Facebook to overhaul political ads after threat of U.S. regulation

[September 22, 2017]  By David Ingram

SAN FRANCISCO (Reuters) - Facebook Inc <FB.O> on Thursday launched an overhaul of how it handles paid political advertisements, giving a concession to U.S. lawmakers who have threatened to regulate the world's largest social network over secretive ads that run during election campaigns.

The company also said it would turn over to congressional investigators the 3,000 political ads that it says were likely purchased by Russian entities during and after the 2016 U.S. presidential election.

Chief Executive Mark Zuckerberg said the company, for the first time, would now make it possible for anyone to see any political ads that run on Facebook, no matter whom they target.

Facebook will also demand that political advertisers disclose who is paying for the advertisements, a requirement that under U.S. law applies to political ads on television but not on social media.

"We will work with others to create a new standard for transparency in online political ads," Zuckerberg said.

Zuckerberg, broadcasting live on Facebook from company headquarters in Menlo Park, California, said the changes would help address concerns that governments including Russia are using Facebook ads to meddle in other countries' elections.

Earlier this month, Facebook said an internal review had shown that an operation likely based in Russia spent $100,000 on 3,000 Facebook ads promoting divisive messages in the months before and after last year's U.S. presidential election. The company initially declined to turn over details on the ads to Congress.

U.S. congressional investigators and special counsel Robert Mueller are examining alleged Russian election interference, which Moscow has denied.

Investigators are interested in other companies as well. Representatives for Twitter Inc <TWTR.N> are set to meet next week with staff from the Senate Intelligence Committee in relation to inquiries into the 2016 election.

Representative Adam Schiff, the top Democrat on the House Intelligence Committee, said on Thursday that he wants to hear from Facebook, Alphabet Inc's <GOOGL.O> Google, Twitter and others in public hearings.

"It will be important for the committee to scrutinize how rigorous Facebook's internal investigation has been, to test its conclusions and to understand why it took as long as it did," Schiff said in a statement.

'WILD, WILD WEST'

The political advertising changes represent a retreat for Facebook, which for years has resisted calls from transparency advocates and academics for the regulation of political ads. The company has instead treated them like all commercial ads.

In the days after the November 2016 U.S. election, Zuckerberg said it was a "crazy idea" to think that misinformation on Facebook swayed the vote toward President Donald Trump.

Senator Mark Warner, the vice chairman of the Senate Intelligence Committee, this month compared political ads on social media to the "wild, wild West" and said legislation might be needed to address them.

The U.S. Federal Election Commission last week sought public comment on possible regulatory changes to digital ads and considered whether to call Facebook and other tech firms before the commission for a public hearing.

Facebook has grown to be the leading online platform for political ads because of its low costs and tools for targeting messages to narrow audiences.

Facebook founder Mark Zuckerberg speaks during the Alumni Exercises following the 366th Commencement Exercises at Harvard University in Cambridge, Massachusetts, U.S., May 25, 2017. REUTERS/Brian Snyder

U.S. political campaigns likely spent $300 million on Facebook ads during the 2016 election cycle, according to Nomura analysts, though the exact amount is unknown.

It remained unclear whether Facebook's voluntary changes would satisfy demands for government action.

Warner and another senator, Democrat Amy Klobuchar, on Thursday sent a letter to colleagues inviting them to be co-sponsors of legislation they are writing that would formalize and expand the commitments Zuckerberg made.

The legislation, they wrote, would require digital platforms with 1 million or more users to maintain a publicly available file of all election-related ads bought by people who spend more than $10,000, according to a copy of the letter seen by Reuters.

Trevor Potter, president of the pro-transparency Campaign Legal Center, said in a statement that his group would "carefully monitor Facebook's implementation of this new policy." He said Facebook "helped create the secrecy that gave rise to foreign interference in the 2016 elections."

In the past, Facebook has argued that ad details had to remain confidential unless released by the advertisers.

GERMAN ELECTION MONITORING

Zuckerberg, who returned to work on Thursday after a month of paternity leave, laid out other steps the company would take to prevent governments from using Facebook to manipulate each other's elections.

He said Facebook would hire 250 additional people; expand partnerships with election commissions around the world; and adapt systems to help deter political bullying.

Facebook has not found an attempt at election-meddling in Germany, Zuckerberg said, but he added that the company would continue to examine fake accounts that it has removed in advance of Sunday's German national election.

"I don't want anyone to use our tools to undermine democracy. That's not what we stand for," Zuckerberg said.

Facebook General Counsel Colin Stretch said in a blog post on Thursday that it was unusual for Facebook to voluntarily turn over information to government authorities, as it was doing by giving U.S. lawmakers copies of ads.

The company has long had a rigid policy of refusing to turn over any user information without a court order or other legal process.

But ultimately, Stretch wrote, "We believe the public deserves a full accounting of what happened in the 2016 election."

(Reporting by David Ingram in San Francisco; Additional reporting by Dustin Volz and Patricia Zengerle in Washington and Abinaya Vijayaraghavan in Bangaluru; Editing by Jonathan Weber and Diane Craft)

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