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Facebook in Trouble on HUD Charges, Twitter, Google on Alert
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Facebook faces regulatory concerns from all over the world. The company has now been charged for violating the U.S. Fair Housing Act per Reuters.
Apart from reviewing Facebook’s ad practices, HUD is also reviewing that of other tech juggernauts including Twitter and Alphabet (GOOGL - Free Report) .
HUD Accuses Facebook of Discrimination
The Department of Housing and Urban Development (HUD) has accused the tech giant of following targeted advertising, which implies that Facebook restricts who can view housing-related ads on the basis of their race, color, national origin and religion.
Under The Fair Housing Act (1968) and the Equal Credit Opportunity Act (1974), any ad that discriminates between people based on race, religion and sex is considered a felony.
Authorities have also accused Facebook of mining user data and leveraging machine learning to predict user’s response to housing related ads. Per the response generated, Facebook creates different groups, classifies them according to the user’s race, color, national origin and religion and disseminates ads accordingly.
Per HUD’s report, the company has provided advertisers with an option to target users depending on the language they speak and the place they live by drawing a red line around that area.
The report also condemns Facebook for imposing restrictions on advertisers with regard to reaching out to a wider audience base. Notably, this is likely to have a negative impact on the company’s ability to attract ad-dollars, which contributed significantly to the top line (98.4%) in fourth-quarter 2018.
Facebook Shares closed at $166.33 on Mar 28, up 0.5%. The stock has returned 27% year-to-date, outperforming S&P 500’s rally of 12.4%.
Facebook’s Stance
Facebook was first accused of discriminatory ad practices in 2016 when ProPublica had reportedly exposed it of displaying housing ads that clearly debarred minorities like African Americans and Hispanic people.
However, after ProPublica’s revelation, the company “temporarily disabled” the option that lets advertisers exclude certain racial groups from their target audience.
Further, in August 2018, Facebook also removed over 5,000 targeting options to help prevent misuse of its platform and to overhaul discriminatory advertising.
Per reports, Facebook decided to revamp its discriminatory ad practices after facing five lawsuits from U.S. civil rights groups. The company announced plans to build an ad portal with listing of all available houses and employment opportunities in the United States for all its users.
Despite boosting its efforts and taking up initiatives to counter this discrimination, Facebook was caught off guard with HUD’s charge.
Other Tech Giants in Focus
Among the tech giants, Facebook offers the most extensive targeting opportunity to advertisers, while others including Google, Twitter and Amazon (AMZN - Free Report) enable advertisers to target audience by zip code, which gives information regarding their race and demographics.
Twitter and Google have both denied such accusations. However, they have accepted that they allow advertisers to target by gender. Per Reuters, gender targeting could potentially be a violation of the Fair Housing Act.
Such activities are also in violation of European Union’s (EU) GDPR privacy law, which states that the companies should inform users regarding the purpose of storing data and how the stored data will be processed.
Notably, the tech companies were able to lure advertisers on its platform with the help of targeted advertising, wherein they would provide information to advertisers regarding users’ activities and accordingly guide their advertisement. If the accusations are proved, it can affect the companies’ top line.
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
Image: Bigstock
Facebook in Trouble on HUD Charges, Twitter, Google on Alert
Facebook faces regulatory concerns from all over the world. The company has now been charged for violating the U.S. Fair Housing Act per Reuters.
Apart from reviewing Facebook’s ad practices, HUD is also reviewing that of other tech juggernauts including Twitter and Alphabet (GOOGL - Free Report) .
HUD Accuses Facebook of Discrimination
The Department of Housing and Urban Development (HUD) has accused the tech giant of following targeted advertising, which implies that Facebook restricts who can view housing-related ads on the basis of their race, color, national origin and religion.
Under The Fair Housing Act (1968) and the Equal Credit Opportunity Act (1974), any ad that discriminates between people based on race, religion and sex is considered a felony.
Authorities have also accused Facebook of mining user data and leveraging machine learning to predict user’s response to housing related ads. Per the response generated, Facebook creates different groups, classifies them according to the user’s race, color, national origin and religion and disseminates ads accordingly.
Per HUD’s report, the company has provided advertisers with an option to target users depending on the language they speak and the place they live by drawing a red line around that area.
The report also condemns Facebook for imposing restrictions on advertisers with regard to reaching out to a wider audience base. Notably, this is likely to have a negative impact on the company’s ability to attract ad-dollars, which contributed significantly to the top line (98.4%) in fourth-quarter 2018.
Facebook Shares closed at $166.33 on Mar 28, up 0.5%. The stock has returned 27% year-to-date, outperforming S&P 500’s rally of 12.4%.
Facebook’s Stance
Facebook was first accused of discriminatory ad practices in 2016 when ProPublica had reportedly exposed it of displaying housing ads that clearly debarred minorities like African Americans and Hispanic people.
However, after ProPublica’s revelation, the company “temporarily disabled” the option that lets advertisers exclude certain racial groups from their target audience.
Further, in August 2018, Facebook also removed over 5,000 targeting options to help prevent misuse of its platform and to overhaul discriminatory advertising.
Per reports, Facebook decided to revamp its discriminatory ad practices after facing five lawsuits from U.S. civil rights groups. The company announced plans to build an ad portal with listing of all available houses and employment opportunities in the United States for all its users.
Despite boosting its efforts and taking up initiatives to counter this discrimination, Facebook was caught off guard with HUD’s charge.
Other Tech Giants in Focus
Among the tech giants, Facebook offers the most extensive targeting opportunity to advertisers, while others including Google, Twitter and Amazon (AMZN - Free Report) enable advertisers to target audience by zip code, which gives information regarding their race and demographics.
Twitter and Google have both denied such accusations. However, they have accepted that they allow advertisers to target by gender. Per Reuters, gender targeting could potentially be a violation of the Fair Housing Act.
Such activities are also in violation of European Union’s (EU) GDPR privacy law, which states that the companies should inform users regarding the purpose of storing data and how the stored data will be processed.
Notably, the tech companies were able to lure advertisers on its platform with the help of targeted advertising, wherein they would provide information to advertisers regarding users’ activities and accordingly guide their advertisement. If the accusations are proved, it can affect the companies’ top line.
While, Facebook currently has a Zacks Rank #2 (Buy), both Alphabet and Twitter carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Today's Best Stocks from Zacks
Would you like to see the updated picks from our best market-beating strategies? From 2017 through 2018, while the S&P 500 gained +15.8%, five of our screens returned +38.0%, +61.3%, +61.6%, +68.1%, and +98.3%.
This outperformance has not just been a recent phenomenon. From 2000 – 2018, while the S&P averaged +4.8% per year, our top strategies averaged up to +56.2% per year.
See their latest picks free >>