Facebook ad boycott sinks stock, raises pressure on Mark Zuckerberg
Synopsis
Shares plunged 8.3% on the news, eliminating $56 billion in market value.
The decision by the maker of major consumer goods like Dove soap and Hellmann’s mayonnaise to follow other brands in an advertising boycott, prompted a rare reaction from Facebook’s investors. Shares plunged 8.3% on the news, eliminating $56 billion in market value. Unilever’s pledge applies immediate pressure on other big companies and presents a risk to Facebook’s dominant business. Later Friday, Coca-Cola Co. said it would pause ads on all social media platforms for at least 30 days, while Honda Motor Co.’s U.S. unit, Hershey Co. and several smaller brands said they would join the boycott.
The Anti-Defamation League, among the collection of civil rights groups that organized the July ad boycott, called the changes announced by Zuckerberg “small.”
“We have been down this road before with Facebook,” the group said in a statement. “They have made apologies in the past. They have taken meager steps after each catastrophe where their platform played a part. But this has to end now.”
Stocks Recommendations
For years, Facebook has weathered scandals with its business intact and growing rapidly. The company’s advertising revenue gained 27% in 2019 to more than $69.7 billion despite threats of regulation, previous calls for advertising boycotts and a user movement encouraging people around the world to delete their accounts. But just four months before the U.S. election, and amid nationwide protests about race and policing in society, Facebook finds itself at the cultural center of a divided country, balancing regulatory pressures with societal ones.
“It is clear that Facebook and its CEO, Mark Zuckerberg, are no longer simply negligent, but in fact, complacent in the spread of misinformation, despite the irreversible damage to our democracy,” Derrick Johnson, president and CEO of the NAACP said in a statement last week.
Facebook has tried to quell the boycott behind the scenes, and has reached out to advertisers to push back on the narrative that it doesn’t care about fighting hate and misinformation. In an email to advertising partners, the company highlighted the software it uses to detect hate speech, which has improved over the years, and its efforts to circulate verified information around the elections with a new informational hub and a goal to register 4 million new voters.
During the Q&A with employees, Zuckerberg went a step further. He said the company will put a link to the voting hub on all posts related to voting, and will also start marking posts that violate Facebook’s rules, although the posts will remain up if they’re newsworthy.
Those rules give Facebook cover to take an action without making a decision on the nature of the content. For instance, several weeks ago when Trump tweeted that mail-in voting would lead to fraud, Twitter labeled the post to fact-check it. Zuckerberg left the same post alone on Facebook. But now, if all voting-related posts have a context link on them, the CEO won’t have to make controversial decisions about their accuracy.
Facebook, which already prohibits advertising that discriminates, also sharpened those policies Friday with a clause saying no ads will be allowed if they label another demographic as dangerous, or if they portray immigrants, migrant groups or refugees as inferior and worthy of disgust. “There are no exceptions for politicians in any of the policies I’m announcing here today,” Zuckerberg said.
In a follow-up email to advertisers late Friday, Carolyn Everson, vice president of global marketing solutions, summarized the announcements Zuckerberg made and outlined many of the steps the company already takes to find and remove hate speech. Everson added that Facebook will seek an audit for its quarterly report outlining how it enforces its community standards.
“Hate is an insidious feature of every society, and that is reflected across all platforms,” she wrote. “But we also believe in our responsibility to help change the trajectory of hate speech -- and while we know we can’t eradicate it, we will continue to do everything in our power to shatter its presence on our platform.”