Facebook Plays It Safe, SMBs Boost Google Revs, Subscription Model Mania

Facebook Moderates Ahead of Section 230 Changes

Facebook announced yesterday it's getting deeper into content moderation by taking down posts making false claims about COVID-19. This is another incremental step for the company, which already prohibits such claims in ads. The policy extends to Instagram, where accounts that discourage vaccination will be demoted. In January, Facebook also banned disinformation about the 2020 election. Both moves are partly intended to mollify critics, now introducing legislation to modify Section 230 of the Communications Decency Act.

Our take:

• The so-called Safe Tech Act, just introduced, would strip liability protections from platforms for certain types of user-generated content.
• Passage is probable and would open the door to a range of lawsuits by individuals and potentially business entities.
• One intriguing question: would this create potential liability for Google in the context of review fraud or "local spam" that materially harms local businesses?

Did SMBs Drive Record Ad Revenues for Google?

Strong Q4 ad revenues reported by Google and Facebook were partly driven by SMBs, according to GroupM. As Yelp said, Q4 was surprisingly strong for many SMBs. And GroupM points out, using US Census Bureau data, that “new business formation spiked in the second half of 2020.” The agency estimates the two platforms captured perhaps 70% of US digital dollars in 2020, with SMBs partly to thank -- as larger brands didn't "collectively increase their spending at the levels of ad revenue growth that digital media experienced."

Our take:

• GroupM's argument is persuasive, given that the majority of Google and Facebook's advertisers qualify as SMBs.
• It's not clear exactly which SMB verticals drove the ad spend, whether it was from new or established businesses or whether loans contributed.
• These and other data suggest that COVID's SMB impact was far less than originally feared, which is very good news.

Subscription Mania Takes Hold

The subscription model is booming. The latest example: Twitter is exploring subscriptions as new way to generate revenue beyond ads. Paid newsletters, monetizing Tweekdeck and providing enhanced features for users are being considered. Recently the NY Times said digital subscriptions are now its top revenue source. And Mark Cuban is preparing to launch Fireside, a new podcasting platform that seems like a cross between Clubhouse and OnlyFans.

Our take:

• Twitter's recent acquisition of newsletter platform Revue gives the company an immediate and viable path to paid content.
• Substack is hot and Hubspot just acquired The Hustle, which produces newsletters and podcasts.
• Paid-content is increasingly popular as an ads alternative in a privacy sensitive world, but we could reach peak subscription relatively soon.

Short Takes

• US retail sales increased 9.2% in January according to MasterCard; now malls may be poised for a comeback, according to Simon Property Group.
• TikTok is moving aggressively into e-commerce, moving onto Facebook's turf.
• DoorDash is buying Chowbotics, which automates salad making. Terms weren't disclosed but the latter was valued at $46 million in 2018.
• Uber Eats said it will spend $20 million to support local restaurants; it's also waiving some processing fees through July.
• The European Commission warned Apple to not exempt its own apps from iOS tracking-consent rules or face its antitrust wrath.
• Europe may emulate the Australian news media bargaining code, which forces Google and Facebook to subsidize news content.
• The chips are down: A global shortage of semiconductors is taking a toll on multiple industries, especially automakers.
• Apple reportedly ended discussions with Hyundai-Kia to build the rumored Apple Car.  

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