Are Facebook and Google reaching the limits of their power?

The big two tech platforms seem to have hit something of a pothole. Facebook is facing an increasing advertising boycott, and Google has discovered it’s not immune to the general ad downturn. Are we getting closer to the limit of the big tech platforms’ power?

The US-based campaign to encourage advertisers to boycott Facebook (at least through July) mushroomed over the weekend, with major advertisers like telecommunications giant Verizon, consumer cultural icons like Coca-Cola and Starbucks, and consumer goods market leader Unilever joining in — in Unilever’s case until the end of the year.

Facebook is caught between the dollars of its advertisers today and its eagerness to avoid regulation tomorrow. Google, however, faces the challenge of monopoly when there’s limited room to grow.

Facebook under fire

#StopHateForProfit — launched on June 17 — brought together traditional US civil rights and anti-racism groups like the Anti-Defamation League and the National Association for the Advancement of Colored People with campaigning groups like Sleeping Giants to force Facebook to prevent its platforms being used for hate speech. 

These latest companies to drop their ad spend are big players: Verizon is a top 20 company by US revenues; Coca-Cola has set advertising trends since the days of Mad Men.

It’s clear that corporate America is joining the boycott to get as close as possible to the right side of history in the cultural reset driven by the Black Lives Matter moment. It’s a recognition that the successful gaming of Facebook’s algorithm by right-wing hate groups makes that desire incompatible with advertising on the platform.

This couldn’t be put clearer than the comment by Unilever’s executive vice president of global media, Luis Di Como, to The Wall Street Journal:

The complexities of the current cultural landscape have placed a renewed responsibility on brands to learn, respond and act to drive a trusted and safe digital ecosystem.

In the age of social responsibility in marketing, the brands of both advertisers and advertising platforms reflect on each other, for good and ill. In that world, Facebook is now a risk — made riskier by its links with Trump and his supporters.

The bigger picture

Last week The New York Times media columnist Ben Smith suggested Facebook is constrained by an implicit deal between Trump and Facebook CEO Mark Zuckerberg to keep out of each other’s way: Facebook will allow the Trump re-election campaign more or less free rein on the platform that was so important in the 2016 election, while the Trump administration will resist calls for tighter regulation.

Zuckerberg has already expressed his concerns about the threat of regulation from an incoming Democratic administration.

Facebook has also stumbled in its boycott response. It took until Friday US time to announce a minor shift from its repeated declarations that it would not moderate political speech, even when as provocative as Trump’s. Now, it will start labelling political speech that violates its rules and will act to prevent voter suppression and moderate hate speech.

Too little, too late to prevent the boycott building steam.

Ultimately, Facebook is constrained by its governance. Using a dual share ownership model allowable under US law, Zuckerberg retains majority control although most of the capital comes from non-voting shares. This means there’s unlikely to be meaningful change until Zuckerberg decides the risk of long-term advertising losses outweighs the danger of regulation by either Trump or a Biden administration. That could be some time.

Meanwhile, Google has its own troubles. The Wall Street Journal reports that Google’s ad revenue is expected to fall in 2020 for the first time. It seems to have a larger scaled version of the problem facing The SMH and The Age: an over-reliance on travel ads in its core search function.

While the Facebook boycott is generating more news (thanks to the schadenfreude of traditional media), both stories suggest we’re getting close to peak unregulated platforms.