What's going on?
What does Facebook want? Advertisers’ money! When does it want it? Oops, too late: some of the world’s biggest companies boycotted the platform this weekend to protest the social media giant’s lackluster hate speech policies.
What does this mean?
Facebook promised late on Friday to both ban hate speech in ads and label any posts that violate those policies. But the company still didn’t commit to removing the posts altogether, which may have been the last straw for organizations that’ve long argued Facebook isn’t doing enough to halt the spread of bigotry.
Spirits magnate Diageo, household products giant Unilever, and soft drink behemoth Coca-Cola were just some of the big-name businesses that announced they’d be pulling one to six months’ advertising spend from Facebook’s platform. They might be hoping the losses will force the company to take further action, or else risk losing more revenue and more investors.
Why should I care?
For markets: You’ll come crawling back.
Even high-profile walkouts aren’t going to cripple Facebook: the company serves eight million ad partners, and the top 100 of those only make up 20% of revenue. Case in point: Unilever spent $12 million on Facebook ads in the first half of 2020, but the advertising giant’s expected to have earned $35 billion overall in that time. And while some analysts worry greater regulatory pressure could crimp Facebook’s potential profits, optimists might point out that the same argument was made after the Cambridge Analytica scandal, and not much came of it (tweet this).
The bigger picture: Yesterday’s news.
Facebook is one of the most valuable stocks in the US, which means swings in its price can influence the stock market at large. And since that price fell 8% on Friday, investors’ fears that rising US coronavirus cases would disrupt the economic recovery might’ve been compounded. Investors often have short memories, mind you, and a further 3% fall in Facebook’s share price on Monday appeared to be offset by another shiny thing: China’s first monthly rise in industrial business’ profits since November.