Alphabet’s (GOOGL - Free Report) division Google recently eliminated ads, which were misleading users searching for voting related information.
Reportedly, users searching with terms like register to vote, vote by mail and other related terms were getting directed to ads that charged them huge fees especially the ones providing registration information.
According to a report from Tech Transparency Project watchdog, users browsing for register to vote on Google search engine came across an ad at first, which directed them to a site charging $129 for same day registration.
Further, some of the misleading ads were also tracking personal data of users, which was a cause of concern.
Given this confusing, misleading and exploitative scenario, Google’s latest decision remains a major step ahead of the U.S. 2020 presidential election.
Moreover, this bodes well for the company’s continued efforts toward enhancing its search results by curtailing fake information and misleading ads.
Impact on Ad Business & Search Platform
Although removal of voting related misleading ads is expected to aid Google in sustaining momentum across users and society, it is likely to hurt ad revenues to some extent.
This does not bode well for Alphabet’s top line, which derives significant portion of the total revenues from ad business. Notably, lingering coronavirus woes that have been taking a toll on advertisers’ spending this year so far have been impacting the company’s revenues.
Notably, Google advertising revenues amounted to $134.8 billion, accounting for 83.3% of total revenues in 2019.
Nevertheless, the company’s growing endeavors to combat misleading information with its strengthening ad policy structure will help it to strengthen presence in the online ad world.
Apart from the latest move, the company has recently mandated identity verification for all advertisers before buying any advertising space on its platform.
The advertisers are required to submit their personal identification and business incorporation documents to prove their identity and the country in which they operate. Also, existing customers are needed to comply with the new rules, failing which their ads will be suspended till verification.
We believe these efforts are expected to bolster the company’s brand value and trustworthiness of search platform.
Fight Against Misleading Info Gains Steam
Apart from Google, tech companies like Facebook (FB - Free Report) and Twitter (TWTR - Free Report) are also leaving no stone unturned to curb misinformation and fake news.
Facebook has recently decided to begin labeling content from elected officials that it deems newsworthy.
In regard to 2020 election, the company will ban posts that make false claims suggesting ICE agents are checking for immigration papers at polling places, which is a tactic used to discourage voting.
Further, it is creating a new Voting Information Center that will appear at the top of News Feed and Instagram’s feed, directing users to information on how and where to vote, including information on how to register to vote and how to vote by mail.
Meanwhile, Twitter is continuously removing misleading and potentially damaging tweets since. Further, it has announced a new guidance that bars malicious content.
Additionally, the company has recently unveiled new labels to alert users coming across tweets with COVID-19-related misinformation.
Nevertheless, Google’s strengthening fight against misleading information is likely to sustain its dominance in the advertisement market.
Zacks Rank & a Stock to Consider
Currently, Alphabet carries a Zacks Rank #3 (Hold).
Investors interested in the broader technology sector can consider a better ranked stock is Chegg, Inc. (CHGG - Free Report) , which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rankstocks here.
Long-term earnings growth rate for Chegg is pegged at 30%.
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