Google's money churning ad engine sputters in rough economy

SAN FRANCISCO, United States - Google parent Alphabet reported quarterly earnings that fell short of market expectations as belts tightened in the digital ad market that drives its revenue.

Alphabet said it made a profit of $14 billion in the third quarter on ad revenue that grew just 6 percent to $69 billion when compared with the same period of last year.

Aside from one period at the start of the Covid pandemic, that would mark the weakest revenue growth at Alphabet for any quarter since 2014.

"When Google stumbles, it's a bad omen for digital advertising at large," said Insider Intelligence analyst Evelyn Mitchell.

"This disappointing quarter for Google signifies hard times ahead if market conditions continue to deteriorate."

Alphabet shares slipped 6.8 percent to $97.35 in after-market trades that followed the release of the earnings report.

Google's foundation in advertising on its heavily used search engine does give it an advantage, however, over other ad-reliant tech firms such as Meta, Snap and Twitter, the analyst added.

"Over time, we've had periods of extraordinary growth and then there are periods I viewed as a moment where you take the time to optimize the company to make sure we are set up for the next decade of growth ahead," Alphabet and Google chief Sundar Pichai said on an earnings call.

"I view this as one of those moments."

Alphabet chief financial officer Ruth Porat said the financial results in the quarter showed "healthy fundamental growth in Search and momentum in Cloud" computing revenue, but suffered from foreign exchange rates given the strong US dollar.

"We're working to realign resources to fuel our highest growth priorities," Porat said.

Big tech firms are grappling with multiple challenges, from inflation to the war in Ukraine, putting pressure on earnings.

Alphabet recruited throughout the pandemic, but announced a slowdown in hiring as ad revenue growth cooled this year.

"Within this slower headcount growth next year we will continue hiring for critical roles, particularly focused on top engineering and technical talent," Porat said.

Many other tech companies have decided to lay off staff, including Netflix and Twitter, or slow the pace of hiring, such as Microsoft and Snap. 

YouTube squeeze? 

Worsening the financial situation for Alphabet is the fact that Google tends not to aggressively promote advertising on its platform with tactics such as trying to convince businesses that online marketing is a smart move during tough economic times, said independent tech analyst Rob Enderle of Enderle Group.

"They don't like the idea of making their money off advertising, so they don't treat the market very well," Enderle contended.

"Now, you are seeing the adverse impact of not taking your revenue source seriously."

The earnings report also showed that ad revenue at YouTube was slightly lower than it was in the same quarter a year earlier, despite a hot trend of people watching video on-demand on the internet.

"Overall, I feel YouTube remains in a really good position to continue to benefit from the streaming boom," chief business officer Philipp Schindler said during an earnings call.

However, Alphabet noticed a "pullback in spending" by advertisers at YouTube in the quarter, Schindler told analysts.

"They have a ton of competition in video, and TikTok is probably hitting YouTube pretty hard," Enderle said.

Netflix last week reported that it gained subscribers in the recent quarter, calming investor fears that the streaming giant was losing paying customers.

The company said it ended the third quarter with slightly more than 223 million subscribers worldwide, up some 2.4 million, after seeing subscriber ranks ebb during the first half of the year.

The turn-around in subscriber growth comes as Netflix is poised to debut a subscription option subsidized by ads in November across a dozen countries.

Rival streaming platform Disney+ is to launch ad-subsidized subscriptions in December.

Agence France-Presse

Facebook keeps policy protecting political ads

SAN FRANCISCO — Defying pressure from Congress, Facebook said on Thursday that it would continue to allow political campaigns to use the site to target advertisements to particular slices of the electorate and that it would not police the truthfulness of the messages sent out.

The stance put Facebook, the most important digital platform for political ads, at odds with some of the other large tech companies, which have begun to put new limits on political ads.

Facebook’s decision, telegraphed in recent months by executives, is likely to harden criticism of the company heading into this year’s presidential election.

Political advertising cuts to the heart of Facebook’s outsize role in society, and the company has found itself squeezed between liberal critics, who want it to do a better job of policing its various social media platforms, and conservatives, who say their views are being unfairly muzzled.

The issue has raised important questions regarding how heavy a hand technology companies like Facebook — which also owns Instagram and the messaging app WhatsApp — and Google should exert when deciding what types of political content they will and will not permit.

By maintaining a status quo, Facebook executives are essentially saying they are doing the best they can without government guidance and see little benefit to the company or the public in changing.

In a blog post, a company official echoed Facebook’s earlier calls for lawmakers to set firm rules.

“In the absence of regulation, Facebook and other companies are left to design their own policies,” Rob Leathern, Facebook’s director of product management overseeing the advertising integrity division, said in the post. “We have based ours on the principle that people should be able to hear from those who wish to lead them, warts and all, and that what they say should be scrutinized and debated in public.”

Other social media companies have decided otherwise, and some had hoped Facebook would quietly follow their lead. In late October, Twitter’s chief executive, Jack Dorsey, banned all political advertising from his network, citing the challenges that novel digital systems present to civic discourse. Google quickly followed suit with limits on political ads across some of its properties, though narrower in scope.

Reaction to Facebook’s policy broke down largely along party lines.

The Trump campaign, which has been highly critical of any attempts by technology companies to regulate political advertising and has already spent more than $27 million on the platform, largely supported Facebook’s decision not to interfere in targeting ads or to set fact-checking standards.

“Our ads are always accurate so it’s good that Facebook won’t limit political messages because it encourages more Americans to be involved in the process,” said Tim Murtaugh, a spokesman for the Trump campaign. “This is much better than the approaches from Twitter and Google, which will lead to voter suppression.”

Democratic presidential candidates and outside groups decried the decision.

“Facebook is paying for its own glowing fake news coverage, so it’s not surprising they’re standing their ground on letting political figures lie to you,” Sen. Elizabeth Warren said on Twitter.

Warren, who has been among the most critical of Facebook and regularly calls for major tech companies to be broken up, reiterated her stance that the social media company should face tougher policies.

The Biden campaign was similarly critical. The campaign has confronted Facebook over an ad run by President Donald Trump’s campaign that attacked Joe Biden’s record on Ukraine.

“Donald Trump’s campaign can (and will) still lie in political ads,” Bill Russo, the deputy communications director for Biden, said in a statement. “Facebook can (and will) still profit off it. Today’s announcement is more window dressing around their decision to allow paid misinformation.”

But many Democratic groups willing to criticize Facebook had to walk a fine line; they have pushed for more regulation when it comes to fact-checking political ads, but they have been adamantly opposed to any changes to the ad-targeting features.

On Thursday, some Democratic outside groups welcomed Facebook’s decision not to limit micro-targeting, but still thought the policy fell short.

“These changes read to us mostly as a cover for not making the change that is most vital: ensuring politicians are not allowed to use Facebook as a tool to lie to and manipulate voters,” said Madeline Kriger, who oversees digital ad buying at Priorities USA, a Democratic super PAC.

Other groups, however, said Facebook had been more thoughtful about political ads than its industry peers.

“Facebook opted against limiting ad targeting, because doing so would have unnecessarily restricted a valuable tool that campaigns of all sizes rely on for fundraising, registering voters, building crowds and organizing volunteers,” said Tara McGowan, chief executive of Acronym, a non-profit group that works on voter organization and progressive causes.

Facebook has played down the business opportunity in political ads, saying the vast majority of its revenue came from commercial, not political, ads. But lawmakers have noted that Facebook ads could be a focal point of Trump’s campaign as well as those of top Democrats.

Facebook’s hands-off ad policy has already allowed for misleading advertisements. In October, a Facebook ad from the Trump campaign made false accusations about Biden and his son, Hunter Biden. The ad quickly went viral and was viewed by millions. After the Biden campaign asked Facebook to take down the ad, the company refused.

“Our approach is grounded in Facebook’s fundamental belief in free expression, respect for the democratic process and the belief that, in mature democracies with a free press, political speech is already arguably the most scrutinized speech there is,” Facebook’s head of global elections policy, Katie Harbath, wrote in the letter to the Biden campaign.

In an attempt to provoke Facebook, Warren’s presidential campaign ran an ad falsely claiming that the company’s chief executive, Mark Zuckerberg, was backing the reelection of Trump. Facebook did not take the ad down.

Criticism seemed to stiffen Zuckerberg’s resolve. Company officials said he and Sheryl Sandberg, Facebook’s president, had ultimately made the decision to stand firm.

In a strongly worded speech at Georgetown University in October, Zuckerberg said he believed in the power of unfettered speech, including in paid advertising, and did not want to be in the position to police what politicians could and could not say to constituents. Facebook’s users, he said, should be allowed to make those decisions for themselves.

“People having the power to express themselves at scale is a new kind of force in the world — a Fifth Estate alongside the other power structures of society,” he said.

Facebook officials have repeatedly said significant changes to its rules for political or issue ads could harm the ability of smaller, less well-funded organizations to raise money and organize across the network.

Instead of overhauling its policies, Facebook has made small tweaks. Leathern said Facebook would add greater transparency features to its library of political advertising in the coming months, a resource for journalists and outside researchers to scrutinize the types of ads run by the campaigns.

Facebook also will add a feature that allows users to see fewer campaign and political issue ads in their news feeds, something the company has said many users have requested.

There was considerable debate inside Facebook about whether it should change. Late last year, hundreds of employees supported an internal memo that called on Zuckerberg to limit the abilities of Facebook’s political advertising products.

On Dec. 30, Andrew Bosworth, the head of Facebook’s virtual and augmented reality division, wrote on his internal Facebook page that, as a liberal, he found himself wanting to use the social network’s powerful platform against Trump.

But Bosworth said that even though keeping the current policies in place “very well may lead to” Trump’s reelection, it was the right decision. Dozens of Facebook employees pushed back on Bosworth’s conclusions, arguing in the comments section below his post that politicians should be held to the same standard that applies to other Facebook users.

For now, Facebook appears willing to risk disinformation in support of unfettered speech.

“Ultimately, we don’t think decisions about political ads should be made by private companies,” Leathern said. “Frankly, we believe the sooner Facebook and other companies are subject to democratically accountable rules on this, the better.”


2020 The New York Times Company

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Trump ramps up Facebook ads against impeachment

WASHINGTON - US President Donald Trump's re-election campaign is countering impeachment efforts against him with a new surge in Facebook ads, while his Democratic rivals are saying little on the subject on the social media site or the campaign trail.

Trump ran more than 2,500 ads mentioning "impeach" or "impeachment" in the week through Dec. 5, more than his campaign did in the prior 2 weeks combined, according to a Reuters analysis of data published by Facebook Inc.

The ads criticize the Democratic-led impeachment inquiry in the US House of Representatives as producing "baseless LIES" and ask for money to support Trump's bid to win another four-year term in November 2020.

The torrent of messages is a sign of Trump's belief that the impeachment effort will backfire on Democrats, energizing his base and winning over independents skeptical of the process. Public opinion polls show support for impeachment is concentrated among Democrats.

Leading Democrats vying to challenge Trump next year have supported the impeachment process but ran only a handful of ads mentioning impeachment in recent weeks, according to the Reuters analysis of the most recent Facebook data available which was gathered by researchers at New York University's Tandon School of Engineering.

They have focused instead on issues like healthcare, gun laws and climate change.

That could change if the Republican-led Senate takes up the impeachment matter next month and dismisses the charges, said Nicholas Valentino, a political scientist at the University of Michigan.

"Dismissal will be a highly mobilizing tool" for Democrats, Valentino said.

House Democrats unveiled formal impeachment charges on Tuesday that accuse Trump of "betraying" the country by abusing power in an effort to pressure Ukraine to probe a political rival and then obstructing Congress' investigation into the scandal.

While the House appears likely to approve impeachment, the Republican-controlled Senate is expected to dismiss the charges.

Trump has denied wrongdoing. He again ripped into Democrats at a campaign rally in Pennsylvania on Tuesday, calling the probe a hoax.

"The ONLY thing stopping Democrats from carrying out their impeachment WITCH HUNT is Patriotic Americans standing with President Trump," according to the text of an ad Trump's Facebook page ran on Dec. 3. Other anti-impeachment ads by Trump solicit supporters' phone numbers and email addresses.

In contrast, Democrats' recent Facebook ads have referred to impeachment only sparingly.

Massachusetts Senator Elizabeth Warren, a leading candidate for the Democratic nomination, mostly has focused her ads on strengthening gun laws, fighting corruption and raising taxes on wealthy Americans.

Her proposal for universal health insurance coverage was the key topic at a town hall in Las Vegas on Monday. Impeachment did not come up.

Former Vice President Joe Biden's ads have focused on gun violence and his recent bus tour in early voting state Iowa. Biden launched new ads on Nov. 21 asking Facebook users to take a poll on whether Trump should be impeached.

Several Facebook ads for Pete Buttigieg, the mayor of South Bend, Indiana, who has been rising in polls in Iowa and New Hampshire, asked viewers to think about what he described as pressing issues.

"These big issues, from the economy to climate change, will not have taken a vacation during the impeachment process," according to the text of 3 ads launched on Dec. 1.

source: news.abs-cbn.com

Google shifts rules for political ads, pressuring Facebook

WASHINGTON -- Google's tightening of its political ad policy could help reduce the spread of misinformation on election campaigns, but at a cost for lesser-known candidates.

The move by Google placing restrictions on how advertisers can target specific groups of voters also adds to the pressure on Facebook to modify its hands-off policy on political ads.

Google announced Wednesday it would not allow political advertisers to use "microtargeting" which can be based on user browsing data, political affiliation or other factors, for its ads, including on YouTube.

Instead it will limit targeting to general categories such as age, gender or postal code location. The changes will be enforced in Britain within a week and in the rest of the world starting in January.

Google also sought to clarify its policy by indicating it does not allow "false claims" in advertising, political or otherwise.

"There are no carve-outs," Google vice president Scott Spencer said.

"It's against our policies for any advertiser to make a false claim -- whether it's a claim about the price of a chair or a claim that you can vote by text message, that election day is postponed, or that a candidate has died."

The move follows a ban by Twitter on most kinds of political ads, and comes amid growing pressure on internet platforms to curb the spread of misinformation around political campaigns.

FACEBOOK ISOLATED

Senator Ron Wyden welcomed the Google move, saying it could reduce the number of deceptive ads which are sent to small segments of users, including from foreign entities.

"Targeted influence campaigns are more effective and more cost-effective than blanket propaganda, and far harder to identify and expose," Wyden said.

"Now that Google and Twitter have taken responsible steps to guard against shadowy political influence campaigns, Facebook should do the same."

Karen Kornbluh, director of the digital innovation democracy initiative at the German Marshall Fund, called Google's move "a critically important step in taking this political disinformation weapon off the table," but warned that the different rules for various platforms could lead to confusion.

Michelle Amazeen, a Boston University professor who follows political advertising, said Google's actions were "small steps in the right direction that serve to chip away at the tsunami of disinformation fostered by the current architecture of digital-social media platforms."

Analysts noted that Facebook, which has rejected efforts to fact-check political speech or ads, will be pressured to make a similar move that could have even more far-reaching consequences.

Facebook said in a tweet late Wednesday it was "looking at different ways we might refine our approach to political ads," without elaborating.

SHIFTING DIGITAL STRATEGIES

But political strategists from both parties warned that the changes by Google are likely to help well-financed and incumbent candidates and may not have the intended effect.

"This change won't curb disinformation, but it will hinder campaigns and others who are already working against the tide of bad actors to reach voters with facts," said Tara McGowan, founder of the progressive advocacy group ACRONYM which has launched a $75 million digital campaign.

Eric Wilson, a Republican digital strategist, said new candidates would be hampered in their ability to raise funds and build voter lists -- a key element on online campaigns even before the "persuasion" phase.

"The big disappointment on this is you're going to have campaign spending go to platforms that are less transparent that will allow you to target voters more narrowly. The dollars won't go away."

Mark Jablonowski, managing partner and chief technology officer of the digital consultancy DSPolitical, which works with Democrats, said Google's efforts create a patchwork of different rules that would favor incumbents.

"In the absence of sensible, implementable federal regulations, companies like Google have adopted misguided policies that will do little more than benefit incumbents, the wealthy, and those who rely on targeting largely monolithic Republican constituencies," he said.

President Donald Trump's campaign director Brad Parscale responded to the Google action by tweeting that "political elites & Big Tech want to rig elections.. Won't stop until they control all digital political speech."

source: news.abs-cbn.com

Twitter to ban political ads

Twitter Inc. will ban political advertising on its platform next month, the company's chief executive said on Wednesday, as social media platforms face pressure to block attempts to steer elections with false information.

"We've made the decision to stop all political advertising on Twitter globally," said Twitter CEO Jack Dorsey in a statement. "We believe political message reach should be earned, not bought."

Social media companies, including Twitter rival Facebook Inc face growing pressure to stop selling ads that spread inaccurate information.

Facebook has pledged efforts to deal with misinformation on its platform after Russian propaganda on that platform before the 2016 U.S. presidential election was seen to affect the outcome of that race, which was won by Donald Trump.

But Facebook made a decision to not fact-check ads run by politicians, drawing ire from Democratic candidates running in the 2020 presidential election such as former Vice President Joe Biden and Senator Elizabeth Warren.

Earlier this month, Facebook CEO Mark Zuckerberg defended the company's policy, saying it did not want to stifle political speech.

Twitter's ban takes effect starting Nov. 22. Dorsey wrote on Twitter that paying for ads forces "targeted political messages on people" with a power that "brings significant risks to politics, where it can be used to influence votes to affect the lives of millions." 

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Malaysia threatens ride-hailing firm Grab with $21-million fine

KUALA LUMPUR - Malaysia's competition watchdog on Thursday threatened to hit Grab with a $21-million fine for practices that allegedly reduce competition, the latest problem for the ride-hailing giant.

Grab is the biggest ride-hailing firm in Southeast Asia, and has strengthened its hold on the market since buying US rival Uber's operations in the region last year. 

But the Singapore-headquartered firm has come under scrutiny from regulators in several countries due to concerns about its dominant position. 

The Malaysia Competition Commission proposed fining Grab almost 87 million ringgit ($21 million) for preventing its drivers from providing advertising services for the company's competitors.

This had the effect of "distorting competition" by creating barriers to Grab's rivals, it said.

"It is important that barriers to entry for new players remain low, and for existing players to have the ability to grow and compete on merits to ensure that competition can remain healthy," said Iskandar Ismail, the watchdog's chief executive.

In addition, a daily penalty of 15,000 ringgit will be imposed should Grab fail to take action to address the competition concerns.

Grab has 30 days to respond to the watchdog, after which a final decision will be made.

The company said they had complied fully with competition laws and were "surprised" by the proposed fine.

"We believe that it is common practice for businesses to decide upon the availability and type of third-party advertising on their respective platforms," a Grab statement said.

Last year, Singapore fined Grab and Uber $9.5 million for breaking competition rules when they merged. 

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Facebook tightens rules for political ads in Singapore

Facebook on Thursday introduced strict criteria for political ads on the social network in Singapore to prevent the spread of misinformation as the city-state gears up for elections.

Faced with criticism the site has been used to manipulate polls, Facebook has been tightening rules on such adverts around the world, from the United States to India.

Those advertising in Singapore about elections and politics on Facebook or its Instagram app will now have to first confirm their identity and location, and disclose who is responsible for the ad, the social network said.

They must also provide information such as a phone number, email or website, said Katie Harbath, Facebook's public policy director.

In addition, the new requirements will apply to those wanting to run ads related to social issues such as immigration and crime -- topics that are hotly debated by Singaporeans on Facebook.

"To enable healthy discourse in Singapore, we've taken steps to reduce the spread of misinformation, help prevent foreign interference in elections, and, more recently, to bring greater transparency and authenticity to advertising," she said.

Speculation has been mounting that Singaporeans could head to the polls soon after Prime Minister Lee Hsien Loong convened a committee to review electoral boundaries this month, typically the first step towards a vote.

Facebook came under fire from Singapore authorities earlier this year in the run-up to the passage of new legislation to combat "fake news", with the government accusing tech giants of being unable to police themselves.

The law requires social media platforms to carry corrections or remove content the government deems to be false, but activists have warned it could be used to silence critics ahead of the elections.

Facebook is a major investor in Singapore. The firm has its Asia headquarters in the city-state and last year announced plans to build a $1 billion data center there, its first in the region.

The Singapore government has long been accused of clamping down on civil liberties and free speech, and targeting their political opponents.

The People's Action Party, which has ruled Singapore uninterrupted for more than five decades, is not seen as being at risk of losing power at the polls to a divided opposition.

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Facebook settles with rights groups on ad discrimination

WASHINGTON - Facebook unveiled major changes to how it uses targeted advertising on Tuesday, settling a legal challenge alleging it discriminated in messages on jobs, housing, credit and other services.

The leading social network said housing, employment or credit ads will no longer be allowed to target by age, gender or zip code -- a practice critics argued had led to discrimination.

The changes came as part of a settlement with the National Fair American Civil Liberties Union, National Fair Housing Alliance, Communication Workers of America and others.

"Today's changes mark an important step in our broader effort to prevent discrimination and promote fairness and inclusion on Facebook," chief operating officer Sheryl Sandberg said in a statement announcing the changes.

"But our work is far from over. We're committed to doing more, and we look forward to engaging in serious consultation and work with key civil rights groups, experts and policymakers to help us find the right path forward."

The ACLU called the agreement a "historic settlement" that will result in major changes to Facebook's advertising platform.

Under the settlement, Facebook will take proactive steps to prevent advertisers from discrimination when sending job, housing or credit ads to users of Facebook, Instagram and Messenger. 

"Advertisers will no longer be able to exclude users from learning about opportunities for housing, employment or credit based on gender, age or other protected characteristics," ACLU attorneys Galen Sherwin and Esha Bhandari said in a blog post.

"Ad-targeting platforms can be used to exclude users on the basis of race, gender or age, as well as interests or groups that can serve as proxies for those categories (think 'soccer moms' or 'Kwanzaa celebrators')."

The ACLU said it began exerting pressure on Facebook several years ago to stop its use of an "ethnic affinity" category, which labeled users as Asian American, Hispanic or African American based on what they liked on Facebook.

The organization said Facebook took some steps to eliminate discriminatory targeting but did not always follow through. 

For certain ad categories, Facebook will create a separate portal for such ads with a much more limited set of targeting options excluding Facebook users' age, gender, race or other characteristics.

Facebook will also implement a system of automated and human review to ensure compliance and to study the potential for unintended biases in algorithmic modeling.

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Facebook admits phone numbers may be used to target ads

SAN FRANCISCO - Facebook on Thursday confirmed that advertisers were privy to phone numbers given by members of the social network for enhanced security.

A study by two US universities, first reported by news website Gizmodo, found that phone numbers given to Facebook for two-factor authentication were also used to target advertising.

Two-factor authentication is intended to enhance security by requiring a second step, such as entering codes sent via text messages, as well as passwords to get into accounts.

Phone numbers added to profiles, for security purposes, or for messaging were potential fodder for advertisers, according to the study.

"These findings hold despite all the relevant privacy controls on our test accounts being set to their most private settings," researchers said in the study, which looked at ways advertisers can get personally identifying information (PII) from Facebook or its WhatsApp and Messenger services.

Contact lists uploaded to Facebook platforms could be mined for personal information, meaning that people could unintentionally help advertisers target their friends.

"Most worrisome, we found that phone numbers uploaded as part of syncing contacts -- that were never owned by a user and never listed on their account - were in fact used to enable PII-based advertising," researchers said in the study.

The study supported concerns that Facebook uses "shadow" sources of data not given to the social network for the purpose of sharing to make money on advertising.

"We use the information people provide to offer a better, more personalized experience on Facebook, including ads," a spokeswoman said in response to an AFP inquiry about the study findings.

"We are clear about how we use the information we collect, including the contact information that people upload or add to their own accounts."

Facebook is grappling with the worst crisis in its history, vilified for not more zealously guarding the information that users share.

The Silicon Valley-based internet colossus faced intense global scrutiny over the mass harvesting of personal data by Cambridge Analytica, a British political consultancy that worked for Donald Trump's 2016 election campaign.

The company has admitted up to 87 million users may have had their data hijacked in the scandal.

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