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Snap Shares Plunge as Ad Glitch and Competition Stall Growth

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Snap’s (SNAP.N) shares fell nearly 21.5% in early trading on Wednesday following a weak quarterly performance and intensifying competition, highlighting its ongoing challenge to keep pace with AI-driven rivals.

The company’s slowest revenue growth in over a year was driven by advertisers cutting marketing budgets amid economic uncertainty and favoring larger platforms like TikTok and Meta’s Facebook and Instagram. A glitch in Snap’s ad-buying platform, which caused ads to be delivered at discounted rates, also contributed to the slowdown. Although Snap’s revenue met estimates, it was a significant drop from the double-digit growth seen over the past five quarters. Snap’s market value could fall by approximately $3.24 billion if losses persist.

Analysts at MoffettNathanson noted advertisers prefer platforms with direct access to purchase-ready users, diverse marketing tools, and clear ROI metrics — areas where Snap currently lags.

Snap’s performance contrasts with competitors Meta and Reddit, which reported strong second-quarter results, driving their shares up by 30.3% and 21.8% respectively this year, compared to Snap’s 12% decline. Following the results, at least 14 brokerages cut Snap’s price target, bringing the median to $9.

Snap is betting on its Sponsored Snaps video ad format, rolled out more broadly in June across the U.S. and other markets, which has driven increased user engagement and actions.

Morgan Stanley analysts said, “For Snap to capitalize on improvements in engagement, it must better demonstrate ad efficacy to advertisers and reduce barriers to adopting its products.”

Meta Unlikely to Further Change Pay-or-Consent Model, Faces Imminent EU Fines: Sources

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Meta Platforms is expected to maintain its current pay-or-consent model without further adjustments, making it nearly certain to face new antitrust charges and significant daily fines from the European Union, according to sources with direct knowledge of the situation.

The European Commission recently warned Meta that limited tweaks to the model would not satisfy the Digital Markets Act (DMA), which aims to limit Big Tech’s market power through strict regulations. Meta was already fined €200 million ($234 million) in April for breaching the DMA with its pay-or-consent approach from November 2023 to November 2024.

Although Meta modified the model in November 2024 to reduce the use of personal data for targeted ads, the EU remains unsatisfied. Sources indicated that unless circumstances change, Meta will not propose further revisions, prompting expected new charges and daily fines that could reach up to 5% of the company’s average daily global revenue, starting from June 27. The final decision on fines has yet to be finalized.

Following the Reuters report, Meta’s shares dropped 1.7% mid-session. Meta declined to comment on the latest developments but reiterated previous statements asserting its compliance with the DMA, highlighting the broad choices offered to European users and accusing the Commission of unfairly targeting its business model.

UN Report Calls for Stronger Measures to Detect and Combat AI-Driven Deepfakes

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The United Nations’ International Telecommunication Union (ITU) has urged companies to adopt advanced tools to detect and eliminate misinformation and deepfake content, highlighting the growing threats these pose to elections and financial security. The call was made in a report released on Friday during the ITU’s “AI for Good Summit” in Geneva.

Deepfakes—AI-generated images, videos, and audio that convincingly mimic real people—are increasingly used to spread false information, the ITU warned. To tackle this, the report recommended robust standards for combating manipulated multimedia and urged platforms like social media sites to implement digital verification tools to authenticate content before sharing.

Bilel Jamoussi, head of the ITU’s Standardization Bureau’s Study Groups Department, noted that public trust in social media has dropped sharply because users struggle to distinguish truth from fake. Generative AI’s ability to fabricate realistic multimedia makes combating deepfakes a particularly pressing challenge.

Leonard Rosenthol from Adobe, a leading digital editing software company addressing deepfakes since 2019, emphasized the need for content provenance—information about the origin of digital media—to help users judge trustworthiness. “When scrolling feeds, users want to know: ‘Can I trust this image or video?’” he said.

Dr. Farzaneh Badiei, founder of Digital Medusa, a digital governance research firm, stressed the need for a coordinated global response, noting the lack of a single international body focused on detecting manipulated media. She warned that fragmented standards could make harmful deepfakes more effective.

The ITU is developing standards for watermarking videos—which constitute 80% of internet traffic—to embed provenance data such as creator identity and timestamps.

Tomaz Levak, founder of Swiss firm Umanitek, called on the private sector to proactively adopt safety measures and educate users. “AI will become more powerful and faster… We must upskill people to avoid them becoming victims,” he said.