By Max Milano (Tech Writer)
The week of Oct 4, 2021, wasn't a good week for Facebook. In fact, it was perhaps the worst week so far in the company's history.
Is the tech giant mortally wounded or too big to fail?
Like a bad Bob Geldof song, Facebook's bad week started on a Monday, with the longest outage since the company entered the public's consciousness. For six long hours, Facebook and all their affiliate sites and apps were down, including Instagram, WhatsApp, and more crucially Facebook Ads Manager, forcing Facebook media buyers to join the worldwide cry of "what will we do with ourselves now that Facebook/Instagram/WhatsApp and derivatives are down?" During the outage, media buyers were losing real money in undelivered Facebook ads, forcing them to make serious decisions about their future with Facebook as a destination for their paid ads. Could an ad platform like Facebook, with increasingly diminishing returns, afford a worldwide day-long outage? This was the question hitting Facebook ads forums from Australia to Palo Alto and beyond on Monday, Oct 4, 2021.
But that was Monday, the bad Monday. It would have been remembered as Facebook's Black Monday, only that Tuesday, Oct 5, 2021, was even worse.
Tuesday, Oct 5, 2021
If Monday, Oct 4 was Facebook's black Monday, with a six-hour outage and media buyers "running for ze hills," what senators chairing a Commerce, Science and Transportation Committee Hearing about protecting kids online were about to hear from Facebook whistleblower Frances Haugen on Tuesday, Oct 5, was nothing short of reputation ending. A pure corporate P.R. hell-storm unleashed by a data scientist scorned who knew what she was talking about because she'd worked closely with Facebook's top leadership in her former role as product manager hired to oversee election interference on the platform. So Facebook's Black Monday was now being followed by an even more disastrous Tuesday.
Frances Haugen told Congress of all manner of evil going on at Facebook: from promoting eating disorders amongst 12-year-old girls to endangering democracy in the USA and abroad.
Haugen told senators about a leaked internal Facebook study that found that 13.5% of U.K. teen girls in one survey had more frequent suicidal thoughts and increased eating disorders after joining Instagram.
Haugen continued to explain how Facebook encourages hate speech for profit, encourages political parties in Europe to become more radical, ignores foreign espionage like CCP spies using Facebook to track Uyghur dissidents around the world, and turns a blind eye to genocide in Africa and human trafficking in various parts of the world.
Sadly, like a late-night infomercial, the whistleblower continued to deliver "but wait, there's more" blows, one after the other, including the fact that Facebook's leadership knew about human trafficking on their platform and did nothing at all about it. They put profits above human lives in their obsessive gathering of user data (plus its involvement in the United States PRISM surveillance program) in order to continue feeding the beast that was their pre iOS14 eerily accurate and profitable ads targeting platform.
Is This The Last Straw For Facebook Media Buyers & Investors?
Is this the last straw? Time to take your money and run? While most investors seem to be hanging in there after deciding to weather the storm, the panic for the exits has already gripped the media buying community.
It had been carnage out there for most media buyers in Facebook-ads-land post the infamous iOS14 update. And now, after the daylong outage and a reputational deathblow in Congress, was it time to cut losses and head for the greener, albeit, more (way more) expensive pastures of Google ads?
Facebook ads' fall will only benefit Google as the only other tech giant in Silicon Valley that can fill the crater left behind by the potentially civilization-ending comet that Apples' iOS14 update exploded right in the middle of Facebook's Ads business.
That is until Apple ads are unleashed on the same fan base currently praising Apple for its "stand on privacy".
Until then, it will be Google and its ubiquitous Google ads that will benefit from Facebook's fallout. But the iOS14 update is just part of Facebook's targeting problems. Like most online advertisers outside of search, Facebook built their ad targeting platform around cookies. But cookies are on the way out. And Google already announced it will ban third-party cookies from Chrome beginning in 2022. This basically means that post iOS14 and post cookies Google search will be the only game in media buying town (because let's be honest Microsoft Ads are not a threat to Google's search empire yet. Not even close).
So the issue is that Google owns all the chips, plus the casino where all media buyers have to play in, and the house is always set up to win.
Google's monopoly on search and search ads sure has the whiff of evil around it. How easy is it for them to throttle search results to favor paying customers? Already over half the results on their first page are all ads, leaving organic SEO to begin resembling some arcane lost art.
How many remember Google's early days and their, with hindsight, incredibly naïve "Don't Be Evil" slogan?
But Facebook's problems don't end with Google; they began way before the infamous iOS14 update was unleashed in early summer 2021. The first real crack in the Facebook ads secret sauce of data mining came out around the 2016 Election, culminating with Facebook being slapped a massive 5 billion dollar fine by the Federal Trade Commission in 2019 (by far the largest penalty ever imposed on a company for violating consumers' privacy rights). After the FTC's expensive slap on the wrist (which included over 130 million to insulate Mr. Zuckerberg himself from having to give testimony), Facebook more or less promised to "regulate itself" and took out some deep targeting options from Facebook ads. Still, for the aforementioned media buyers, Apple's iOS14 update has been the real Facebook ads killer.
But What's So Bad About The iOS14 update?
Most regular consumers may not be aware of how damaging the iOS14 update has been to Facebook's ad business. In fact, the average consumer probably thinks iOS14's enhanced privacy defaults to be a good thing. But for media buyers relying on the accuracy of Facebook Ads' targeting, it has been disastrous. By simply opting out from all tracking permissions on their devices, Apple now forces third-party apps on their devices to explicitly request users' consent if they intend to track users' activities across apps and websites. In other words, if you're on an Apple device, Facebook simply won't be able to track you, and that translates into inaccurate targeting for Facebook ads delivery. In other words, Facebook ads are now shooting blanks and making their media buyers pay for it.
Media buyers know Facebook ads goose is cooked when their ad reps are telling them to "forget targeting" and that "some of their customers have found success by running ads (get this) WITH NO TARGETING!" In other words, Facebook reps are asking media buyers to send them money for nothing. Not unlike the type of Craigslist ads you can commonly find in Silicon Valley: $3000 per month for a bedroom inside a house in Palo Alto, no cooking allowed, shared bathroom, and preferably only a tech professional who's a commuter that won't be home on weekends should apply. Only that said tech commuter without cooking privileges, while being fleeced, still gets a room to sleep in midweek, while media buyers for Facebook ads are being asked to throw good money after bad to an ad system that has lost the only reason they were scary accurate pre-iOS14.
But Facebook ad's former scary accuracy came with a price. Not in ad costs, because Facebook's accuracy offered media buyers incredible value for money. The actual cost was the amoral level of surveillance and personal data mining, driven by Facebook's internal policies that encouraged misinformation, outrage, and conspiracy theories, simply because those were the emotions that kept the punters coming back for more.
But that's not even the worst of Facebook's problems. Because at the end of the day, no one will shed a tear over media buyers having to scramble to get away from Facebook Ads implosion. The fact that these amoral practices that encourage divisive content coupled with laxity over foreign involvement behind conspiracy theories are enshrined as policy at Facebook H.Q. is what's truly costly to us as a country and a society. Still, we do live in a country that not so long ago enabled corporations to sell cigarettes as being "good for you and recommended by doctors." Hence, morality is only relative to the amount of lobbying dollars and profits for investors.
But savage corporate laissez-faire is all fun and games until the party is over and we're all holding the broken pieces. For Facebook, that party may or may not already be over. The fallout from iOS14 and the whistleblower hearings may still prove to be unsurvivable. Or they might figure out how to weather the storm and salvage their ads business via AI or other methods.
So Facebook is currently at a crossroads. Apple has delivered what could still be a death blow if rapid action is not taken. One thing is clear: Facebook has to DO SOMETHING. Staying the course is not an option. Some investors and top Facebook brass may think that they are too big to fail. However, like the once mighty and "unsinkable" Titanic, now rusting at the bottom of the Atlantic Ocean, complacency can be just a harsh mistress in the cold North Atlantic as in Silicon Valley, where ubiquitousness can be quickly followed by irrelevance and/or bankruptcy and where no one is too big to fail. Let's remember Netscape, Yahoo (there were even Yahoo ads once), Myspace, and other tech pioneers that once dominated their markets and that most TikTokers today haven't even heard of. Even mighty Apple was 90 days from bankruptcy in 1997 after following a misguided policy of skewing innovation and "we'll make money off our overprized ink cartridges." At the very least, Facebook should take a lesson from recent history and realize that they are indeed not too big to fail.
Is There A Moral To This Story?
There must be a moral to the story of these tech giants that new tech entrepreneurs can heed. Because the story arch of a successful tech giant seems to follow a tried and true formula where the youthful naivete of the garage days (Don't Be Evil!) is soon to be shed as success blesses the startup and rapid growth turns into power.
But like in a Shakespearean drama, power corrupts. What started as a passion project between tech buddies has morphed into founders hobnobbing with presidents and leaders of industry. The beast must be fed. Shareholders demand growth. The success of a tech startup can soon turn into complacency over what may not be technically legally wrong but morally questionable. This malaise of ethics driven by demands for infinite growth can begin to creep in until your monstrously successful tech giant starts to resemble a parody of "The Strange Case of Dr. Jekyll and Mr. Hyde," where the good Doctor's facade of public ethics is betrayed every night by the ghoulish needs of Mr. Hyde. But the beast is not going to feed itself. Your competitors want you dead, your shareholders have yacht payments due, and the president is on the phone. You may be a paradigm of Silicon Valley success, but your moderators downstairs have seen things they will never unsee and then have to come back for more the next day, and the trail of suicides, troll farms, and blatant misinformation is not really your fault is it?
Yes, there must be a morality tale somewhere in this story for new tech entrepreneurs to heed. But will they?