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Facebook and the economics of decency

Recently, advertisers have begun to boycott Facebook. After pleas from civil rights groups, including the NAACP, brands began to desert the platform.

Multiple companies have pulled July ad campaigns from Facebook because they say the social network isn’t doing enough to curtail racist and violent content on its platform.Amr Alfiky/Associated Press

Facebook says it believes in free speech. As recently as the beginning of June, it was on record allowing political ads to include lies and posts from politicians to fan the flames of prejudice. Even as Twitter started to label posts from President Trump as inciting violence or containing manipulated media, Facebook did nothing. “I just believe strongly that Facebook shouldn’t be the arbiter of truth,” Facebook CEO Mark Zuckerberg said in a Fox News interview in May.

That all changed on Friday, when Zuckerberg announced two policy changes. First, Facebook says it will delete or label posts, even those from politicians like Trump, that promote hate or violence. And second, it will block hateful ads, including political ads that claim that “people from a specific race, ethnicity . . . or immigration status are a threat.”


What changed?

Did Facebook grow a conscience? Not voluntarily. Facebook’s first loyalty is to its almighty algorithm; anything that slows the spread of content, no matter how hateful, is just grit in the gears. The only priority more important to Facebook than the algorithm is fending off regulation.

But recently, advertisers have begun to boycott Facebook. After pleas from civil rights groups, including the NAACP, brands began to desert the platform. It started with left-leaning Ben & Jerry’s and its parent company, Unilever, then spread to 120 other marketers, including Verizon, REI, Honda, Patagonia, Hershey’s, Levi Strauss, Starbucks, and Coca-Cola. All will pause Facebook ads for at least a month.

Realistically, though, Facebook brings in over $17 billion a quarter in ad revenues, from over 7 million separate advertisers. The July ad walkout might dent those revenues slightly, but the company remains obscenely profitable. Zuckerberg wants to avoid the appearance that he flinches as soon as a few advertisers bolt. So why give in now?


There’s a much bigger picture here.

First off, it’s not just advertisers who are restless, it is Facebook’s employees. Four hundred of them staged a virtual walkout in late May. Some engineers are quitting; others are demanding change. The ad boycott caused a more than 8 percent decline in Facebook’s stock price. With much of employee compensation tied to stock prices, this can’t be helping morale or retention. A brain drain is much more of a threat to the future of the company than a blip in ad spending.

Just as important, Zuckerberg, like so many before him, may have finally realized that being friends with Donald Trump works out poorly in the end.

As The New York Times reported, Trump and Zuckerberg met last October and may have a wink-wink deal regarding the Trump administration easing off regulatory pressure in exchange for Facebook tolerating Trump’s provocative posts. “Mark’s deal with Trump is highly utilitarian,” speculated early Facebook investor Roger McNamee. “It’s basically about getting free rein and protection from regulation. Trump needs Facebook’s thumb on the scale to win this election.”

Of course, things in Trumpworld have changed since then. Trump’s incendiary posts and tweets are increasingly hard to treat as no big deal. And Zuckerberg may now realize that a president nosediving in the polls is no longer the best partner. If Joe Biden is far more likely to win, then the cynic’s bet for Facebook to avoid regulation or, worse, an antitrust-driven breakup of the company, is to push back harder against Trump and hate speech.


It’s easy to imagine a straight line between cause and effect — Black Lives Matter supporters call for a boycott, advertisers pull dollars, and Zuckerberg caves. But that’s not what happened. What happened was a shift in public attitudes about race, tolerance, hate, and Trump, galvanized by the Black Lives Matter protests. This shift changed the perspective of voters, advertisers, and Facebook employees. Fighting that tide became impossible.

This may be a turning point. The next time a politician turns viciously on so many of his own citizens, it will be easier to pressure platforms like Facebook and Twitter to avoid becoming conduits for hate, lies, and conflict. You can shock the conscience of advertisers and huge companies. All it takes is enlightening them about how aligned their economics are with the masses of decent people who still make up America.

Josh Bernoff is the author or coauthor of six business books. He blogs daily at bernoff.com.