July 24, 2018 / 9:29 PM / 2 years ago

Breakingviews - Facebook and Twitter are lucrative quagmires

A man is silhouetted against a video screen with a Twitter and a Facebook logo as he poses with an Dell laptop in this photo illustration taken in the central Bosnian town of Zenica, August 14, 2013. REUTERS/Dado Ruvic

NEW YORK (Reuters Breakingviews) - Facebook and Twitter want to be like vibrant town squares, bustling with conversation and opinions of all stripes. Instead they look like swampy quagmires, where misinformation and bullying abound. Lawmakers and users are beginning to notice, but advertisers on the two social-media platforms have a higher tolerance for grime.

The uncomfortable moments are piling up. Facebook Chief Executive Mark Zuckerberg told Recode last week he believes content related to Holocaust deniers shouldn’t be removed from the platform, even if he thinks their views are wrong. Twitter boss Jack Dorsey defended his network after a New York Times political journalist said she was quitting the “anger video game” – but he noted that it is not a place for nuanced conversation and needs to be fixed.

Advertisers are worried, but their concerns are quite specific. They want social-media companies’ self-reported metrics about user engagement to be accurate, and they want to know their ads won’t appear next to objectionable content. Facebook for example has removed more than 580 million fake accounts from January through March of this year. Earlier this month, Unilever’s Chief Marketing Officer Keith Weed tweeted praise for Twitter’s efforts to jettison false accounts.

And the revenue keeps rolling in. Facebook is expected to report a 44 percent year-over-year rise in second-quarter advertising revenue on Wednesday, representing a haul of some $13 billion, according to estimates compiled by Thomson Reuters. That growth rate comes despite Facebook’s mishandling of user data and a raft of congressional hearings. Twitter too is enjoying a resurgence following six consecutive quarters of growth in its daily active-user numbers. Analysts are expecting the company to report more than a 20 percent increase in ad sales for the three months ending June 30.

Companies like Facebook, Twitter and Google – whose parent company Alphabet reported double-digit revenue growth on Monday – will keep talking about cleaning up the swamp. But the financial incentives point in a different direction. All three depend on advertising so people can use their platforms for free. In turn, advertisers want a large audience that spends lots of time online – and there aren’t many places to find it. That means a big, deep pool of users – even a muddy one – is for now a reason to continue spending.


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

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