Facebook Inc. (FB) - Get Report shares extended declines Monday after Starbucks Corp. (SBUX) - Get Report, the world's largest coffee chain, joined a list of more than 150 companies that are planning to freeze advertising spending on the social media platform.
Starbucks, Coca-Cola (KO) - Get Report, Diageo and Unilever are just a few of the scores of global brand giants that have said they will pause social media ad spending for the month of July -- and in some cases until the end of the year -- unless companies such as Facebook do more to eradicate hate speech and misinformation on their social media platforms.
"We believe in bringing communities together, both in person and online, and we stand against hate speech,"Starbucks said in a statement. "We believe more must be done to create welcoming and inclusive online communities, and we believe both business leaders and policy makers need to come together to affect real change."
"We will pause advertising on all social media platforms while we continue discussions internally, with our media partners and with civil rights organizations in the effort to stop the spread of hate speech," the statement added.
Facebook shares were marked 0.2% lower in early trading Monday, after falling nearly 5% in pre-market dealing, to change hands at $215.22 each. Facebook shares lost more than $55 billion in value Friday after Unilever -- one of the world's biggest ad buyers -- said it would freeze spending with the social media company until the end of the year.
Facebook, which earned more than $70 billion in advertizing revenue last year, said Friday that it would take "extra precautions" to safeguard the platform in the run-up to the U.S. elections in November, and pledged to take down false information about voting while implementing a new labeling system for "newsworthy" posts that would otherwise violate its policies.
"We will soon start labeling some of the content we leave up because it is deemed newsworthy, so people can know when this is the case," CEO Mark Zuckerberg said in a livestreamed segment of the company’s weekly meeting. "We’ll allow people to share this content to condemn it, just like we do with other problematic content, because this is an important part of how we discuss what’s acceptable in our society ... but we’ll add a prompt to tell people that the content they’re sharing may violate our policies."
Facebook's announced changes, meanwhile, represent yet another change in tack from founder and CEO Zuckerberg, who once dismissed allegations that his platform was used to interfere in the 2016 elections as "ridiculous" before agreeing to hand over more than 3,000 Russian-linked political ads to Congressional investigators.
Zuckerberg said last month that Facebook "shouldn’t be the arbiter of truth of everything that people say online" but admitted that "there are a number of areas of content we need to do a better job of policing on our service."
"To be sure, the list of advertisers pulling Facebook spend (and increasingly, all social media, often including Twitter and YouTube) for the month of July is growing," said BMO Capital Markets analyst Daniel Salmon. "However, with Facebook sporting 8mm+ advertisers and many direct response advertisers willing to spend more in ad auctions when others step away, we don't expect the revenue impact to be material at this stage."
"But with FB's latest changes announced Friday being met with calls for more still, the issue should continue to be monitored."