#TheWeeklyRoundUp - 30.12.22

Children’s User-Data Lawsuit to Proceed Against Google and YouTube As Appeals Court Overturns Dismissal (digital music news)

An appeals court has officially overturned the dismissal of a lawsuit that accuses Google-owned YouTube of violating multiple states’ laws (as well as COPPA at the federal level) by collecting and tracking children’s user data without parental authorization.

A three-judge appeals panel just recently reversed the district-court dismissal of the relatively straightforward action. Filed against Google, YouTube, and high-profile companies that had uploaded content to the latter platform, the suit specifically maintains that the video-sharing service used “persistent identifiers” to perform the aforementioned data collection and tracking.

“Persistent identifier” is defined in the Children’s Online Privacy Protection Act as information (including IP addresses and cookies) “that can be used to recognize a user over time and across different Web sites or online services.” And per COPPA, websites cannot utilize the “persistent identifiers” of children – individuals under the age of 13 in this instance – to tap into user data without receiving parental consent.

But the plaintiffs allege that YouTube did just that, violating COPPA as well as various related state laws in California, Colorado, Indiana, Massachusetts, New Jersey, and Tennessee. The filing parties only brought claims under these state laws, however, which the presiding judge (upon dismissing the action) determined were preempted by COPPA.

Also worth reiterating is that Google and YouTube in 2019 agreed to pay the FTC $136 million for alleged COPPA violations (on top of forwarding $34 million to New York’s AG), and the settlement represented “the largest amount” that the FTC had “ever obtained in” connection with COPPA. The state-focused case that’s once again moving forward claims that Google had waited until January of 2020, months after finalizing the settlement, to retool YouTube to comply with COPPA.

Bearing in mind these pertinent background details, the initially noted three-judge appeals panel unanimously reversed the dismissal, finding that the suit (and the allegations under state law) doesn’t preempt COPPA.

“Hewing closely to the language of the preemption clause, we determine that Congress intended to preempt inconsistent state laws, not state laws that are consistent with COPPA’s substantive requirements, such as the state law causes of action pleaded in the complaint here,” Circuit Judge M. Margaret McKeown explained in her opinion.

“Since the bar on ‘inconsistent’ state laws implicitly preserves ‘consistent’ state substantive laws, it would be nonsensical to assume Congress intended to simultaneously preclude all state remedies for violations of those laws,” the legal text drives home. “If exercising state-law remedies does not stand as an obstacle to COPPA in purpose or effect, then those remedies are treatments consistent with COPPA.” Besides the reversal of the dismissal, the appeals court remanded to the district court so that it “can consider in the first instance the alternative arguments for dismissal, to the extent those arguments were properly preserved.”

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Spotify Stock (NYSE: SPOT) Has Dropped By Almost 70% In 2022 — Will Things Turn Around During 2023? (digital music news)

Spotify stock (NYSE: SPOT) has suffered an almost 69 percent valuation dip since 2022’s beginning, raising questions about shares’ path forward in the new year.

When the market closed today, Spotify stock was worth $76.61 per share, representing the aforementioned 68.62 percent falloff since 2022 began as well as a small increase from yesterday’s day-end value.

Of course, it’s been a decidedly difficult year for the wider market and particularly high-profile tech and entertainment stocks including Meta (down 65.85 percent from 2022’s start), Snap (down 81.65 percent), and Netflix (down 53.65 percent).

Especially because Spotify stock was riding high when the year kicked off – as financial professionals were setting correspondingly large SPOT target prices – many investors are now speculating about shares’ outlook in 2023. Needless to say, the trajectory of the wider economy, including the much-discussed possibility of a recession, is factoring heavily into these discussions.

But the operational specifics of Stockholm-headquartered Spotify, which is gunning for podcasting profitability as well as a staggering $100 billion in annual revenue, are for obvious reasons also driving the talks.

Morgan Stanley set a SPOT target price of $105 (a close to 37 percent boost from the present worth) earlier this month, and certain investment firms remain extremely optimistic about Spotify’s perceived long-term potential as something of a one-stop destination for audio entertainment.

And on this front, the streaming giant formally launched audiobooks (on the heels of a 2021 test) in the States in late September, indicating at the time that the rollout marked “just the beginning of Spotify’s audiobooks journey.” In November, higher-ups brought the offering to the UK.

Meanwhile, besides continuing to tout its live-audio options, Spotify is evidently working to cut expenses in the podcasting space, where it’s dropped billions in recent years as part of a wider effort to move beyond music’s razor-thin margins. Execs have made multiple layoffs across Spotify’s podcast units in 2022, for instance, and a number of original programs have been axed.

In 2023, it’ll be interesting to see how these reductions, non-podcasting layoffs, a hiring slowdown, and a presumed pivot from massive acquisitions will impact Spotify’s financials and stock value. The business said that it had 456 million monthly active users as of Q3 (up 20 percent year over year and five percent quarter over quarter), including 195 million paid subscribers (up 13 percent YoY and four percent QoQ).

Despite the improvements as well as €3.04 billion in quarterly revenue (up 21 percent YoY), Spotify likewise identified a Q3 operating loss of €228 million. The company is scheduled to post its fourth-quarter results before the market opens on January 31st.