Hate content issue may impact Facebook's India business, say experts

Analysts foresee strengthening of "Facebook ad boycott" call, with big players in the country revisiting their decision to advertise on the platform

Facebook facing controversy in India around the platform's lack of hate content moderation and disinformation is going to strengthen the “Facebook ad boycott” in the country and impact the company's business, according to the analysts.

The Mark Zuckerberg led-social media giant is facing attacks in India from political parties such as Congress and the CPI(M). They are pushing for a probe by a joint parliamentary committee over the Wall Street Journal's story that the company rejected to apply hate speech rules to certain Bharatiya Janata Party (BJP) politicians. Facebook has stated that its policies are applied globally without regard to political affiliation. However, all of these controversies are expected to have a negative impact on the business interests and the brand of the company in India, according to the analysts.

“With big players in India revisiting their decision for advertising on Facebook, it could lead to more Indian companies joining the global ‘Facebook ad boycott’ bandwagon which include MNCs such as Verizon, Coca-Cola, Starbucks, The North Face, REI and Patagonia,” said Salman Waris, managing partner at TechLegis Advocates and Solicitors.

The Congress has alleged that Facebook's "inaction" against hate content "destabilises democracy" in India.

Kazim Rizvi, founder of The Dialogue, a tech policy think tank, said platform accountability is one of the most important issues that need to be dealt with and is an ever-evolving subject of importance, especially in democracies. 

“The recent turn of events is part of a larger need of ensuring that platforms are transparent in their procedures and protocols when it comes to the takedown of hate content on the internet,” said Rizvi. “Companies revisiting their advertising business options with Facebook as a direct outcome of the WSJ article and the controversy surrounding it is expected in the short run.”

India is the biggest user base of Facebook with around 328 million monthly users while the company’s WhatsApp messaging app has 400 million users in the country, also the highest in the world. It recently invested $5.7 billion for a 9.99 per cent stake in Reliance Jio Platforms. The deal aims to help Reliance to dominate the e-commerce and payments space.

Advertising accounts for nearly all Facebook's $70.7 billion annual revenue. Last year Facebook India had posted revenues of Rs 892 crore, compared to revenues of Rs 521 crore, a 71 per cent increase in revenues. It recorded a net profit of Rs 105 crore, up 84 per cent from the last fiscal for the fiscal year ended 31 March 2019. 

Analysts said that the business implications of the current political tug-of-war over alleged hate speech could be very adverse for Facebook and if the parliamentary panel summons Facebook on the latest issue it could lead to further damage. “Brands don’t want to be seen connected (with organisations) that sponsor fake news, biases, violent and hate content.”

Experts said that it is expected that the organisations with big marketing budgets may shift their ads to other platforms such as Amazon, Google, YouTube and Pinterest, after halting advertising on Facebook. It was reported that the company CEO and co-founder Mark Zuckerberg recently lost $7.2 billion after several companies pulled advertising from Facebook and shares of the firm fell 8.3 per cent.

“We can expect this trend to gain momentum in light of the latest controversy in India and this can (finally) result in an overall loss of close to a $1 billion or more for Facebook in the medium term,” said Waris.

Experts said it is important to acknowledge and assure that going forward there will be further improvements with respect to the protocols applied towards removal of hate content online.

“I believe that platforms must continue to strive for transparency and there should be no stone unturned when it comes to taking down hateful content,” said Rizvi of The Dialogue. “ It is crucial that social media platforms are transparent and accountable with their community guidelines and adhere to it uniformly.”

He said there is Manila Principles on Intermediary Liability and the Santa Clara Principles on Transparency and Accountability in Content Moderation and these international laws act as a guiding light for the platforms to navigate.

The Congress has asked Facebook CEO Mark Zuckerberg to set up a high-level inquiry into his India leadership team. It has asked the investigation be submitted to the company’s board “within a reasonable period of time such as one/two months” and made public. 

Shashi Tharoor, who heads the Parliamentary Standing Committee on Information Technology, said the panel would like to hear from Facebook about the report. A Delhi Assembly panel has also said it will summon Facebook officials, over complaints of "deliberate and intentional inaction to contain hateful content" in India.

Facebook's content policy and the alleged selective application has been in controversy in the past as well. Experts said the company acted leniently or took no action on controversial posts by US President Donald Trump — including one during the racial justice protests. Earlier there were scandals surrounding Facebook-Cambridge Analytica related to the hacking of democratic processes. Also, there is the big issue of fake news being pushed on Facebook-owned WhatsApp.