#SocialStocks: New York passes bills to restrict child access to social media

Sprout Social brings on new chief product officer, Sprinklr and Reddit unveil expanded pact, and other notable stories from this week

Welcome to “#SocialStocks,” The Fly's weekly recap of Wall Street's reactions to social media stock news.

FRESH EYES ON THE PRODUCT: 

Sprout Social (SPT) announced the appointment of Erika Trautman to chief product officer, effective July 15. As chief product officer, Trautman will oversee Sprout's global product organization and focus on elevating and expanding Sprout's product offering. Trautman brings more than 15 years of experience in technology to Sprout with a career that has spanned work as a start-up founder to the management of billion-user products. Prior to Sprout, Trautman was the senior vice president and general manager of the work management portfolio at Atlassian (TEAM).

FORMER SOCIAL MEDIA EXECUTIVE TAPPED: 

OpenAI has hired two Silicon Valley veterans in finance and product roles as it prepares to launch new consumer products with Apple (AAPL), The Information's Erin Woo and Stephanie Palazzolo reported, citing a person with direct knowledge of the matter. Sarah Friar, who was most recently the CEO of Nextdoor (KIND), is joining as the company's first chief financial officer. Kevin Weil, who previously headed up product at Twitter and Instagram (META) before leading product and business at satellite imagery company Planet Labs (PL), is joining as chief product officer, the authors note.

AMENDED REGISTARATION STATEMENT: 

Trump Media & Technology Group (DJT) – operator of the Truth Social platform – announced it has filed an amended registration statement on Form S-1 with the U.S. Securities and Exchange Commission to register, for resale or initial issuance, certain shares of common stock and warrants of the company following the consummation of the company's business combination with Digital World Acquisition Corp. on March 25. “The Amended Registration Statement amends the registration statement filed on April 15, 2024; the number of shares of common stock that TMTG seeks to register is unchanged. Today's filing follows and incorporates a re-audit of the Company's financial statements for the years ended December 31, 2023, and December 31, 2022, conducted by the Company's independent auditor, Semple, Marchal & Cooper LLP, or ‘SMC,' in accordance with Public Company Accounting Oversight Board standards. As part of the Amended Registration Statement, all securities being registered are either held by or underlie securities held by existing security holders of TMTG. TMTG will not receive any proceeds from the sale or resale of securities by the selling security holders pursuant to this Amended Registration Statement, except in connection with any possible future exercise for cash of any outstanding warrants. The listing of an individual as a ‘selling securityholder' in the Amended Registration Statement does not mean such individual or entity will sell their shares or is planning to sell their shares. Notwithstanding registration of securities on the Amended Registration Statement, TMTG's directors and officers, its affiliate President Donald J. Trump and certain other securityholders will remain subject to a lockup period or otherwise restricted from selling any shares at this time. The Amended Registration Statement relating to these securities has been filed with the SEC but has not yet been declared effective. These securities registered may not be sold nor may offers to buy be accepted until the Amended Registration Statement becomes effective. The Amended Registration Statement is subject to further amendment and completion,” the company stated.

ENACTING SOCIAL MEDIA SAFEGUARDS FOR KIDS: 

New York Governor Kathy Hochul on Friday announced the legislative passage of two bills to protect kids online. The Stop Addictive Feeds Exploitation for Kids Act will restrict a child's access to addictive feeds on social media, and the New York Child Data Protection Act will keep children's personal data safe. The SAFE for Kids Act will require social media companies to restrict addictive feeds on their platforms for users under 18. Unless parental consent is granted, users under 18 will not receive addictive feeds. Users may still search for specific topics of interest. It will also prohibit social media platforms from sending notifications regarding addictive feeds to minors from 12:00 a.m. to 6:00 a.m. without parental consent. The legislation will authorize the Office of the Attorney General to bring an action to enjoin violations of the new law as well as seek civil penalties of up to $5,000 per violation, among other remedies. And finally, it calls for the establishment of acceptable age verification and parent consent methods, to be determined by the OAG as part of a rulemaking process once the legislation is enacted. The New York Child Data Protection Act will prohibit online sites from collecting, using, sharing or selling personal data of anyone under the age of 18, unless they receive informed consent or unless doing so is strictly necessary for the purpose of the website. It also authorizes the OAG to enforce the law and enjoin and seek damages or civil penalties of up to $5,000 per violation.

COMMUNITIES: 

Meta is quietly launching a new “Communities” feature on Messenger that is meant to help organizations, schools, and other private groups communicate in a more streamlined and structured manner, TechCrunch's Aisha Malik wrote. The company introduced the same kind of feature on WhatsApp two years ago, the author noted.

NEW WHATSAPP FEATURES: 

At the global Conversations event in Sao Paulo event, Meta announced several new features are going to be added to WhatsApp. The company believes AI tools can help businesses get people the help they're looking for and find new products and services. Meta is introducing ways for any business to use AI on the most popular questions they receive. The company is also integrating AI tools to create an ad to run on Instagram or Facebook and to help make sure businesses are following up with customers that want to hear from them. Meta is also beginning to roll out Meta Verified on the WhatsApp Business app in Brazil, India, Indonesia and Colombia. When you see a Meta verified badge, this means a business has registered their information with Meta and is receiving impersonation protection. Businesses using Meta Verified also receive enhanced account support from Meta and can use WhatsApp across multiple devices for their employees. For those times when you need to talk to someone live, Meta is introducing the ability to call larger businesses on WhatsApp in just one tap. Meta just started testing this feature and will expand it to more businesses in the coming months.

AI INNOVATIONS: 

Sprout Social announced a series of AI-powered product enhancements alongside 20 new capabilities across its platform in an effort to help marketers prioritize what matters most, enhance creativity and drive more business impact with social. Many of these will be featured in Breaking Ground, Sprout's new quarterly showcase of the company's latest product innovations. Sprout's latest product innovations will help solve common challenges by automating key elements of content creation, reporting and social care. AI capabilities include Generate by AI Assist, which makes it easier for brands to improve accessibility by writing alt-text for images, and Analyze by AI Assist, which surfaces performance and conversation trends for brands. Sprout's new AI solutions also classify and prioritize inbound messages, replace manual data analysis and craft suggested responses.

PARTNERSHIP EXPANSION: 

Sprinklr (CXM) and Reddit (RDDT) announced an expanded strategic partnership. The partnership spans both Reddit's Data API as well as its Advertising API, which is now open with Sprinklr as the first official partner. Sprinklr works with many of the largest brands in the world to bring together teams, tools, and data for every customer facing team on one unified platform. Deep partnerships with social and digital channels help Sprinklr customers monitor and understand brand-relevant conversations, optimize brand content for maximum reach and engagement, and tailor advertising for maximum effectiveness and ROI. The Reddit Data API provides Sprinklr customers direct access to near real-time public conversations on Reddit. This social listening partnership will show relevant Reddit posts and comments in Sprinklr's interactive customer dashboard. By combining Sprinklr's best-in-class analytics with Reddit's unmatched archive of constantly-updated human conversation, brands and businesses now have access to enhanced feedback and sentiment, trends, and competitive insights to better understand their customers, brand reputation, and power business growth. As Reddit's first advertising API partner, Sprinklr customers can access the full Reddit advertising suite and easily integrate Reddit into their enterprise advertising strategies and campaigns. Enhanced data and insights via the Sprinklr Data API integration can also help inform advertising strategies to reach intended audiences on Reddit.

PROTECTING DATA FROM AI: 

The Noyb-European Center for Digital Rights, a Vienna-based nongovernmental organization, said Thursday that it filed complaints with data-protection authorities in Germany, France, Italy, Spain and other seven countries over Meta's new AI project. “Over the past few days, Meta has informed millions of Europeans that its privacy policy is changing once again. Only on closer inspection of the links in the notification did it become clear that the company plans to use years of personal posts, private images or online tracking data for an undefined ‘AI technology' that can ingest personal data from any source and share any information with undefined ‘third parties.' Instead of asking users for their consent, Meta argues that it has a legitimate interest that overrides the fundamental right to data protection and privacy of European users. Once their data in the system, users seem to have no option of ever having it removed. Noyb has now filed complaints in 11 European countries, asking the authorities to launch an urgency procedure to stop this change immediately, before it comes into force on 26 June 2024.” noyb said it plans to file complaints in the remaining EU Member States in the coming days.

WRONGFUL TERMINATION LAWSUIT: 

Ferras Hamad, a Palestinian-American engineer who had been on Meta's machine learning team since 2021, is suing the company in a California state court for discrimination, wrongful termination and other wrongdoing, accusing the company of firing him for trying to help fix bugs causing the suppression of Palestinian Instagram posts, Reuters' Katie Paul and Jessica DiNapoli report. Hamad accused Meta of a pattern of bias against Palestinians, saying the company deleted internal employee communications that mentioned the deaths of their relatives in Gaza and conducted investigations into their use of the Palestinian flag emoji. Meta spokesperson Andy Stone said Hamad was dismissed for violating the company's “data access policies,” which set limits on what employees can do with different types of data.

ANALYST COMMENTARY: 

BMO Capital reiterated the same rating on Meta while noting that based on the recent interview with its Head of Instagram, Adam Mosseri, the company is facing a rising risk of free cash flow burn from “more frequent” performance bonuses for content creators. Temu app download growth has also decelerated meaningfully to 35% in May vs. 162% and 196% in April and March, while the comps for the second half of 2024 also remain difficult given the outsized 2023 growth, the analyst told investors in a research note.

Citi said that with the firm's Instagram Reels advertising load tracker in Q2-to-date expanding 160 basis points to just under 22%, engagement remains strong across the platform with Reels a key driver of overall advertising growth. While Reels monetization going forward to likely to come from engagement gains, advertiser adoption and pricing versus ad load expansion, the tracking suggests continued gains in Reels ad loads, the analyst noted. Citi added that its Reels tracking and recent ad checks suggest a strengthening digital ad environment. It believes Meta is gaining share of spend.

Cleveland Research told investors its checks were “upbeat” on Pinterest spending, improving advertiser ROI, and new product execution, leading the firm to increase Q2 and 2024 estimates “somewhat ahead of consensus.” The firm has a Neutral rating on Pinterest shares.

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Originally Posted June #SocialStocks: New York passes bills to restrict child access to social media