Latest news

6/recent/ticker-posts

Advertisement

"Facebook jail"

Fully Charged
Bloomberg

Hey all, it's Sarah Frier. When Facebook executives want people to feel warm and fuzzy about the company's impact on the world, they point to anecdotes about the small businesses that have grown on the platform.

Chief Operating Officer Sheryl Sandberg has binders full of such examples. During the third-quarter earnings call she told the story of a magnetic eyelash company that used ads on Facebook and Instagram to thrive. And Chief Executive Officer Mark Zuckerberg mentioned small businesses three times in his prepared Congressional testimony defending Facebook's market dominance this summer, saying he was proud that the company was becoming a lifeline for mom-and-pops during Covid-19.

It's true that these businesses depend on Facebook—particularly as coronavirus shuts down storefronts, and analog ad channels fade away. But for a company that's fervently trying to convince lawmakers it's not a monopoly, some advice: It's usually a bad thing when an entire sector of the economy is dependent on your service in order to survive. 

That's particularly true when those services unexpectedly go away. This holiday season, dozens of small businesses told me horror stories of getting locked out of their advertising accounts with no one to talk to, besides Facebook's mostly-automated customer support system. These businesses—a honey-maker, a solar roofing company, a high-end salon—are both beneficiaries and victims of Facebook's massive scale.

The problem is so common that retailers have even given it a nickname: "Facebook jail." When they get locked out, companies are cut off from customers, meaning they can't get the word out about products on offer, and may miss out on revenue. Some have ended up cutting employees or dipping into personal savings to make it through bans.

One reason for the lockouts is that Facebook has recently been using more artificial intelligence to moderate content that goes against its rules, because human beings simply cannot look at all the problems more than 3 billion people make. But tiny glitches or misfires of this system can take down innocent users, who then have to hope a real human sees the mistake and resolves it. That's a process that can take days, if it happens at all.  

One traditional definition of a monopoly is when a company has so much power over a market, it can fix prices or overcharge, hurting consumers. Facebook's pages are free for people and businesses to use (unless they're advertising), making it hard to argue consumer harm. But the company is coming under fire anyway, because of its outsized power over human communication. 

The Federal Trade Commission is expected to file suit on Facebook's monopoly powers before the end of the year. The Congressional investigation into the tech companies found that "in the absence of competition, Facebook's quality has deteriorated over time." Congress noted a reduction in privacy protections and a rise in misinformation, but the same could be said about customer support. Facebook simply doesn't need to be good at it, because advertisers will be desperate to use the product, no matter what. Sarah Frier

If you read one thing

It's Salesforce and Slack vs. Microsoft. Salesforce's $28 billion purchase of Slack is an ambitious attempt to go head-to-head with Microsoft, which has a similar product called Teams. The pairing represents a chance for Salesforce "to elevate itself to the very top of the software industry," Bloomberg's Nico Grant reports

And here's what you need to know in global technology news

Gig worker rights are increasingly becoming a political issue—decided by ballot measures and elected representatives. But many workers who are immigrants won't get a say because they aren't eligible to vote

Spotify had a good day. The company's shares climbed as much as 16% Wednesday after the Joe Rogan podcast became exclusive to its platform and it generated buzz by showing users their top songs of 2020. 

Amazon is in the lead to acquire podcasting company Wondery, the Wall Street Journal reported.

Shares of Snowflake dropped 5% in extended trading Wednesday after the software maker and Wall Street darling issued a lackluster product sales forecast for the current quarter. 

 

Like Fully Charged? | Get unlimited access to Bloomberg.com, where you'll find trusted, data-based journalism in 120 countries around the world and expert analysis from exclusive daily newsletters.

 

Post a comment

0 Comments