- Google was accused of enabling greenwashing.
- Meta prepared to fire lots of staff.
- Apple workers in Glasgow unionised.
- Microsoft faced allegations of code piracy.
- Amazon could be short on boxes.
- Tencent logged a win in the market.
Affairs of state: Brands bail
Advertisers abandoning Twitter are an existential threat to the platform. It gets around 90 per cent of its revenue from ads. As notable companies like Audi, General Motors, Pfizer, Volkswagen and United Airlines pause their advertising spend on Twitter, Musk needs to make an ethical and economic case to entice them back.
Doing the right thing. Musk believes pressure from activists concerned about content moderation has spooked the advertisers. In this open letter, some activist groups claim that Twitter has been âinundated with hate and disinformationâ since he took control. They have a point:
- Musk himself tweeted a conspiracy theory about Paul Pelosi, the husband of US House Speaker Nancy Pelosi and victim of a recent assault, shortly after the takeover;
- Musk fired Twitterâs entire human rights team and almost all of its ethical artificial intelligence team;
- Researchers found that the number of hostile tweets per hour (those containing the ân-word,â âk-word,â and âf-word,â) rose from 84 to 398 on the day Musk took over.Â
The result has been a âmassive drop in revenueâ for Twitter as advertisers say theyâll monitor the situation before returning to the platform. But Musk may not be able to win them back by improving moderation protocols or curbing hate speech. Heâll have to prove he can deliver sales.
Show me the money. An advertising executive familiar with some of the brands that advertise â or used to advertise â on Twitter said some had already been put off by hateful content on the platform and others were now deciding it didnât offer enough return on investment to warrant staying.
âTwitter, Reddit, Facebook â none of them really offer much choice in terms of where your content is placed,â this executive said. âThey canât offer content exclusions, so thereâs no way of knowing what your advert will appear next to. Most clients Iâve worked with who turned off Twitter did so because they werenât seeing the returns, rather than for moral or ethical concerns.â
Inflation, cost of living pressures and a general demand slump have all driven down online sales, and advertisers are tightening their spending across all platforms while prioritising actual returns. The situation at Twitter looks particularly bad:
- The chief revenue officer left after Muskâs takeover.
- Musk fired other sales executives who were trusted by ad buyers.
- Musk also blocked the Twitter account of a marketing trade association head after he said âthe issue concerning us all is content moderationâ.
But Twitterâs not alone. Advertising revenue at YouTube dropped by 2 per cent in the companyâs most recent earnings report. Itâs the first time on record that ad revenue for the division has shrunk. Ruth Porat, YouTubeâs chief financial officer, told investors the slump âreflects further pullbacks in advertiser spendsâ.
Itâs the same story at Microsoft. Search and news advertising revenue at the company only grew by 16 per cent in the quarter, down from 40 in the same period last year. Amy Hood, Microsoftâs chief financial officer, echoed Porat, saying âreductions in customer advertising spendâ were to blame.Â
This downturn shows the power advertisers have over digital platforms. Even if Twitter can convince investors, users and advertisers that itâs fixed its content moderation protocols, it still needs to prove it can make them money.
End game. Musk is in a tough spot. Heâs sacked almost half of Twitterâs staff and forced through changes that he hopes will generate revenue, but without advertisers spending money on the platform these measures are for naught.Â
Last month, Meta, which owns Facebook and Instagram, saw $80 billion wiped off its share value on reports that advertisers were cutting spending. Meta moderates harmful content better than it used to but its faltering financial performance is what ultimately switched investors off.
For now, brands can make an ethical case against Twitter. But itâs the economic case that ultimately needs to improve if the Chief Twit â who is on record saying âI hate advertisingâ â is to prevail.
Oil giants have used Google advertising to appear more climate-friendly and environmentally sustainable than they really are, according to a report from the UK-based Center for Countering Digital Hate (CCDH). The report, Greenwashing on Google, alleges that oil and gas companies pay to appear in returns for Google search queries like âeco-friendly companyâ and ânet zero emissionâ. Despite Google promising to stop profiting from climate denial content, the report shows that large fossil fuel companies spent $23.7 million on Google Search ads over the past two years, half of it on alleged greenwashing.Â
A message from
New research from McKinsey & Company suggests that consumer faith in a companyâs cybersecurity, data protections, and responsible use of AI can make or break a companyâs growth.
Companies leading in this area are more likely to see at least 10% revenue and EBIT growth annually.Â
Read the research: âWhy digital trust truly mattersâÂ to see what digital trust leaders are doing differently.
This is sponsored by McKinsey & Company
Meta is getting ready to fire hundreds if not thousands of staff. Disappointing quarterly results, a slump in advertising revenue and pressure from investors may have contributed to the decision to sack thousands of Metaâs workers â of which there are 87,000 worldwide. In line with the wave of lay-offs that is sweeping the technology sector â and with the recent firings at Twitter â Mark Zuckerberg has said Meta will double-down on key revenue areas and that some teams will stay the same or shrink as the company contends with strong economic headwinds.Â
Employees at an Apple store in Glasgow have become the first at the company to unionise in the UK. Represented by GMB Scotland, the workforce at Apple Glasgow have organised a pay raise campaign to push for more than the ÂŁ12 per hour wage currently offered. GMB Scotland described the vote as an âhistoric momentâ. Last month, a site in Oklahoma became the second Apple store to unionise in the US amid allegations that benefits were withheld from workers who supported the union and that Apple conducted unlawful surveillance of workers during the deliberation process. Apple is facing a surge of labour action as cost of living pressures throw the companyâs $90 billion profits this year into sharp relief.
Microsoft is being sued in a $9 billion class action suit for pirating Github usersâ copyrighted code. Microsoft acquired GitHub â the largest code host in the world, with 40 million users â in 2018 for $7.5 billion. The suit details how GitHub and OpenAI have violated the Digital Millennium Copyright Act (DMCA) 3.6 million times, by using free and open source software code to train an AI coding tool it calls Github Copilot. Github Copilot turns natural language prompts into coding suggestions, which could mean less demand for highly skilled software engineers. According to Matthew Butterick, who filed the lawsuit in California, this is the first class-action case in the US that challenges the trainÂing and outÂput of AI sysÂtems.Â
Amazon is one of many retailers who could struggle with packaging supplies this holiday season. Workers at DS Smith â which makes boxes and other packaging products â have voted to strike over pay. 700 staff at the company are members of GMB, which has also attempted to organise industrial action at Amazon facilities. 93 per cent of members voted in favour of a strike which could cause disruption to Christmas deliveries, although an Amazon spokesperson has said the company is not expecting a packaging shortage.Â
A sliver of hope
Chinese stocks, including Tencent, have logged their best trading week in more than a decade, amid signs that China is preparing to exit its zero-Covid strategy. Tencent jumped 2.9 per cent on the Hang Seng Index. âThe market thinks the worst is over,â said Gary Ng, a senior economist at Natixis Corporate and Investment Bank in Hong Kong. The past couple of years have been tough for Tencent, which has fallen from nearly $100 a share in early 2021 to around $30 today. Itâs suffered mainly from the imposition of tight regulation from the CCP and prolonged Covid restrictions that have limited production and shrunk the Chinese economy.Â
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Additional reporting by Sebastian Hervas-Jones