Leaning In to Ad Revenue
Twitter and Facebook differentiate their concepts of “Free Speech”
On 31 October 2019, Twitter founder and CEO Jack Dorsey announced the microblogging site would be banning all political advertising globally, both by candidates and on an issue-by-issue basis. The announcement was made in the early morning eastern time, well before markets opened.
Twitter’s timing could not have been better, on the heels of Libra’s regulatory troubles and Zuckerberg’s uninspiring performance in front of the House Financial Services Committee the week prior.
Dorsey outlined Twitter’s reasoning in a lengthy thread, but his central point was simple: reach should be earned, not paid for. His argument centered around a definition of speech which excludes advertising. Advertising, according to Dorsey, is pay-to-win, not purely speech.
He evokes a vision of political speech and online movements as a competitive space for ideas, where paying for spread and influence effectively amounts to cheating. He argues that advances in micro-targeting, deep fakes and other technologies mean that large-scale, unverified political advertising on social media is simply not worth the risk. Micro-targeting allows political advertisers an astonishing level of insight into which voters may be most susceptible to a given ad, something Dorsey describes as unnecessary for free expression and contrary to democratic principles. In an obvious jab at Facebook, he says:
“It‘s not credible for us to say: ‘We’re working hard to stop people from gaming our systems to spread misleading info, buuut if someone pays us to target and force people to see their political ad…well…they can say whatever they want! ;) ’”
More broadly, Dorsey’s argument is essentially the opposite of Facebook’s now infamous motto of “move fast and break things”. His main point is that modern tools make unfettered political advertising too dangerous, and that there is no obvious societal or political good derived from its existence without significant controls in place. Twitter doesn’t want to police political advertising, so they simply won’t engage with it at all.
Dorsey ends by urging legislators to update campaign regulation to account for new digital targeting tools. This is a common critique of Zuckerberg’s claims that Facebook shouldn’t police the Internet. Essentially: no Facebook shouldn’t, but democratically-elected government should.
Facebook, for its part, has stuck to “Free Speech” to justify its decisions on political advertising. Public affairs lead Sheryl Sandberg published a video where she defended Facebook’s position, saying “we believe in free expression, and we believe ads can be an important part of that.” Sandberg continues that Facebook has taken industry-leading steps on transparency — a fact hotly disputed by disinformation and hate speech researchers — and argues that the most important thing the social network can do is make it apparent to users what organization is paying for a given ad.
Despite the fact that advertising — both political and commercial — has long been subject to federal regulation, Facebook leadership has been resolute in its defense of the First Amendment’s supposed protections for all Speech, including deliberate and malicious disinformation spread through sponsored content.
Facebook’s decision on political advertising comes on the heels of years of controversy, including the Cambridge Analytica scandal, revelations over Sandberg’s questionable PR campaigns, and data leaks. Most recently, Facebook decided to add hardline nationalist publication Breitbart to its “high-quality publishers” program on its News Tab.
Sandberg’s defense of limitless political expression’s extension to advertising coincides with a months-long campaign by Zuckerberg and other Facebook executives to win over right-wing political figures, including Republican politicians and pundits such as Tucker Carlson. The social media giant has become less interested in a bipartisan lobbying effort as more and more Democratic lawmakers have proven receptive of Senator Elizabeth Warren’s proposal to retroactively undo Facebook’s acquisitions of competitors Instagram and WhatsApp.
Regardless of principles, Facebook’s investors clearly agreed with Zuckerberg: Facebook stock rose 5% pre-market the day after Dorsey’s announcement. Twitter stock dropped 5% pre-market, then rebounded and finished the day even.
Impact
Some Facebook employees seem to agree with Scott and Dorsey. Hundreds of Facebook staff signed an open letter to Zuckerberg on 28 October, three days before Dorsey announced Twitter’s decision. The letter’s argument is simple:
“Free speech and paid speech are not the same thing.”
The irony is that Facebook’s overall content policies are some of the most restrictive of any internet platform. The site has developed extremely powerful tools for identifying photos containing provocative or pornographic imagery, and has applied these same tools to its subsidiary, Instagram. Twitter on the other hand does not ban explicit content, instead applying an “18+” filter to flagged images. Facebook’s and Twitter’s policies on lewd images are fairly representative of the often hypocritical morality of social media: you can be a nazi as long as you keep it family friendly.
Twitter’s decision will likely have no impact on their revenue. Tech journalists were quick to point out that Twitter’s audience and revenue streams are are very different from Facebook’s. Twitter is mostly popular in the US, while the vast majority of Facebook users are outside the US. Even in the US, Twitter is mostly used by heavily politically-engaged voters, politicians, pundits and journalists. Twitter also doesn’t get very much revenue from political advertising. In the UK’s 2017 election, for example, parties spent £3.2m on Facebook ads, compared to only £56k on Twitter ads.
This gives Twitter a distinct advantage. Because they don’t depend on political advertising for revenue, the can sacrifice their market share to win brownie points with the press, regulators and the public. Microsoft and Apple, who make their money from hardware and software, did this in 2017, taking explicitly pro-privacy positions in contrast to Google and Facebook, whose business models require mass surveillance. The “M” for Microsoft has since been largely dropped from “GAFAM” in European discussions of tech taxation and regulation. Apple won the trust of privacy-conscious consumers by fighting the FBI over an encryption backdoor.
Modern Business Ethics 101: when your business model gives you an ethical advantage over a competitor on a hot-button issue, mercilessly hit them over the head with it.
Dorsey’s thread can be read opportunistically. Twitter sensed an opening and took it. More importantly, Twitter knows who its most important constituents are: its users, specifically tech journalists and political commentaros. From a casual survey of journalists’ reactions to Dorsey’s announcement, his thread was definitely warmly received by this small but influential demographic.
Facebook’s bet is clear: the company is ‘leaning in’ to political ad revenue, and, increasingly the conservative online world.
Jackson Webster writes on tech policy, social media, politics and security. You can follow him on Twitter @joliverwebster.
