Facebook gets serious challenging ad disinformation
Social media giant Facebook became embroiled in the recent controversy over Russian “hacking” of the last U.S. Presidential Election, when it transpired that Russian-bought political ads were featured on its site. The company, like peer, Google, is eager to learn from the experience, making its networks more robust, more resistant to disinformation, and more heavily policed. This is a subject close to Facebook’s founder’s (Mark Zuckerberg) heart, but it’s also a critical part of the company’s business plan: advertising is big business for Facebook, and it plans to pump money into ensuring its offering is market leading, in terms of respectability.
Saying that he “wanted our investors to hear that directly from me”, Zuckerberg explained on the company’s earnings call that he was “dead serious” about spending on the defense of Facebook’s ad platform – so much so that it would “significantly impact our profitability.” These profit-denting plans include the hiring of 10,000 extra staff, doubling the number of people who work on safety and security, and investing in technology that can spot bots and posts from malicious sources with greater accuracy.
Facebook’s share price has appreciated by 59% year to date
SOURCE: Yahoo Finance
Facebook is wise to act fast. Brian Wieser, an analyst at Pivotal Research, says: “I think they needed to convey something forceful. I think it almost would have been better in some ways if Wall Street took them seriously. There’s no shame in being a Facebook advertiser right now.”
Ben Edelman also thinks Facebook is sensible to be proactive, and that doing so may save it from further regulatory problems further down the line:
“The real cost is the company’s increased vulnerability to future regulatory efforts. They’ve had an amazing run of things so far — avoiding any significant government oversight, and enjoying immunities against the kinds of laws other media companies rightly face if they are insufficiently careful.”
Dominion holds Facebook in its Global Trends Ecommerce Fund.
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