News & Insights


It’s a wrap – Honner’s quarterly media roundupby Rebecca Thurlow

© AdobeStock / dolphfyn 

What’s news?

Facebook’s Biggest Scandal Yet

Facebook announced that as many as 87 million people may have had their user data “improperly shared” with Cambridge Analytica, a London-based data firm hired to support President Donald Trump’s 2016 election campaign.

With users apparently deserting Facebook in droves, founder Mark Zuckerberg apologised in for a “major breach of trust", introduced measures to crackdown on platform abuse, and suspended Cambridge Analytica from the social media platform.

Alleged to have created psychological profiles to influence how people vote, Cambridge Analytica got the data from a researcher who paid 270,000 Facebook users to complete a psychological profile quiz back in 2014, and the quiz also gathered information on their friends, massively increasing the number of people affected.

Calls for Industry Shakeup, More Regulation

While most of those people affected are from the US, Facebook said 311,000 Australians may have been impacted, and Australia’s privacy commissioner has begun an investigation to decide if the firm breached local laws, joining investigations occurring in the UK, US and EU.

As the fallout reverberates through the echelons of Facebook stakeholders, advertisers have threatened to abandon the platform, specialist exchange traded fund (ETF) provider Betashares removed Facebook from its Global Sustainability Leaders ETF, and other large Australian shareholders said they were reconsidering their investments due to ethical concerns over the scandal.

The ramifications are likely to spread well beyond one company amid intensifying calls for tech giants and consumer data usage generally to be better regulated. In Australia, the scandal has focused the attention of the Australian Competition and Consumer Commission as it prepares for an inquiry into the role of technology giants in spreading fake new stories and diverting advertising away from traditional media – a probe that’s now taking on global significance.

Google launches new publishing tools: Fairfax among the partners

Google pledged to invest US$300 million globally over three and a half years in a range of measures aimed at helping publishers generate revenue from their journalism.

The initiatives include a Disinformation Lab to combat misinformation and disinformation during political campaigns, and Subscribe with Google, a program designed to help publishers convert readers into paying customers by enabling people to use their Google account to subscribe.

Launch partners include Fairfax Media, The New York Times, The Financial Times, and Japan’s Mainichi.

Meanwhile Facebook is testing a news feature that will allow some Australian media companies to add breaking new labels to their feeds.

Twitter stock soars on first ever profit

Twitter shares surged more than 20 per cent in one trading day after the company reported a net profit for the first time and returned to revenue growth.

The social media platform made a profit of US$91 million in the fourth quarter of 2017, compared with a US$167 million loss a year earlier, after cutting costs.

Revenue rose 2% year to US$732 million as video ad sales rose, although a clampdown on fake accounts meant it lost users in the US and overall user growth stalled.

Earnings season brings some good news for Australian media companies

The earnings season brought some much needed good news for Australian media companies.

News Corp and Fairfax Media both said consumers were showing a greater willingness to pay for journalism online. News reported a 26 per cent jump in digital sales for the second quarter, while Fairfax recorded a 21 per cent increase since August 2017.

Among the broadcasters, Seven West Media chief executive Tim Worner said trends in the TV ad market continued to improve, and Nine shares surged strongly after it reported a 55% jump in net profit helped by stronger ratings and better demand for advertising.

Still, pressure remains on traditional media assets. Fairfax Media Chief Executive Greg Hywood said he will look for efficiencies in the publisher’s newspaper business after a further decline in print revenues, while outlining plans to shut down one-third of the company’s New Zealand print titles.

Insights & Opinion

The Guardian’s economics editor Larry Elliot asks “Is it time to break up the tech giants?”

Sydney Morning Herald business and technology writer John McDuling says Zuckerberg’s interview is scary because it’s clear he’s not in control.

Author and Guardian columnist Richard Wolffe says the evil genius of Cambridge Analytica was to exploit those we trust the most.

Daniel Finkelstein writes in The Times that the Internet and social media will be better with rules.

William H. Dutton, Professor of Media and Information Policy, Michigan State University, says regulating Facebook won’t prevent data breaches

Roger McNamee and Sandy Parakilas say the Facebook breach makes it clear: data must be regulated.

A survey shows twice as many people distrust the media as trust it. But people trust journalists more than they trust platforms.
Quotable quotes:

"This was a major breach of trust and I'm really sorry it happened." - Mark Zuckerberg, apologising for the data scandal involving Cambridge Anlaytica.

"I think that there is a genuine risk that this data has been accessed by quite a few people and it could be stored in various parts of the world, including Russia.” – Cambridge Analytica whistleblower Christopher Wylie on the data harvested from tens of millions of Facebook users via a quiz app.

“My suspicion is Facebook and Google have much more personal information about people than people realise,” Australian Competition and Consumer Commission chairman Rod Sims

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