Recent developments in online advertising have been uplifting. Facebook (and by extension, Instagram) has been running a policy that is meant to block predatory ads that target people who are overweight or have skin conditions, pushing unusual and often medically dangerous miracle cures. Google, which makes over $100 billion in online ad revenue, has also released a statement declaring a ban on ads that are selling treatments that have no established biomedical and scientific basis. Twitter also declared that it won’t be accepting ads from state-controlled media entities.
This is not to say that the advertising policies of these companies are perfect, as incidents reported by The Verge and CNBC will tell you. However, things have been improving at a steady pace as far as advertising policies are concerned.
A major catalyst for this change has been the 2016 US election that saw the potential of online advertising abused for targeting voters. Since then, there has been bipartisan support in the US to achieve greater transparency in online advertising. This includes disclosing who paid for public ads, how many people saw those ads, and how the purchaser can be contacted.
There are two problems with the support for greater transparency in advertising. Firstly, the bi-partisan push never ended up becoming law. Secondly, even if it did end up becoming law, its impact would have been limited to the US.
It is an interesting story why we still lack a law that enforces greater transparency in advertising, and much of it revolves around Facebook, with its conclusion set to impact other players in online advertising. The bill, called the Honest Ads Act, was introduced in the Senate in 2017.
Had it become law, it’s success or failure would have given other countries a template to work with to achieve greater transparency in advertising. As of now, that will need to continue without precedent. Days after the bill was introduced, Facebook announced that it would be updating its Advertising Transparency and Authenticity Efforts.
Mark Zuckerberg declared his support for the Honest Ads Act through a separate Facebook post, stating, “Election interference is a problem that’s bigger than any one platform, and that’s why we support the Honest Ads Act”. Important side note, Twitter also announced its decision to back the Act, but the focus here is on Facebook because of its size, position, and role in the 2016 US election.
Once Facebook expressed its support for the act, and declared the intent to self-regulate according to the bill, the issue lost momentum. At the time, Zuckerberg’s testimony at Capitol Hill was impending, and the news cycle shifted its attention. Senate Majority Leader Mitch McConnell, brought in the first amendment into the argument, saying he was sceptical of proposals (like the Honest Ads Act) that would penalize American citizens trying to use the internet and to advertise. At this point, you could just make the argument that in retrospect, Facebook could have supported the Honest Ads Act by not declaring its support.
Regardless, the implications of these events impacted players across a wide spectrum. Because there was no legal requirement to do so, other avenues of online ads (read, Twitter, Google) did not need to comply with a set standard that could be used as a yardstick to judge them against. In addition, the problem with the freedom of speech argument is that transparency in ads is not directly impacting free speech. You could extend the same argument to revoke the laws that mandate transparency in TV and radio ads in the US. So where is the crackdown on transparency in TV and Radio?
The Honest Ads Act is relevant as it had the potential to set the tone for how transparent the regulation should be in other countries.
The US is not the most significant user base for these platforms. And as you might expect, having transparency in political ads could be useful for other countries that also hold elections. For example, India has over 270 million Facebook users, a significant percentage of whom participated in the general elections. Understandably, advertising on social media sites such as Facebook was an integral part of most campaign strategies. So, it would help to have a law that helps voters identify who is paying for what political ad, and conversely, which of them might be facts, and which of them might be false propaganda.
Asking online ad companies such as Facebook to regulate themselves will have exactly the effect that it is having now. They will move towards better ad and transparency policies at their own pace, influenced by what the prevailing narrative is. And for most countries, that is not enough.
Having a law in countries where these platforms operate is more efficient. It is not just the United States that needs its ads to be honest.
The writer is a Research Analyst with Takshashila Institution, Bengaluru.
This article was first published in Deccan Herald.