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Facebook vs Congress: It’s Complicated

Facebook vs Congress: It’s Complicated

After 10 hours of grilling, Mark Zuckerberg’s testimony in front of the US Congress has come to a close. The highlights were embarrassingly ill-thought out questions, and subsequent retorts from Zuckerberg. In response to a question about how Facebook is financially viable while remaining free to users, Zuckerberg succinctly replied “Senator, we run ads”. Aside from these amusing moments, there was a lot of “I’ll have my team get back to you” and “I’m not specifically aware of that”. Generally, there was little to worry advertisers.

In fact, since the Cambridge Analytica scandal, Facebook have seen an increase in ad spend. Week on week spend increased 7% the week after the story first broke, rising further to 15% the following week. Instagram spend also rose 9% in both weeks.

While a handful of companies did pull ads from Facebook, for most this appears to be temporary (Sonos paused for just one week). Mark Zuckerberg also reiterated that the #DeleteFacebook movement had no “meaningful impact”.

For advertisers the most significant news has been Facebook’s decision to shut down ‘Partner Categories’. This feature allows advertisers to use data from third party companies to target Facebook users. Although this announcement came amid the Cambridge Analytica controversy, many believe this was to help Facebook become GDPR compliant.

While bad press might affect investors, advertisers are likely to feel the impact when this results in legislation (like GDPR). And there’s plenty more to keep an eye out for on that front.

In the US, Democrat Senators have put forward a GDPR-esque ‘privacy bill of rights’ to protect American consumers’ data. Pressed on this topic during his testimony, Zuckerberg said he supported the idea “in principle”.

In the UK, Digital Secretary Matt Hancock met with Facebook earlier this week. He stressed that he wouldn’t rule out “further regulation in the future”. Also this week, The House of Lords Communications Committee concluded its 8 month long inquiry into the future of the UK ad industry. One of its recommendations urged the CMA to investigate the dominance of Facebook and Google in digital advertising. The Information Commissioner’s Office is continuing its investigation into 30 companies (including Facebook) over the use of personal data for political purposes, and will be “making clear public policy recommendations”.

Mark Zuckerberg’s testimony in front of Congress might be over, but Facebook are not off the hook quite yet.

With all the ongoing investigations and threats of regulation, advertisers will feel the impact weeks and months after the initial headlines and apologies. As Senator Richard Blumenthal (who is putting forward the privacy bill of rights) said, “consumer abuses by Facebook and other tech giants necessitate swift legislative action rather than overdue apologies and hand-wringing”.

For advertisers, it’s a case of watching this space. And while we wait, we’ll continue to scroll down our news feeds.

Rayhan Uddin
Junior Planner/Buyer

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