The 12 Months of Crypto: March
What Google and Facebook’s Ban on Crypto Says About the Limits of Centralized Internet Companies
This is part of a 12 part highlight reel by BlockWorks Group where we review the biggest crypto and blockchain story from each month of 2018. Read the January and February reviews.
The Story
In March, Google fell in line with fellow internet giant Facebook when it announced an update to its financial services policy that banned all cryptocurrency-related advertisements.
As part of the new measure, Google vowed to remove what it deemed “unregulated or speculative financial products” in traditional markets, including CFDs, (contracts-for-difference), binary options trading, and forex products.
The crackdown was intended as a precautionary measure to guard unsophisticated investors against participating in highly risky activity or potentially fraudulent schemes. As a result, exchanges, wallets, advisory firms and other infrastructure providers were undermined in their ability to acquire new customers.
Said Scott Spencer, Google’s Director of Sustainable Advertising:
“We don’t have a crystal ball to know where the future is going to go with cryptocurrencies, but we’ve seen enough consumer harm or potential for consumer harm that it’s an area that we want to approach with extreme caution.
As consumer trends evolve, as our methods to protect the open web get better, so do online scams. Improving the ads experience across the web, whether that’s removing harmful ads or intrusive ads, will continue to be a top priority for us.”
9 Months Later…
In September, Google announced that it was reversing part of its sweeping ban on cryptocurrency-related advertisements. Starting in October, regulated exchanges were once again able to advertise to their customer base in the US and Japan.
Unfortunately, some segments of the industry are still out of luck. ICOs, for one, are still banned on Google and most other social media and internet platforms.
Firms advertising themselves as “crypto consultants” or investment advisors also are still prohibited from buying AdWords. Digital wallet providers, somewhat more puzzlingly, are still banned as well.
There’s a lot to unpack with this story. Let’s begin by addressing the question of whether or not Google was justified in instituting the ban in the first place.
If you asked crypto twitter, the answers you’d get would be somewhere on the spectrum of “absolutely the f**k not” to the more conspiratorial “this is centralized tech protecting its business interests.”
I’ll admit, there was a while where I fell in the latter camp.
After all, the winners of web 2.0 do have a firm monopoly on today’s internet. Some 80% of referral traffic on the internet flows through Google and Facebook, who make their money by extracting tolls and selling advertisements. They’re the ones that potentially stand to lose the most if a decentralized, user-controlled alternative arises so yeah, why wouldn’t they want to throttle the competition?
3 Reasons Why Google and Facebook Banned Ads
On closer inspection though, that argument doesn’t really hold up.
- To begin with, both Facebook and Google introduced the ban on cryptocurrencies along with other financial service products (crypto was not the sole target).
- Second, there is a precedent for Google and other tech giants helping prevent fraud, as they did with online pharmacies.
- Which brings me to my third argument (and this is coming from a big long-term believer in crypto)… a HUGE percentage of ICOs were either outright scams or conceived of so poorly that they were reckless.
Finally, put yourselves in the shoes of a Google or Facebook executive. If you really did believe your business model was being threatened, would your response be to ban advertisements for ICOs?
Again this might be unpopular, but it seems highly doubtful that a seasoned executive would have perceived the vast majority of these tokens as a threat.
So if Google and Facebook aren’t anti-crypto…
Why Should I Care?
Google’s ban deserves our attention because it highlights the inability of any one company to effectively police content on a platform of their size. Even with the near infinite resources Google has, they can’t possibly be expected to understand all the nuances of the crypto space.
Take, for instance, Google’s decision to allow “regulated” exchanges to advertise.
What exactly does regulation mean, in this context? Is this for crypto goods, currencies, or a different type of asset? Which regulatory body does the exchange need approval from? Is an exchange considered regulated if there has been no outright enforcement action against it, or does Google need explicit guidance?
Facebook, on the other hand, now allows certain “pre-approved” advertisers to use their platform.
Ok, what does that mean? What’s the criteria for becoming pre-approved?
The answer is you don’t know — there’s no transparency, and Google and Facebook have no incentive to provide it. Why should they care? They’ve got plenty of advertisers to fill out their inventory. And this would all be fine (if you don’t like my rules, don’t use my platform!) if it wasn’t for the fact that
Google has grown to a point where it IS the internet.
Imagine for a second what it would be like if you couldn’t use Google anymore.
Try to think back to the last website that you typed “www.” in front of. There simply isn’t an option not to use these platforms — they’ve been allowed to grow too large.
BWG Gets Blocked
I know this because Facebook, Google, and Twitter all blocked our advertisements. And worse, there was no appeals process. No transparency. Not even a customer support department.
The cryptocurrency ad ban is a microcosm of a much larger situation.
The failure of tech giants is one of competition and governance. Barring a major antitrust action from the US government, it’s highly unlikely that another internet company will be able to dethrone Google, Facebook, or Apple.
They’ve simply become too big, and their network effects and years of harvested data are powerful moats.
The decentralization of crypto networks represent a novel solution to the problem, a new method of delivering digital goods and services.
Instead of one company presiding over a network whose incentives are often misaligned with its users, crypto allows a community with shared motivations to collaborate on a solution in real time.
At its heart, crypto is really the greatest experiment in governance since the declaration of independence. And so far, it seems to be the only solution capable of tackling problems that tech giants will eventually find themselves incapable of solving.
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