Facebook Reviews Content Policies as Advertisers Move Away

·5 min read

Facebook’s FB shares dropped 8.3% to close at $216.08 on Jun 26 — its lowest in three months — after more than 100 advertisers boycotted the social media giant’s platform for its failure to stop hate speech and misinformation being posted on its platform.

Coca-Cola and Unilever became the latest major corporations to pull the plug on Facebook advertising, joining firms like Hershey, Pepsi, Dove, Honda and Ben & Jerry's in a show of support for the #StopHateForProfit campaign.

This was followed by Facebook’s swift announcement of new content policies for the social platform, including tighter restrictions on advertising and labels for harmful posts from public figures as advertisement revenues are a major contributor to the company’s top line. Notably, advertisement accounted for 98.5% of $70.7 billion revenues generated in 2019.

Facebook will begin labeling content from elected officials that it deems newsworthy but that would otherwise violate its policies. The content will be allowed to remain on its platform as long as public interest value outweighs the risk of harm.

There is no newsworthiness exemption for content that incites violence or suppresses voting. Additionally, Facebook will ban posts that make false claims suggesting ICE agents are checking for immigration papers at polling places, which is a tactic used to discourage voting.

Moreover, the company also announced new policies, cracking down on hateful language in ads, as well as guidelines on voting information.

Facebook, Inc. Price and Consensus

Facebook, Inc. Price and Consensus
Facebook, Inc. Price and Consensus

Facebook, Inc. price-consensus-chart | Facebook, Inc. Quote

Backlash From Advertising Partners Raises Concern

This year, concerns about the widespread distribution of inaccurate information have spread beyond the U.S. 2020 Presidential election to include response to the coronavirus pandemic and the nationwide protests against racial injustice in light of the Black Lives Matter (BLM) movement, which has pushed technology companies to enhance inclusion.

Facebook’s decision came after Coca-Cola stalled all paid social media advertising globally for at least 30 days, citing concerns over racism on social media. Additionally, Unilever will stop spending money on Facebook advertising for the rest of the year.

Earlier, telecom carrier Verizon announced to pull down ads from Facebook and Instagram, joining advertisers like apparel brand North Face, outdoor apparel stores REI and Patagonia, freelancing platform, Upwork, shipping company Local Postal, password manager Dashlane and outwear company Arc'teryx to boycott the social network.

Meanwhile, the coronavirus outbreak has resulted in the extra challenge of potentially scaring U.S. citizens away from going to the polls, making accurate information even more vital.

Facebook Encourages Voting Information on News Feed

Facebook is creating a new Voting Information Center that will appear at the top of News Feed and Instagram’s feed, directing users to information on how and where to vote, including information on how to register to vote and how to vote by mail. Users can also turn on alerts that will remind them to vote and direct them to polling places come November.

The Voting Information Center will also contain links to posts that discuss voting, including posts from politicians in an attempt to share authoritative information and as part of an effort to get 4 million people to register to vote in the 2020 U.S. elections.

Notably, Facebook removed 50 deceptive networks last year and another 18 so far this year that sought to manipulate public debate from Russia, Iran and the United States. The company also disabled 1.7 billion fake accounts during first-quarter 2020.

Others Prepping Policies Around Political Content

This Zacks Rank #3 (Hold) company joins other social media giants including Twitter TWTR, Alphabet GOOGL owned Google and Snap SNAP. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Twitter has already flagged a couple of controversial tweets while Facebook faces widespread criticism for its inaction over Trump posts that glorified violence in the aftermath of the death of African-American George Floyd.

In November 2019, Twitter rolled out guidelines restricting political content on its platform ahead of the 2020 U.S. presidential elections. The company has since prohibited ads related to elections, candidates, parties and other political content on its social platform. The ads also cannot mention specific legislations. (Read More: Twitter Rolls Out Political Ads Policy Ahead of Ban)

Twitter’s initial announcement of its political ads ban came hot on the heels of the public outcry over Facebook’s prior policy to not fact check political statements or remove politicians’ posts, which, it believed to be newsworthy, irrespective of the fact that the content may violate its “community standards.”

Notably, Google and its video-streaming service, YouTube, have guidelines that prohibit misrepresentation in ads, such as misinformation about public voting procedures or incorrect claims.

However, Snap allows political advertising unless the ads are misleading, deceptive or violate the terms of service on Snapchat. The company defines political ads as including election-related, advocacy and issue ads.

Breakout Biotech Stocks with Triple-Digit Profit Potential

The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.

Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.

See these 7 breakthrough stocks now>>

Click to get this free report

Facebook, Inc. (FB) : Free Stock Analysis Report

Alphabet Inc. (GOOGL) : Free Stock Analysis Report

Twitter, Inc. (TWTR) : Free Stock Analysis Report

Snap Inc. (SNAP) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research