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Facebook Roundup: Ad Transparency, Privacy, Instagram & More

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This Facebook (FB - Free Report) Roundup is about the adoption of previously announced ad transparency rules, a controversial patent, Instagram’s enhancements, more data leak news, Oculus damages and more. Here are the details-

Ad Transparency Rules

Facebook is cracking down on fake news and making sure that political or issue-based ads are vetted. So when an ad falls into these categories, the company is blocking it. The advertiser then has to contact Facebook and provide personal identification (which could be a driver’s license or passport), mailing address and the last four digits of his/her social security number.

The campaign can proceed only after receipt of mail at the said address. Ads deemed political will be retained for seven years. This identification process has been necessitated by the number of fake IDs created by Russian operators to create issue-based divisiveness and drive political opinion in the last elections.

Some advertisers are getting frustrated at the delay, but they’re unlikely to move away. COO Sheryl Sandberg says there won’t be a resultant negative impact on revenue in the next quarter.

Facebook has also announced the expansion of its View Ads feature, allowing users to see every live ad a Page is running whether it’s political or not. Users can see ads across the world and report inappropriate content. The info and ads section on each page will also allow users to see when the page was created and recent name changes with further updates to be added soon.

Meanwhile, a Pew Research survey says that 72% of Americans (85% of republicans and 62% of democrats and democrat-leaning independents) believe that social media platforms actively censor political views that they find objectionable. This might seem ridiculous considering how the platforms are struggling with containing fake news. But when you allow users to report what’s inappropriate and then delete stuff whether true or not for sentimental reasons, this is bound to happen.

Privacy Matters

Facebook has applied for a patent on technology that will pick up high-pitched audio signals in broadcast content that isn’t audible to humans to start recording "ambient audio" and then sending it back to Facebook. Ostensibly, this is just gauge your reaction to ads, but Facebook can use it for what it loves most, i.e. your data.

Facebook VP and Deputy General Counsel Allen Lo says that the patent was filed "to prevent aggression from other companies," and that "patents tend to focus on future-looking technology that is often speculative in nature and could be commercialized by other companies." In other words, Facebook is doing it to prevent those “other” bad guys from using such technology to track you.

Instagram

The app that one-upped Snapchat in its own technology to attract over a billion monthly users (400 million daily users) worldwide just got more musical. Thanks to the deals Facebook has with the three leading music labels and a host of indies, iOS and Android users in 51 countries will now be able to make music clips a part of their Instagram Stories.

So after shooting a photo or video, users can search by song, artist, mood, genre or what’s popular to select the music clip they want to accompany their content. iOS users can also choose the music first and build their content around it, a feature that will come to Android later. When users watch such a story, the music will load automatically, allowing them to tap on the sticker to see the artist name and song title.

Anna White from Facebook's internal PR team will replace Gabe Madway, Instagram's director of communications, when he moves to another company this summer. Gabe worked at Reuters and Alphabet GOOGL before joining Instagram as its executive communications manager. White worked as communications manager at Google and YouTube before moving to Facebook as its Consumer Communications director. She will report to Kristina Schake, Instagram's Global Communications director. Her first challenges at the new job will be overseeing Instagram’s functionality expansion currently underway.  

Facebook is bringing a stripped-down version of its Instagram app called Instagram Lite, for pretty much the same reasons that it launched Facebook Lite, i.e., it wants to expand the user base, for which it needs to tap the more populous emerging markets where people are however constrained by limited and expensive data plans. The new 574KB app that is a shrink from the 90MB main Instagram app, allows users to search for other users, post pictures, and create and watch stories that disappear after 24 hours with video sharing and messaging options coming soon. It is reportedly being tested in Mexico.

More Data Leaks

Security researcher Inti De Ceukelaire has revealed in a medium.com post that a quiz app from NameTests.com has been exposing data of more than 120 million users for more than a year. The javascript used allowed broad sharing of users’ Facebook ID, first and last names, languages spoken, gender, date of birth, profile picture, cover photo, currency, the devices used, the last information update, posts, statuses and photos of themselves and their friends. What’s worse, information could continue to be shared for up to two months after the app was deleted.

It’s true that Facebook has been taking steps to address the privacy issue ever since the Cambridge Analytica data breach went public. Facebook’s ongoing audit has eliminated around 200 apps and its Bugs Bounty program was responsible for the discovery of this data breach.

But many believe that the company’s efforts aren’t much more than damage control and there was scope to do much more. In this case for example, the security breach was reported on April 22, Facebook’s canned response came by the end of the month, the follow-up letter on May 14 elicited a Facebook response on May 22 to the effect that it could take 3-6 months to investigate the matter. The problem was fixed by June 25.

Oculus Damages Halved

U.S. District Judge Ed Kinkeade has halved the $500 million that a jury had awarded Zenimax as damages from Facebook, its virtual reality unit Oculus and others while turning down its request for banning sales of Oculus headsets.

Zenimax claimed that one of its star employees, John Carmack colluded with Oculus founders Brendan Iribe and Palmer Luckey to steal software and hardware technology used in the Oculus handset.

Facebook argued that the technology it acquired through the Oculus purchase was still years behind prime time and that the actual amount copied was just 7 lines out of 42 billion, making it insubstantial.

Last year, the judge also agreed with Facebook that banning sales of the device would amount to unfair hardship on the company, its business partners and customers.

Facebook had no further comments following the verdict. Zenimax said that while it is pleased with the $250 million in damages and $54 million in interest that the judge allowed, it was disappointed that the amount had been lowered and was therefore weighing its next steps.

Facebook A Contender For English Premier League

Facebook, which has either limited itself to things like UEFA Champions League European soccer matches, U.S. major league baseball and soccer games and sports documentaries, or lost out to others in things like Indian cricket, remains focused on premium content to boost its Watch video hub.

It now appears that the social media company is looking to make the most of the League’s owners’ desire to move beyond incumbents like Sky Plc, BT Group Plc and BeIN Sports to go digital and drive up prices in the bargain.

Qatar’s BeIN Sports currently holds the three-year deal to screen all 380 matches per season exclusively in Thailand, Cambodia, Laos and Vietnam. This is the deal it’s trying to win.

Facebook hired Eurosport CEO Peter Hutton earlier this year to spur its sports content acquisition efforts.

Facebook Ditches Acquila

Facebook is closing its UK facility responsible for managing drone design, development and testing, and distancing itself from the task of beaming Internet to under-connected regions of the world with its Aquila solar-powered drones.

With aerospace companies getting into the space, it makes much better sense for Facebook to instead partner with companies like Airbus SE on high-altitude connectivity technologies.

The drone had crashed back in 2016 when Facebook launched it for the first time. So this seems like a good strategy to focus on what it does best and leave the rest to others.

Recommendations

Facebook shares carry a Zacks Rank #2 (Buy). Other bets in technology include Match Group (MTCH - Free Report) , The Trade Desk (TTD - Free Report) ,  21Vianet Group (VNET - Free Report) , Dropbox (DBX - Free Report) , or Etsy (ETSY - Free Report) .You can also see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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