Maybe, like me, you are feeling a warm glow of schadenfreude on hearing about the growing Facebook boycott. They had it coming to them, and we, of all people, are in favour of corporate actions in pursuit of social change, right? Perhaps you joined Jim Cramer, host of CNBC’s “Mad Money” in considering this a major ESG victory, and that “things have changed big.” If so I would just advise you to be careful what you wish for. There are no easy solutions to the complex issues involved here, and plenty of unforeseen, and undesirable, outcomes.
Responsible investors have long been concerned by Facebook, and frustrated by a lack of change. Last week campaigners found a new target – the company’s clients. In launching the “Stop Hate for Profit” advertising boycott, ADL (the Anti-Defamation League) certainly didn’t mince its words. “When it comes to dealing with rampant hate and harassment, the platform continues to come up short… (its) hate speech, incitement, and misinformation policies are inequitable.” After a slow start, suddenly the campaign snowballed, and over 150 organizations have now joined in. Not just the usual socially-aware companies, like Ben & Jerry’s, but mainstream ones – Coca-Cola, Unilever, Hershey Co., Ford, Microsoft, Verizon, Levi’s and Starbucks.
Unilever is a big deal in the advertising world, and one hour and forty-seven minutes after it made its announcement on Friday, Facebook had scrambled into action. In a ‘virtual Town Hall’ on his own Facebook page, CEO Mark Zuckerberg pledged to hide or block content considered harmful. But, having scented blood, this was still not enough for campaigners, the ADL chief asked would it really be “so hard for ‘Zuck’ to push white nationalists off his platform?”
There was some degree of investor panic at the end of last week, and at one point the shares fell nearly 10%. This was perhaps not surprising with so many household names, major Facebook clients, so joyously ‘putting the boot in.’ Hershey’s (who spent $36.5m with Facebook in the US last year) complained “we have not seen meaningful change,” Verizon ($22.9m) demanded “an acceptable solution,” and Honda ($6m) said it was “choosing to stand with people united against hate and racism.” With all these big corporates suddenly involved, The Guardian rubbed its hands that campaigners had “found Facebook’s weak spot.”
Well, not so fast.
At present, the boycott is not global – most of the companies making worthy statements are confining their action to the States. And they are only pausing advertising (mainly just for July), not ending it. Besides, anyone who understands Facebook’s business model knows that its incredible revenue growth is driven by a huge number of small businesses: some 8m of them. They have nothing else which can deliver for them as Facebook does. The top 100 brands on Facebook are just 6% of spend globally. There may be a dent in one quarter’s revenue, but not a very big one.
More importantly, the issues here are complex, and mired in the hopelessly polarized US political debate featuring two warring tribes, which never attempt to see each other’s viewpoint and which watch specially selected “news.”
For viewers of MSNBC, President Trump is literally a Russian agent, intent on wrecking the United States with dictatorial and racist policies. House Speaker Nancy Pelosi echoed these views this week. For fans of Fox News, the chaos in the newly-declared autonomous zone in Seattle (where several people have been murdered in the last week) shows Trump is all that stands between them and widespread looting.
All this with a General Election just months away. No wonder Unilever, in announcing its pause, commented that during this “polarized election period” continuing to advertise “would not add value to people and society.”
Facebook is stuck in the middle between these two warring factions. As Black Lives Matter protests turned violent, Trump threatened to send in the National Guard and infamously tweeted “when the looting starts, the shooting starts.” Twitter added a warning about Trump’s tweet, saying it glorified violence, but Facebook interpreted the statement not as an incitement to violence but as “a warning about state action.” Zuckerberg’s own staff quickly took to social media to criticize him and the “legitimization of state brutality.”
Trump’s opponents are further incensed by his campaign against mail-in-voting. They demand his posts, suggesting potential voter fraud, are taken down as “lies,” and do not accept Zuckerberg’s defence that Facebook cannot be the “arbiter of truth.” Interestingly, Jen Sey, Levi’s Chief Marketing Officer, pulled her spending with a claim that “Facebook’s inaction … has the potential to threaten our democracy, and the integrity of our elections.”
Many argue Facebook should reverse this stance – but to do so could come at huge cost to the company. Trump has issued an Executive Order to roll back ‘Section 230,’ attacking Tech companies for getting involved in political activism, arguing social media platforms have “an unprecedented liability shield based on the concept they are a neutral platform, which they are not.” He argues that Twitter is effectively censoring him.
Section 230 of the 1996 Communications Decency Act is sometimes called “the twenty six words that created the internet.” It states social media platforms are not publishers of, and thus not liable for, content produced by others. It also allows them to moderate some content, without being required to moderate all. This is the background to Facebook’s desperate attempts not to be labelled a “publisher.”
In these muddy political waters, there is no easy way out here. The Washington Post just ran a story, horrified that Facebook has even talked to Trump. Yet, even its fiercest political critics use it. Trump has spent $45m on Facebook ads, and Biden $23m. Even Nancy Pelosi who’s not running for President, and loathes Facebook, spent $2m on the platform in the last year. Facebook clearly has power, and should be regulated. Perhaps this is one where the politicians should take the lead, not investors.
Zuckerberg points out that the company does in fact remove 90% of hate content before it is flagged. But, of course, one person’s “hate content” is another’s free speech. For example, the BLM leader in New York, Hawk Newsome, recently said “if this country doesn’t give us what we want then we will burn down this system” underscoring the point by saying he was “speaking literally.” Was that an incitement to violence? Or is BLM Shaun King’s call to remove statues of Jesus an attack on religious rights?
As left-wing journalist Krystal Ball rightly observes, I might at first be glad to think of Trump being censored but “it might be him today, it might be you tomorrow.”
Christopher Walker writes on business and global issues. He ran a large equity fund and has many years of investment experience.