The Bill Is Finally Coming Due For Facebook’s Deal With The Devil
Facebook’s shares were down 8% yesterday as large advertisers like Unilever, Coca-Cola, Honda, Hershey, and Verizon join the Facebook…
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Facebook’s shares were down 8% yesterday as large advertisers like Unilever, Coca-Cola, Honda, Hershey, and Verizon joined the Facebook boycott.
Companies Boycotting Facebook as of 6/27/20
For many long time followers of Facebook, like myself, this moment was a loooooong time coming….
I called Zuck in 2004, a month after Facebook launched, and offered to buy the company (I was running the social network Bolt at the time). In March, 2010, I published the 1st Wall Street style research report on FB on Tumblr, with a $100 billion 5 year price target (it was trading at $16B). As FB continued to increase engagement, I continued to be a bull.
Rolling Out A $200 billion price target in December, 2010
I believe social networks are either growing engagement, or they’re dying. And for eight years, Facebook was growing user engagement. But Facebook’s Q4 ’17 earnings revealed the first decline in user engagement in Facebook’s history. Facebook gave the excuse that they were purposefully trying to prevent Facebook users from doing the #1 thing they liked to do on Facebook. They were trying to stop fake news. I didn’t care about the excuse. So after 8 years as a bull, during which the shares went up 30X+, I turned bearish, penning a post tiled “Facebook’s Epic Run Comes To An End”. Since that time, Facebook shares have dramatically underperformed it’s FAMGA peers:
Faced With Falling Engagement, Facebook Embraced Fake News
It’s not known exactly when Facebook started clamping down on fake news, but they first mentioned it following it’s Q4 ’17 results. It’s not known when they changed course on fake news due to falling engagement, but taking a look at the chart below, which tracks engagement (as defined as daily active users/monthly active users), my guess is Q3 ’19 was the first full quarter of the new policy, which drove an increase in engagement not seen for 2+ years:
The Focus Moves To Hate Speech On Facebook
Now the focus has shifted from fake news on Facebook, to hate speech on Facebook. While Facebook has increased the number of hate speech posts it takes down:
The truth is, it’s just a drop in the ocean. Given that there are more than1,000,000 posts per minute, Facebook is taking down less than 0.008% of the posts on Facebook. And the further truth is, clamping down on hate speech on the platform has never been a priority. At almost every turn, Zuck’s focus has been on making money, let the world deal with the fallout from the massive dissemination of fake news and hate speech. It’s a classic deal with the devil.
The best research I’ve seen on how Facebook deals with hate speech was published by the peer review site First Monday in December, 2019. “Report and repeat: Investigating Facebook’s hate speech removal process”, is a data driven analysis of how Facebook deals with reported hate speech. They found that Facebook removes just 50% of hate speech, when it’s reported:
Their conclusions were damning:
Failure on the part of Facebook to address these issues raises questions about the financial motivations for the company to leave hate speech on the site. Given the improvements in artificial intelligence and content removal algorithms, Facebook could choose to remove all instances of certain hateful slurs such as “f*g” or “c*nt” when they appear on the platform. The fact that the company does not immediately take this action suggests that they are more than aware of the financial benefits associated with having hate speech, and the users that consume that content, spending more time on the site.
I believe in karma. And if karma’s a thing, than Zuckerberg will go down in infamy like other billionaires who built massive wealth by giving their customers what they wanted, even when they knew it was poisonous. Another recent example is the Sackler family, who created the opioid crisis and became filthy rich in the process.
I know Facebook has also made lots of people filthy rich. But going forward, that wealth is increasingly at risk, and many will end up …. just plain filthy.
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