Facebook has just lost $56 billion of its market value as soon as news of a boycott by hundreds of global brands came to light.
|More than 100 brands are boycotting Facebook and other social networks |
Facebook's tolerance for harmful content and fake news has finally bitten back as many brands, including globally popular ones like Unilever and Coca-Cola, decided to pull advertisements from the platform.
Specifically, Unilever will remove its advertisements from Facebook, Twitter, and Instagram as of the end of this year. Taking it a step further, Coca-Cola announced stopping all advertisements globally for 30 days.
“Starting on July 1, The Coca-Cola Company will pause paid advertising on all social media platforms globally for at least 30 days,” CEO James Quincey noted in a statement. “We will take this time to reassess our advertising standards and policies to determine whether revisions are needed internally, and what more we should expect of our social media partners to rid the platforms of hate, violence, and inappropriate content. We will let them know we expect greater accountability, action, and transparency from them.”
Other famous brands such as Honda’s subsidiary in the US, Patagonia, and Verizon Communications also joined the campaign. As of now, more than 100 companies are included in the Facebook ad boycott.
As soon as the news went viral, Facebook’s stock lost 8.3 per cent on last Friday, losing $56 billion of the company's market valuation and has seriously hurt its main business line – advertisement. Facebook occupies 23 per cent of the US advertising market and is home to more than 3 billion users globally, according to Bloomberg.
Facebook’s CEO Mark Zuckerberg has been attempting to solve the ad concerns. Speaking in a livestream last Friday, he said the company will change a string of polices regarding advertising and contents published on the platform, specificially prohibiting hate speech in its advertisements.
However, organisations promoting the boycott such as Colour for Change claimed the act is the result of the “failure to wrestle with the harms FB has caused to our democracy and civil rights.”
Over the past time, Facebook has overcome numerous challenges and managed to maintain stable growth despite the strongest headwinds. Its advertising revenue last year rose by 27 per cent to $69.7 billion. Notwithstanding, the racism issue airising to the fore of US political discourse with the presidential elections nearing has also eaten into the company's revenue streams.
The recent StopHateForProfit campaign led by the Anti-Defamation League, the National Association for the Advancement of Coloured People, and Colour for Change has been pressuring social network giants. They have organised many demonstrations to oppose the company's content publishing policy and also call on companies to stop running advertisements on the social networks.
Previously, Facebook already foresaw a plunge in advertising revenue because advertisers are tightening their wallets due to COVID-19. The company even cut its expenditure plan for the year by $3 billion to mitigate lost advertising revenue.