Amid the widespread furor over the spread of Russian propaganda on Facebook and other platforms, several U.S. senators yesterday introduced a bill–the Honest Ads Act–that seeks to require the disclosure of who pays for political ads on social media.
The proposed legislation is being seen by many as one of the first tangible attempts to rein in Facebook after weeks of intense coverage and criticism of the role played by the social media giant during last year’s election. And some are hoping Mark Zuckerberg’s company will have to grapple with the consequences of the new legislation and likely new rules and regulations, especially the prospect of a significant hit to its bottom line.
Don’t believe it, argue numerous experts contacted by Fast Company. Most likely, even Facebook’s worst-case scenario would be little more than a slap on the wrist, and probably nothing that would put even a mild dent in its profits. And you can thank widespread cynicism and self-interest in the halls of Congress for that, they say.
The controversy first erupted in early September, when Facebook revealed it had discovered more than $100,000 worth of ads purchased by Russians between 2015 and 2017 that in some cases were targeted at voters in U.S. swing districts and “appeared to focus on amplifying divisive social and political messages across the ideological spectrum.” Immediately, members of Congress, led by Senator Mark Warner (D-VA) and Representative Adam Schiff (D-CA) began to call for Facebook to explain how it had allowed Russians to leverage its platform to interfere in the U.S. presidential election.
Those calls have only intensified in recent weeks, especially as more details have emerged about the ads–their incendiary content, the fact that Trump-supporting Facebook employees were embedded in his presidential campaign, and that the Russian efforts extended to Facebook-owned Instagram.
Facebook reacted by, among other things, committing to hire 1,000 people for increased manual review of ads, offering some transparency on the contents of the ads purchased by Russians, and disclosing which pages paid for political ads, as well as making it possible to easily visit that page and see what other ads it’s running.
Not Everyone’s Satisfied
Those steps may have calmed some of the anti-Facebook fervor, but it hasn’t satisfied everyone. The Honest Ads Act is designed to mandate the same kind of transparency for online political ads that is required of political advertising on TV, radio, and in print media.
But experts remain skeptical about prospects for the Honest Ads Act or any similar legislation making much of an impact.
“The worst outcome, which would not be fast,” says Laura Martin, a senior internet analyst with Needham, “would be that the Washington, D.C., [establishment] determines that these internet giants [have] gotten very powerful without oversight from regulators.”
Power breeds fear, and Martin thinks Facebook, Google, Twitter, and others don’t really want members of Congress to understand just how much their platforms can influence their electability. That means, she adds, that the worst-case outcome for Facebook and its competitors would be increased regulatory oversight. And that’s something we’re very unlikely to see as long as anti-regulation Republicans are in control in Washington.
“That’s more likely with Democrats,” she says, adding that even then, “How do you regulate it? When a company passes a [certain] market cap? So it’s hard to do, and hard to execute.”
One possible avenue for legislation would be to restrict all political ads on internet sites in the last few months before an election. But in the unlikely event something like that became law, Martin has little faith it would have teeth, or prevent bad actors from figuring out workarounds.
Data Privacy Laws For The U.S.? Don’t Hold Your Breath, Either
Siva Vaidhyanathan, a professor of modern media studies at the University of Virginia, says the only kind of legislation he could see hurting Facebook’s business would be new European-style data protection laws that give users of services like Facebook more say over how data about them is collected.
“Data protection laws would increase the well-being of American citizens, but there’s absolutely no way the U.S. Congress would” pass such legislation, Vaidhyanathan says. “Why? There’s no way to [write] laws to address one company. Any data protection law would encumber not just Facebook, but Google, and Twitter, and every credit agency, and every telecom company, and every cable company, and even every direct marketing company, and [those industries’] lobbying power is way too strong in the U.S.”
Vaidhyanathan acknowledges the Honest Ads Act would force more disclosure in political advertising online, but thinks such legislation would impact campaigns far more than Facebook, Google, or Twitter, and would have only the smallest impact on those companies’ bottom lines. And, “because it would hurt campaigns more than Facebook, I’m not optimistic it would pass anyway,” Vaidhyanathan says. “Anyone considering running for office is salivating” at using Facebook the way Trump did during the 2016 election.
The Honest Ads Act legislation is sponsored by Warner, Senator Amy Klobuchar (D-MN), and Senator John McCain (R-AZ). Vaidhyanathan isn’t impressed. “That’s three” senators, Vaidhyanathan says. “Warner’s not up for re-election for another four years . . . and McCain’s not ever running again, so of course they’re going to be the good guys here. They’re going to wear the white hats. They might find 10 other senators willing to do the right thing, but they won’t find [support] in the House, and I guarantee Mitch McConnell won’t allow a vote” in the Senate.
According to the New York Times, the tech industry has hired high-powered lobbyists to help shape any legislation. And, the Times reported, Klobuchar isn’t currently expecting industry cooperation on the new bill. “I’m not going to tell you they support this bill right now,” she said.
Facebook did not respond to multiple Fast Company requests for comment.
Self-Interest Will Limit Congressional Action
In short, Vaidhyanathan says, there’s little motivation in Congress–where every member of the House and one-third of the Senate must run for re-election every two years–to upend the existing system, regardless of the current controversy. “Basically, the last thing that any politician would do right now,” he argues, “is limit ways Facebook can help them turn out their vote and depress their opposition.”
Michael Pachter, a media and entertainment analyst with Wedbush, is yet another Facebook observer who thinks there’s no real worst-case outcome for the company. Although he says Facebook would confront substantial scrutiny if it didn’t cooperate with regulators, he, like everyone else contacted for this story, is convinced it is.
But Pachter doesn’t see a situation in which Congress passes any kind of law that imposes new regulations on Facebook. He allows that the Federal Election Commission might attempt to restrict internet companies from accepting political ads from foreign entities, but thinks there are numerous ways to skirt such rules.
Further, even if Congress did crack down and limit political advertising, he doesn’t see that as being much of a hit to the bottom line of Facebook or any other internet company. In his estimation, political advertising in the U.S. might account for a 0.25% of Facebook’s revenues. For a company that brought in $27.6 billion in revenues in 2016, that does add up, to $69 million. But, he notes, even then, “It’s not all going away.”
There are some who think that the trouble Facebook and Google have had with political advertising will lead marketers to seek an alternative. Amazon would be a logical beneficiary, those people think. “There’s a real sense of urgency from the market to find a third viable alternative to Facebook and Google,” Perry Gold, an analyst at MoffettNathanson, told Fast Company earlier this month. “Advertisers are wanting Amazon to succeed.”
That may be because, Gold said, Amazon hasn’t yet developed a reputation as a “jihadist or right-wing” advertising platform yet, making it seem safer, even as its reach grows.
“I’m Certain There’s No Smoking Gun”
One of the reasons that experts foresee little impact to Facebook’s advertising cash cow is that none of them believe the company intended to assist the Russians.
“I’m certain there’s no smoking gun,” Pachter says. “I don’t think anybody at Facebook set out to intentionally to help a foreign power meddle in our election.”
That doesn’t mean they think the company is without fault, but they seem to believe Zuckerberg and his team want to fix the broken parts of the platform, or at least want to appear to be doing so, and that it’s really up to them to solve the problem, not regulators.
“Facebook’s response [to the controversy] is both sincere and cosmetic,” says Vaidhyanathan. “The problem with political ads on Facebook has nothing to do with the law. It has to do with how Facebook works . . . The Russians used Facebook because Facebook works really well. It is the best system anyone has invented to advertise anything to anyone, and it is by far the best system ever invented to distribute political propaganda and hate speech.”
Vaidhyanathan says Facebook is putting a lot of energy into trying to convince the public it’s working on the problem, by, for instance touting objectionable content it blocked during the current election campaign in Germany. He’s not sure efforts like that would be successful in other countries.
“What Zuckerberg would like with this whole drama is he would like people to believe his changes will change something,” Vaidhyanathan says. “That’s because he would like to believe that, too.”
But—and this may be troubling to people skeptical of Facebook’s role in civil society—Vaidhyanathan thinks Zuckerberg wants to have more influence in U.S. politics, not less.
Anti-Trust Legislation Is The Nightmare Scenario
There is one expert who can envision a true, albeit far-fetched, nightmare scenario for Facebook. Dave Karpf, an associate professor at George Washington University School of Media and Public Affairs, says the real worst-case outcome of the Russian ads scandal is anti-trust legislation.
As Karpf puts it, Facebook is effectively a monopolistic information utility, yet not regulated as such, even as it has expanded the capabilities of its platform–and limited the power of its competition–by acquiring patents and companies that could result in another company successfully challenging it. Facebook’s control of information today could fairly be compared to the way Microsoft dominated hardware and software in the 1980s and ’90s, which led to anti-trust action at the time, he argues.
“The real terrifying scenario is that in all this public attention, [Congress] starts regulating not advertising but Facebook itself,” he explains, “and treating it like a monopoly, and preventing it from acquiring those companies that make it powerful and overwhelming . . . That’s not something that is a direct result of the Russian ad purchases, but that’s the chain of events that they need to worry about this spiraling into.”
Before you spend much time thinking about this potential outcome, Karpf adds, “Let’s be clear, it’s not going to happen. But it’s what they have to worry about.”
Prepare For A Repeat
The upshot of all of this is that Facebook is likely to continue taking iterative steps to counter election meddling by foreign entities, often by announcing new measures, and by voluntarily appearing before Congress, proactively modifying its platforms, hiring more people, and other procedures.
But don’t get too confident those actions will prevent our future elections from being impacted by foreign-purchased ads. Rather, prepare yourself for a repeat of 2016, especially if you accept the notion that the Russian meddling was done with the assistance of the Trump campaign, as has been alleged. Even if not, expect political campaigns to get more and more sophisticated at gathering personal data, microtargeting their ads, and using them to divide and conquer.
“The skillful use of Facebook that the Trump campaign used will be standard procedure for every campaign from school board to president over the next few years,” Vaidhyanathan argues. “Even if Congress were to pass weak legislation, it would do nothing to stop all the interest group, illegal, and foreign ads, and it would do nothing outside the U.S. anyway.”