Over the past year, Facebook has landed into a heap of trouble…

Although the social media platform hasn’t been plastered all over the news like the latest sexual misconduct scandal, Facebook’s flunks are just as severe and come with reverberating repercussions.

So, whether you want to call it “spilling the tea” or “blowing the whistle,” let’s shed some much-needed light on Facebook’s latest failings.

If things don’t change for our favorite social media platform soon, it’s detrimental fate will be all but sealed…

Russian Election Meddling

From the corridors of Congress to the halls of the House of Parliament, politicians are becoming increasingly worried about what Facebook is costing society.

And with good reason, too. Speculation over Russia’s meddling in the 2016 election proved to be frighteningly true — all thanks to Facebook. The ads purchased by Russia ended up reaching a staggering 126 million Americans.

But the financial cost to Facebook of trying to clean up its platform could be high, too — even if investors appear to have closed their eyes and ears to the fretting among the political class about the need to ensure that future elections are free from disinformation from Russia.

Mark Zuckerberg, Facebook’s CEO and cofounder, has promised to invest so much money in security that it would “significantly impact [Facebook’s] profitability.”

Facebook plans to hire or contract 10,000 extra staff members, effectively doubling the number of people working on safety and security, and to invest in technologies in order to better spot bots and posts from malicious sources.

Even so, analysts are warning that Facebook could still face regulations and costs that are harder to forecast from having its social media platform used illegally or dishonesty.

Being caught up in scandals has the ability to cost precious advertising revenue. YouTube discovered that this year when brands like Coca-Cola, Volkswagen, and Johnson & Johnson boycotted the company due to reports of ads appearing next to extremist and derogatory videos.

However, no legitimate advertisers are known to have withdrawn from Facebook. And no sites seem to be facing problems with users leaving because of lack of trust in what they read or watch — yet.

As far as regulation goes, U.S. senators have already proposed the Honest Ads Act. This act would lead to more bureaucracy surrounding political ads, requiring platforms to collect documentation to prove who is behind campaign ads — an expense that will most likely require human intervention.

Others believe that governments should go further and require more documentation for all digital ads, which would ultimately transform the business model for sites that are reliant on selling ad campaigns through self-serve platforms.

Facebook should really work harder at making it clear where its content comes from and about who’s paid for it.

Racist Ads

Thank goodness for ProPublica — the investigative journalism nonprofit that, a year ago, illuminated how Facebook’s advertising tools could be used for segregating the audience for housing-related ads.

This degree of racial exclusion in real estate, common during the Jim Crow era, was made illegal in 1968 under the Fair Housing Act.

Facebook initially went on the defensive with these allegations, claiming that targeting people by “ethnic affinity” was not the same as racial discrimination. In February, however, it reversed course, announcing changes to its advertising policies and new enforcement tools for preventing illegal discrimination on its ad platform.

It also changed the name of its “ethnic affinity” targeting category to the even more euphemistic “multicultural affinity.”

This next part is important and easy to overlook: Apparently satisfied by Facebook’s pledge to address the problem, the U.S. Department of Housing and Urban Development (HUD) told ProPublica this week that it had closed its inquiry into housing discrimination on the company’s platform.

Perhaps you already know where this is heading…

This week, ProPublica tested Facebook’s ad platform again, using its targeting tool to exclude African-Americans and several other protected demographics from the audience for promoted posts about rental properties.

These are exactly the types of ads that Facebook has pledged to clamp down on. They’re all illegal. But Facebook still approved every single one of them.

This is all from a company that has insisted to government authorities that it’s capable of “self-regulation.” Facebook fears government intervention in its business because the interference would constrain its action in ways that would deeply threaten its “hacker” culture, runaway growth, and revenue.

And so, its lobbyists push instead for “self-regulation” in which the government and public agree to trust Facebook in developing and enforcing its own policies regarding matters of public interest.

However, Facebook’s recent history makes it increasingly clear that this sort of trust is definitely being misplaced…

Is Facebook Really Protecting Its Users?

A former operations manager who was responsible for Facebook’s privacy efforts said that the company “prioritized data collection from its users over protecting them from abuse.”

In a sharply critical New York Times opinion piece published last Monday, Sandy Parakilas said Facebook “has no incentive to police the collection or use of data” from its users, given its business model of selling online ads.

Before Facebook’s 2012 IPO, Parakilas led efforts to fix privacy problems on its developer platform. What she saw on the inside was a company that prioritized data collection from its users over protecting them from abuse.

The fact that Facebook prioritizes data collection over user protection and regulatory compliance is precisely what makes the platform so attractive to advertisers.

From Parakilas’ perspective, the company Zuckerberg leads is obsessed with its press coverage and will only protect user data when negative press or regulators get involved.

The message is absolutely clear: The company just wants negative stories to stop; it doesn’t really care how the data is used. And Parakilas is not the first former manager to criticize Facebook this year.

She goes on to state that lawmakers shouldn’t allow Facebook to self-regulate, because it won’t.

Parakilas’ declaration is in reference to the several bills currently in front of Congress — one of which, if passed, would rely on Facebook to report its users who violate its rules on hate speech and another would enforce putting a buyer disclaimer on political ads.

Of course, in response to Parakilas’ article, Justin Osofsky, Facebook’s vice president of global operations, wrote a reply, stating it’s untrue to suggest that Facebook didn’t or doesn’t care about privacy.

He also went on to reiterate the company’s obligations under prior settlements with the U.S. Fair Trade Commission (FTC). The FTC notably bashed Facebook for deceiving its users.

Despite Facebook’s comments about its dedication to privacy and protecting its users, the latest scandal with the Russian-purchased political ads just goes to show how empty the social media platform’s words really are.

That’s all for now.

Until next time,

John Peterson
Pro Trader Today