selling activity, but saw an uptick in buying in the late afternoon that enabled the three major indices to close off their lows. NVIDIA (NVDA 447.82, +12.83, +3.0%), Apple (AAPL 173.75, +2.54, +1.5%), and Microsoft (MSFT 321.80, +1.38, +1.9%), which were relative strength leaders throughout the session, were standouts in that regard. The Vanguard Mega Cap Growth ETF (MGK) closed up 1.0%.

The communication services (+1.5%), information technology (+1.3%), and consumer discretionary (+0.3%) sectors, all of which house mega-cap components, were alone in positive territory at the close.
  • Nasdaq Composite: +27.2% YTD
  • S&P 500: +11.7% YTD
  • S&P Midcap 400: +1.6% YTD
  • Dow Jones Industrial Average: +0.9% YTD
  • Russell 2000: -0.3% YTD
Reviewing today's economic data:
  • The September ISM Manufacturing PMI checked in at 49.0% (consensus 47.8%), up from 47.6% in August. The dividing line between expansion and contraction is 50.0%, so the September reading denotes an ongoing contraction in the manufacturing sector, but at a slower pace than the prior month. September marked the 11th straight month the PMI reading has been below 50.0%.
    • The key takeaway from the report is the understanding that the pace of contraction in the manufacturing sector slowed in September, which is something that will be construed as an economy tracking more for a soft landing at this juncture than a hard landing.
  • Total construction spending increased 0.5% month-over-month in August ( consensus 0.5%) after increasing an upwardly revised 0.9% (from 0.7%) in July. Total private construction was up 0.5% month-over-month while total public construction increased 0.6% month-over-month. On a year-over-year basis, total construction spending was up 7.4%.
    • The key takeaway from the report is that there was balanced strength in August between private and public construction spending that gave a boost to total construction spending, which was up nicely year-over-year, leaving it well out of any hard-landing zone.
Tuesday's economic data is limited to the August JOLTS - Job Openings report at 10:00 a.m. ET.