Thread by @jason_kint

Any reporter can confirm this but in my world the things that most awoke black ops at Facebook and Google were:
- Our taking on Facebook's data collection across web and apps
- Google's leveraging its monopoly to dictate GDPR roll-out
The unifying theme is instructional here. /1

Although we made considerable progress in getting the industry to recognize the duopoly analysis in digital advertising, we also attempted to connect the dots that the duopoly's success was driven by Google and Facebook's data collection and usage practices. /2

Importantly, these 2 companies set low bar for rest of web. Yes, having to compete with their massive data surveillance across web/apps forces 3rd party ecosystem's practices, too. They shaped industry around audience micro-targeted, direct response leveraging unbridled data. /3

They even impact each other in driving down bar of unbridled data use outside consumer expectations. eg FB's success in mobile/apps with precision data forced Google to break its promise in 2016 and merge data/cookies across their services, again outside user expectations. /4

FTC was long focused on deceptive practices, whether Facebook/Google were (somehow) informing its users properly in their blanket terms. Those terms attempted to cover any collection/usage as long as they didn't sell your data. This is why the duopoly uses that standard line. /5

the reality is their free services (in which US policy argued couldn't be harmful to consumers) along with a pitch of data protection ("we'll never sell your data") was misleading as they retained all of the data and rented it over and over and over again. /6

Of course, a free service only gets more profitable if you can drive up audience and ARPU (revenue per user) while containing costs. Facebook's audience is slowing, engagement is dropping so FB is driving up ARPU. The only way to do this is collecting even more invasive data. /7

my math last quarter was that 90% of Facebook's revenue growth in the US was due to ARPU growth. Eventually this becomes destructive either because your data practices are so aggressive so as to undermine the entire system or advertiser value deteriorates. BOTH ARE HAPPENING. /8

Facebook's savior here would be Instagram and WhatsApps brands and their respective growth but $$$ success here requires leveraging FB data and ad system across these products. Policy, specifically GDPR, is making this more difficult. Their ARPU is much lower for this reason. /9

All this leads to FB earnings today. Analysts likely won't ask the tough questions: numerous breaches, SEC/FBI/DOJ/FTC/ICO/EU investigations, fraud claim, is the company bad for the world, social responsibility, long-term outlook with deteriorating public trust, leadership. /10

but even if Facebook mostly controlled for the hard questions in Congress, refuses to testify in UK, spins its way out of most press scrutiny, hires former politicians for influence, it doesn't change the fact the core products are eroding and consumers are moving on. Watch. /11

And we're on to Facebook earnings... I bet Brian Acton really loves Zuckerberg pumping privacy as a differentiator for WhatsApp. This will be at odds with Facebook's biz model and payoff on the $22B acquisition. Brazil's politics appreciates it.

Zuck is off his game and dumping negative trends yet stumbling through them. They can only talk through the decline in time spent per user for so long. I'll be very interested in what the experts take away from this.

I know I'm repeating myself but Facebook leaning into "dating" as a business opportunity is all sorts of uncomfortable considering their current issues and the decline in brand trust for them.

hey @LindseyGrahamSC, Zuckerberg just announced YouTube was a competitor for video. So Google is an answer you couldn't get out of him. File that away. Google is a competitor to Facebook. Glad we cleared this up.

Safety and security. This is the part which likely received most attention with the last quarter including Myanmar investigation from NYT, Brazil WhatsApp issues, a breach, a 2FA authentication mis-use, ICO finding against Facebook and more and more reports of Instagram concerns.

Oh dear heavens... "Thank you for being a part of this journey with us" - Zuckerberg uses the same word as his key staff including new policy chief. A lot of people don't want to be on a "journey" with Facebook while they wreck the world.

hold for the small businesses in small towns' stories from Sandberg. I bet they also work in support of local news.

ok, experts can check me on this but certainly looks like $FB is becoming more dependent domestically on ARPU growth which is unsustainable without growth in attention. My math says 96% of Facebook's US & Canada revenue growth is a result of squeezing more $ through ARPU.

For those asking why DCN hasn't done its "duopoly" math for Google and Facebook since 2017, we depend on the industry-wide numbers from IAB (which represents entire ad market including majority controlled by Google and Facebook) which haven't been reported since Q4 last year.

oh my, Mark is doubling down on demand for video. I don't even know what he's talking about at this point. This won't go over well. Rate limiting video?

Bottom-line,
- the Facebook brand is losing trust (and usage) with users and advertisers
- still 99% advertising
- developing world significantly lower ARPU
- future depends on Instagram + WhatsApp but those apps constrained particularly around leveraging FB's surveillance model

For those asking why DCN hasn't done its "duopoly" math for Google and Facebook since 2017, we depend on the industry-wide numbers from IAB (which represents entire ad market including majority controlled by Google and Facebook) which haven't been reported since Q4 last year.

I can't keep up with what others are hearing but this seems like a disaster call to me. Answers aren't tight and news is playing out as expected while analysts had their heads deep in their Facebook Kool-aid the past year.

"In the not too distant future, people will be sharing more into Stories than into Feeds" from the same CEO who said "within five years, Facebook will be mostly video" three years ago.

I tried to tell you.

https://twitter.com/jason_kint/status/1022236285975580672

no questions on investigations simply incredible considering active investigations with SEC, FTC, DOJ, FBI, ICO, 37 state AGs, EC, and UK Parliament. CEO Zuck can't even visit UK at this point without testifying and ICO filed last week that Facebook broke the law.

</end> call over. Tune in to PBS tonight at 10pm ET for Part 2 on the Facebook Dilemma documentary.

ps ye all crazy if excited by this one. also noting all material audience growth is in Asia and Rest of World where no doubt things are a lot messier and 5-10% of the ARPU found in US/Canada.

Yea what Brian Wieser just said...

Ok. Watched part 2 of Facebook documentary tonight on PBC. Found myself much more frustrated. Probably a bit like watching Fourth Estate where you know the documentary ends during the middle of an investigation. So much more to dig in on.

To have one of the handful of employees “permitted to speak to @frontlinepbs” suggest this is their #1 priority is BS in the context of the company’s obfuscation of investigations the past two years.

If solving for the problems of their platform was #1 priority, 1) they would gut custom audiences for politics ads until they can handle responsibly, 2) Zuck would actually provide evidence in UK, 3) they would come clean on Cambridge Analytica / GSR and...

and they would be aligning their data collection and microtargeting with consumer expectations cutting a multiple of their validation and reducing earnings. It’s not. They can’t. That was FB controlled spin from heavily coached employees allowed to speak to PBS.

And I don’t understand asking Alex Stamos whether he trusts Facebook. I find it impossible to believe Alex doesn’t have a non-disparagement exit agreement with his former employee. Anyone ask him? He keeps getting interviews. Not his fault, just business by Facebook.