First Take: Senate Hearing

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By Gene Munster of Loup Ventures

Regardless of the nature of the hearing, an appearance on Capitol Hill to testify before Congress constitutes a brand hit to Twitter, Facebook, and Google. Notably (and rightfully), Apple has avoided the conversation. In our view, this is a direct result of Apple’s position on user security, personal information sharing, and, ultimately, how the company generates revenue: selling useful tools to customers, not selling customer data to advertisers.

  • Facebook sought to convince lawmakers that it is doing enough to mitigate the risk of foreign influence on US elections. Sheryl Sandberg carried herself very well (as expected) and referred to the fight against foreign meddling as an “arms race,” implying Facebook will continue to be very active in cleaning up the platform.
  • Twitter, which takes a different stance as a platform for free speech, or a “digital public square,” expressed that it is rethinking its dynamic and growing role in society while sticking to its neutral stance. Jack Dorsey reiterated, “impartiality is our guiding principle.”
  • Google offered to attend, but senators declined their invitation in hopes of getting Larry Page to appear. We still believe Google will need to answer some of the same questions posed by Congress.

What This Means for Broader Tech

This will have largely no effect on tech long-term, but we will hear more from large tech companies on transparency. The emerging theme of transparency includes advertising, privacy, data ownership, automated accounts (aka bots), and the extent to which these platforms have been manipulated.

Facebook has been proactive on this theme. Earlier this year, Facebook announced AI tools to police fake accounts, hired 20,000 people to work on security and content monitoring, made political and other ads more transparent, and created an independent election research commission. We believe other companies will follow Facebook’s lead and offer similar tools, including alerting users when they are interacting with a bot, as discussed by Twitter’s Jack Dorsey today. We believe today’s hearing is evidence that this trend is powerful enough to drive change on the major social media outlets.

Comparing Fake Account Detection

Fake accounts are the starting point for bad actors to operate on social media. To compare how effective Twitter and Facebook are at detecting fake accounts, we created several fictitious users on each platform. Bottom line: it’s pretty easy to create fake social media accounts.

  • Facebook better than Twitter: Facebook was better at detecting fakes than Twitter. While all seven of the accounts we created with only basic profile information were flagged, Facebook still has room for improvement. We were able to create five profiles with more detailed bios that were not detected.
  • Fake email more difficult to create: In order to create fake social accounts, fake emails can be used. However, only so many email accounts can be linked to one phone number. We created one Gmail account without providing a phone number, and it was flagged for suspicious activity.

Fake News

Facebook combats fake news: Facebook has been making a push to reduce distribution of fake news and harmful content as reflected in new content rules and the creation of a “Fake News War Room.”

Twitter combats fake news: Twitter has set up the Ad Transparency Center to better inform users of what they are seeing. The company has also created a certification process for “issue ads” to verify the identity of the advertisers.

Disclaimer: We actively write about the themes in which we invest or may invest: virtual reality, augmented reality, artificial intelligence, and robotics. From time to time, we may write about companies that are in our portfolio. As managers of the portfolio, we may earn carried interest, management fees or other compensation from such portfolio. Content on this site including opinions on specific themes in technology, market estimates, and estimates and commentary regarding publicly traded or private companies is not intended for use in making any investment decisions and provided solely for informational purposes. We hold no obligation to update any of our projections and the content on this site should not be relied upon. We express no warranties about any estimates or opinions we make.