✋ Facebook lied to advertisers


February 23, 2021

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Mark Zuckerberg

(Getty Images / Drew Angerer)

Facebook was caught lying to advertisers (again)

Remember when Mark Zuckerberg battled the Winklevoss Twins to determine who created Facebook?

The legal process uncovered messages from Zuck that said he wanted to do something (we can’t print here) to the ears of the Winklevoss Twins.

Based on a recent drop of unredacted court filings, it looks like Scrooge McZuck has been doing the same unprintable actions to advertisers.

The remarks come from a 2018 California lawsuit…

… which claims that Facebook “knowingly overestimated its ‘potential reach’ metric for advertisers,” writes The Verge.

The core of the lawsuit is that the social media giant didn’t adjust for fake and duplicate accounts.

In one nugget from the filing, Facebook told advertisers it could target 100m people aged 18-34 years old in the US even though there are only 76m people in that age group.

Facebook COO Sheryl Sandberg knew about the issue

Per The Verge, one Facebook product manager told Sandberg that some revenue should “never [have been] made given the fact that it’s based on the wrong data.”

Another employee added the process was “deeply wrong,” but Facebook neglected to make a fix, saying it would have a significant impact on revenue.

3rd time’s the harm

Antitrust expert Matt Stoller notes that Facebook has already been busted on 2 separate occasions for lying to advertisers:

  • “Pivot to video”: In 2016, Zucky McClaims told the world that Facebook was going all in on video, and it misled advertisers about video metrics to boost the program.
  • Measurement tool: At the end of 2020, Facebook told advertisers that its “conversion lift tool” (which measures ad performance) overestimated campaign results.

While Facebook has largely avoided major repercussions for its activities, Stoller believes the tide is turning:

  • Australia is taking a tough (albeit flawed) position against Facebook in regards to hosting publisher content
  • Canada and the UK have called Facebook a bad-faith actor for blocking Australians from seeing news
  • In the US, Facebook faces an antitrust suit

In sum, Facebook is facing attacks on its ears business from regulators the world over.

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Snippets
  • Coinbase to $100B: The cryptocurrency exchange was valued at just over $100B in the private markets, meaning it could see the highest-valued IPO of any tech company since Facebook.
  • Creatio stops bootstrapping: The Boston-based low-code automation platform for the CRM space raised $68m after bootstrapping since its founding in 2011.
  • Spotify is launching an audio ad network. This is a big monetization piece for the company’s recent binge on podcast tech and content.
  • Discovery+ heats up: The parent company of — prepare yourself — Property Brothers, Guy Fieri, and Shark Week announced its new streaming service will reach 12m subscribers by March, up from 5m in December.
  • Luxury giant LVMH acquired a 50% stake in Jay-Z’s Ace of Spades champagne brand, which was launched in 2006. The value of the transaction was not disclosed. (For a history of LVMH, check out this Twitter thread).
  • WeWork co-founder Adam Neumann is nearing a settlement with SoftBank that would pave the way for the real estate startup to go public. Neumann will sell his shares in the firm for $500m (half the original terms) to move on.
A toast to Toast
Toaster

Everyone thought Toast was toast. Now it’s planning an IPO.

You know the satisfying feeling you get when a toaster pops up two slices of beautifully crisp, golden-brown toast? That’s probably how Toast is feeling now.

The Boston-based leader in software and hardware tools for restaurants was getting burnt last spring, but now it’s buttering up for an IPO.

Toast’s turnaround wasn’t fun

In April 2020, Toast CEO Chris Comparato announced a 50% staff reduction through layoffs and furloughs after restaurant sales dropped 80% in March.

But the company introduced new tools focused on food delivery and saw its valuation double to $8B between February and November.

The newly planned IPO would value bread Toast at $20B.

Unfortunately, the rest of the industry is still getting burned

In December, the NRA — “R” as in “Restaurant” — shared insights with congressional leadership that were quite troubling:

  • In October, 87% of restaurants reported a 36% drop in revenue year-over-year on average
  • 83% of restaurant owners said they expect sales to be even worse between December 2020 and February 2021
  • 17% of restaurants — more than 110k — are closed permanently or for the long term

Toast’s IPO isn’t a done deal. It’s also reportedly considering a sale or — no surprise here — a SPAC.

Whatever happens, we’re raising one glass to Toast for its remarkable achievements, and another to toast the restaurant industry for brighter days ahead.

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Tech Controversy
Boston Dynamics dog

Source: MSCHF

MSCHF takes on dual-use technologies. Boston Dynamics is not happy about it.

MSCHF — the viral internet art group — has a new drop tomorrow called “Spot’s Rampage.”

The group spent ~$75k to purchase one of those Boston Dynamics dog robots… and equipped it with a paintball gun.

Starting at 1pm EST on Feb. 24, anyone on the internet can remotely pilot the robot around a small art gallery.

Boston Dynamics is pushing back

The robotics company tweeted a statement last week saying that it “learned that an art group is planning a spectacle” and condemned “the portrayal of [its] technology in any way that promotes violence.”

The drop shines light on the larger questions of dual-use tech: A popular example of this is nuclear energy, which can provide clean power (nuclear plants) or cause great destruction (nuclear bombs).

More recently, the rise of AI…

…has brought attention to how the technology can serve both civilian (show recommendations) and military (automated drones) purposes.

Boston Dynamics writes that “provocative art can help push useful dialogue” but that MSCHF’s drop “fundamentally misrepresents Spot.”

“We always see Boston Dynamics robots shown in nonthreatening and cute videos,” the MSCHF team tells The Hustle. “The reality is that all of this technology can be used for other purposes.”

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Tweet of the day
Fintech valuations

Source: Twitter (@AlexisOhanian)

Fintech firms are exploding in value. Over the past few days, secondary trading in Coinbase (a crypto trading platform soon to go public) and Stripe (a payments platform) valued the startups at $100B+ each.

The speed to a $100B valuation for finance firms is accelerating. It took Visa 54 years to break the mark while Square (11 years), Stripe (11 years), and Coinbase (9 years) have done it in a fraction of the time.

This is not an apples-to-apples comparison (particularly when inflation is taken into consideration). Nevertheless, Reddit co-founder and prolific investor Alexis Ohanian believes the next such firm will get to a $100B valuation in as little as 5 years.

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