The European Union is introducing some of the strictest online privacy rules in the world. The changes aim to give internet users more control.
Google’s ad business is twice as big as Facebook’s. But executives at Google and other big tech companies have avoided intense scrutiny. For now.
As Facebook reels from a privacy scandal, some of its most popular users are lashing out over declining traffic, policy changes and financial complaints.
The internet giant has plenty of problems to fix. Andrew Ross Sorkin thinks explaining why particular ads are presented to users would be a good start.
Most of the coverage of Russian meddling involves their attempt to effect the outcome of the 2016 US election. I have seen all of the Russian ads and I can say very definitively that swaying the election was *NOT* the main goal.
CreditTom Brenner/The New York Times
Rob Goldman, vice president for ads at Facebook, posted an eight-part thread on Twitter late Friday about his company’s role in Russian disinformation — and quickly caused a firestorm.
In his messages, Mr. Goldman discussed the indictment of 13 Russians and three companies accused of carrying out a scheme to subvert the 2016 election. Facebook was frequently mentioned in the indictment as the main tech tool that the Russians had used to tilt the election in favor of Donald J. Trump.
Mr. Goldman defended Facebook in his tweets, saying that the Russian-bought ads on the social network were not primarily aimed at swaying the vote result. His posts went viral on Saturday when President Trump cited them as proof that Russia’s disinformation campaign was about something other than giving him an election victory.
We fact-checked Mr. Goldman’s eight tweets. Here’s what we found.
“We shared Russian ads with Congress, Mueller and the American people to help the public understand how the Russians abused our system.” Tweet #1
When the Russians’ use of Facebook to influence the 2016 election became public last year, the company said it was sharing the Russian-bought ads with Congress and Robert S. Mueller III, the special counsel leading the investigation.
But Facebook did not directly share the ads with the American people. Instead, the House Intelligence Committee released examples of the ads ahead of congressional hearings last November.
“I have seen all of the Russian ads and I can say very definitively that swaying the election was *NOT* the main goal.” Tweet #2
Not according to the indictment.
The grand jury indictment secured by Mr. Mueller asserts that the goal of Russian operatives was to influence the 2016 election, particularly by criticizing Hillary Clinton and supporting Mr. Trump and Bernie Sanders, Mrs. Clinton’s chief rival for the Democratic nomination.
The Russians “engaged in operations primarily intended to communicate derogatory information about Hillary Clinton, to denigrate other candidates such as Ted Cruz and Marco Rubio, and to support Bernie Sanders and then-candidate Donald Trump,” the indictment said.
Mr. Goldman later wrote in another tweet that “the Russian campaign was certainly in favor of Trump.”
“The majority of the Russian ad spend happened AFTER the election.” Tweet #3
True, but here is some context.
According to figures published by Facebook last October, 44 percent of the Russian-bought ads were displayed before the 2016 election, while 56 percent were shown afterward. Mr. Goldman asserted that those figures were not published by the “mainstream media” — however, many mainstream news outlets did print those numbers, including CNN, Reuters and The Wall Street Journal.
“The main goal of the Russian propaganda and misinformation effort is to divide America by using our institutions, like free speech and social media, against us.” Tweet #4
The indictment does show that Russian operatives used social media — particularly Facebook — to try to sow division among Americans. But to reiterate, the indictment said that the Russians’ goal was to sway the 2016 election toward a particular outcome. That aim was pursued not just through ads, which Mr. Goldman focuses on, but through Facebook pages, groups and events.
“The single best demonstration of Russia’s true motives is the Houston anti-islamic protest. Americans were literally puppeted into the streets by trolls who organized both the sides of protest.” Tweet #5
This needs context.
The protests in Houston in May 2016 were among many rallies organized by Russian operatives through Facebook. While the Houston protest was anti-Islamic, as Mr. Goldman said, he failed to note that the goal in promoting the demonstration was to link Mrs. Clinton’s campaign with a pro-Islamic message.
According to the indictment secured by Mr. Mueller, there were many other examples of Russian operatives using Facebook and Instagram to organize pro-Trump rallies. At one protest, the Russian operatives paid for a cage to be built, in which an actress dressed as Mrs. Clinton posed in a prison uniform.
“The Russian campaign is ongoing. Just last week saw news that Russian spies attempted to sell a fake video of Trump with a hooker to the NSA.” Tweet #6
American intelligence officials have said that Russia has continued to target the American public and that it is already meddling in the 2018 midterm elections. The New York Times also reported this month on an attempt by a shadowy Russian figure to sell stolen American cyberweapons, as well as compromising material on President Trump, to the United States.
“There are easy ways to fight this. Disinformation is ineffective against a well educated citizenry. Finland, Sweden and Holland have all taught digital literacy and critical thinking about misinformation to great effect.” Tweet #7
While Finland, Sweden and the Netherlands have all made efforts to teach digital literacy, those countries are still grappling with how to handle misinformation. A recent survey in Finland found that 67 percent of respondents “think fake news affects Finns’ perceptions on issues ‘a lot’ or to an ‘extreme’ degree.” Officials in Sweden and the Netherlands have also recently warned that fake news poses a threat to their governments.
“We are also taking aggressive steps to prevent this sort of meddling in the future by requiring verification of political advertisers and by making all ads on the platform visible to anyone who cares to examine them.” Tweet #8
After initially dismissing concerns that it influenced the 2016 election, Facebook has announced a series of moves to prevent its future misuse. One of those steps includes verifying political advertisers through a system that combines automated and human fact checkers. The company has also said it plans to use postcards sent by regular mail to verify the identities of American political advertisers. Whether these new measures will be effective is unclear.
“I have seen all of the Russian ads and I can say very definitively that swaying the election was *NOT* the main goal.”
Vice President of Facebook Ads https://t.co/A5ft7cGJkE
The announcement is part of a major shift in the industry to lift the veil over how its secretive advertising businesses — its cash centers — work, as lawmakers put more pressure on social media companies about the role their sites played in Russia’s attempt to influence the election. Twitter, Facebook and Google are scheduled to appear for hearings before the Senate and House Intelligence Committees on Nov. 1.
Lawmakers like Senator Mark Warner of Virginia, the leading Democrat on the Senate Intelligence Committee, have expressed frustration about Twitter. In late September, he said Twitter’s response was “inadequate” when it was asked to provide evidence of Russian-linked advertising and accounts that spread misinformation or were used to favor a presidential candidate.
At the time, Twitter said it had discovered about 200 accounts linked to Russian efforts to influence the election. But that figure was significantly less than the number uncovered a month earlier by researchers from the Alliance for Securing Democracy, a bipartisan initiative of the German Marshall Fund, the public policy research group in Washington. The researchers tracked 600 Twitter accounts — both human and suspected automated “bots” — that they linked to Russian attempts to influence the election.
Senator Amy Klobuchar, a Democrat from Minnesota, said that the company’s announcement did not go far enough and that online companies like Facebook, Twitter and Google needed rules that the government could enforce.
Last week, Ms. Klobuchar, Mr. Warner and Senator John McCain, a Republican from Arizona, introduced a bill that would require digital platforms to report who bought political ads on their sites in the same way that TV broadcast stations must maintain databases with those disclosures. The bill was a response to concern that fake accounts linked to Russia on Facebook and other sites were able to fly past monitors on the sites and easily buy thousands of ads promoting racial and other hot-button issues to sow chaos before the election and to influence the result.
“I welcome this transparency,” Ms. Klobuchar said, “but we need a law in place for two major reasons: Not every company will do this, and you need rules for the road.” She added that the companies should not be left to police themselves.
The announcement from Twitter followed a public relations blitz this month by Facebook’s chief operating officer, Sheryl Sandberg, to announce similar voluntary efforts to tighten standards for ad buyers. Lawmakers are still skeptical, saying there are many unanswered questions about whether the social media sites can prevent the mistakes of the 2016 election on their own.
The changes also raise new issues for politicians. For one, advertising agencies often consider their digital strategy part of their “secret sauce” when trying to sell their services to politicians and campaign strategists. Shining a light on the types of ads, the amount spent on them and how often they change could give valuable information to competing candidates.
It is also unclear whether Twitter will be able to keep up with campaigns’ ever-changing digital targeting, budgets and goals, and the company did not mention how it plans to tackle large-scale misinformation spread by bots.
Many of those automated accounts, along with Twitter users with suspected ties to the Russian government, bombarded the platform without buying advertising. Researchers at the cybersecurity firm FireEye discovered that hundreds or thousands of fake accounts regularly sent out messages criticizing Hillary Clinton — sometimes with identical tweets dispatched seconds apart.
Representative Adam B. Schiff of California, the top Democrat on the House Intelligence Committee, said transparency in advertising alone “is not a solution to the deployment of bots that amplify fake or misleading content or to the successful efforts of online trolls to promote divisive messages.”
Twitter said it would try to tighten standards for issues-based ads that wouldn’t fall under its new electioneering rules, such as an environmental group’s push for clean-air policies or an energy company’s promotion of environmental deregulation. But the company admitted that the industry had not agreed on definitions for issues ads.
“We will work with our peer companies, other industry leaders, policymakers and ad partners to clearly define them quickly and integrate them into the new approach mentioned above,” Twitter said in its blog post.
“There are now a number of revenue streams that are being driven by venture dollars,” Bill Gurley, a prominent venture capitalist who has been warning of a tech bubble, said recently in an onstage interview at South by Southwest in Austin, Tex. “Facebook and a little bit of Twitter’s revenues are now coming heavily from mobile downloads. These are ads for, like, Game of War with Kate Upton. Those ads are now an increasing percentage of their revenue, and they’re being spent by these excessive venture dollars.”
The notion that Facebook and other social networks will suffer most deeply when the bubble bursts sounds plausible because it rehashes the last tech boom and bust, when advertising revenue run-ups at huge web portals (remember those?) turned out to be funded mainly by venture capital investments. In 2001, revenue at Yahoo — the largest portal, and something like the Facebook of its time — plummeted by almost $400 million when start-ups stopped spending during the bust. Yahoo has never recovered its former glory. Could Facebook face the same fate?
Probably not — or not yet, at least. On closer inspection, the theory that Facebook’s growth depends on unsustainable venture capital is mostly overblown, another strain of Facebook Second Guessing Syndrome. It’s a story that misses important facts about Facebook’s advertising business. For one thing, as Facebook’s executives have repeatedly pointed out, ads from app companies make up a small percentage of the company’s overall business. Most of the social network’s revenue comes from video ads and ads for large brands.
The theory also misses two other points. Not all these ads are coming from unproved start-ups. And the ads are set to be adopted more widely because they actually work.
Credit Robert a Tobiansky/Getty Images for SXSW
According to several app makers and observers of the industry, the ads are tremendously effective at leading paying customers to new apps. It’s the effort to reach these paying customers — and not venture funding — that is often the reason for all the money pouring into ads for apps.
App-pushing ads are known in the industry as app-install ads. They appear in your Facebook News Feed or Twitter stream and encourage you to download apps from companies that make mobile games and e-commerce and travel services; they also come from big brands like Target and Chase. When you tap the ad, you are sent to Apple or Google’s app store. Facebook and Twitter are paid for each click according to prices set by an online bidding process.
According to Cathy Boyle, an analyst at eMarketer, a research firm that studies the online advertising business, the market for app-install ads is growing rapidly. Ms. Boyle estimates that in the United States, app companies spent $1.67 billion on install ads in 2014. She expects that number to grow 80 percent this year, to about $3 billion. The market for app-install ads is growing faster than just about any other digital advertising category, Ms. Boyle said, but it is still relatively small. In 2015, these ads will account for about 10 percent of the American mobile ad market, according to eMarketer.
Facebook and Twitter would not specify the proportion of their revenue from app ads, but both have described it as far from the majority of their business. “We talk about our mobile ad business growing — mobile app ads are a small part of that, growing in line with our total business,” said Sheryl Sandberg, Facebook’s chief operating officer, in a call with investors in October.
One reason spending on these ads is growing is that the ads solve a problem faced both by businesses that make apps and by users who want apps: App stores are becoming ever more crowded, and it is increasingly difficult for new apps to find an audience. In this way, apps for ads on social networks perform the same function as the highly successful ads for websites that Google runs alongside its search results — they show people something that they might click on and pay for, based on a combination of users’ interests and a business’s willingness to pay.
App ads are also like search ads in that they are highly measurable. Marketers can target specific types of customers whom they want to present with an ad for a certain app, and they can also track exactly how much money they make from customers they get through an app ad. By contrast, the advertising boom that doomed the portal industry was not built on measurable ads. Those were mostly web banner ads, whose effectiveness has always been something of a leap of faith.
Acquiring new customers through app ads is “100 percent based on data,” said Bernard Kim, senior vice president for social and mobile publishing at the video game developer Electronic Arts. “We have the ability to track the players that we get through these networks very carefully, and we know what the profitability looks like on a player, so these ads are a very effective tool for us to bring in the players that we want to engage with our titles.”
Skeptics remain. One tech investor who has been critical of these ads pointed out that start-ups are often very bad at calculating the long-term value of new customers. This miscalculation often causes them to overspend on marketing. Several recent venture-funded flops, including Groupon and Fab.com, were tripped up by huge marketing spending that did not lead to lucrative long-term customers.
If today’s money-burning, venture-funded app companies — Uber, Lyft, Airbnb and many more — are also overestimating the value of new customers, could they wake up one day to find they’re spending too much on app ads?
Facebook does not think so. In an interview, Andrew Bosworth, the company’s vice president for advertising, argued that start-ups today were more disciplined than in the recent past, with many analyzing not just how much they’re spending to get new users but also whether those people are actually buying stuff. “That’s been the big shift. The big V.C.-backed Fab.coms of the world spent on acquisition but couldn’t actually convert,” he said. But when today’s start-ups look at these ads, “They’re asking, ‘Can you put a dollar in and get two dollars out?’ If you can, you spend, and if you can’t, you don’t.”
Sure, Mr. Bosworth’s argument is a variation of “this time is different,” which is the stock defense during every boom. But he added that Facebook wasn’t counting on app ads for its long-term survival. “I think this will be a stable ongoing market,” he said. “I think it will plateau at some point in terms of share, as smartphone growth plateaus. I don’t think it will shrink dramatically, but I just think there will come a point where it plateaus.”