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How Meta Is Making Billions From Scam Advertising · Question Everything

0:06
Speaker 1: There's a conflict I'm grappling with at the heart of
0:09
Speaker 1: Section 230, the law from 1996 that's responsible for the
0:12
Speaker 1: internet as we know it. On the one hand, Section 230,
0:17
Speaker 1: lots of people argue, is the reason we have free
0:21
Speaker 1: speech on the internet. Which, that is something I definitely want,
0:25
Speaker 1: free speech on the internet. The law is so fundamental
0:28
Speaker 1: to online life. like the foundation of your house, it's
0:32
Speaker 1: easy to take for granted. But ever since I started
0:34
Speaker 1: paying attention to it, I haven't been able to stop
0:37
Speaker 1: seeing Section 230 everywhere. Like last week, when the new
0:41
Speaker 1: dump of Jeffrey Epstein documents came out, with Donald Trump's
0:45
Speaker 1: name littered all over them, millions of us could go
0:48
Speaker 1: on to X and TikTok and Substack and Blue Sky
0:51
Speaker 1: and talk about them. We could theorize about what Epstein
0:55
Speaker 1: meant when he wrote that Trump was the dog that
0:57
Speaker 1: hasn't barked. Or whether we thought Epstein was telling the
0:59
Speaker 1: truth when he claimed that he had photos of Trump
1:01
Speaker 1: with scantily clad young women in his kitchen. And we
1:04
Speaker 1: could do that, arguably, thanks to Section 230. Because it
1:08
Speaker 1: makes it so that internet sites and providers can't get
1:11
Speaker 1: sued for what users post on their platforms. And the
1:14
Speaker 1: same for users who repost something from someone else. And
1:18
Speaker 1: that means when people share damning information about the president,
1:21
Speaker 1: X and TikTok and Substack and Blue Sky don't have
1:24
Speaker 1: to worry about Trump suing them. the way he sued
1:26
Speaker 1: news organizations for many millions of dollars. Because of Section 230,
1:31
Speaker 1: platforms are comfortable providing a space for the public to
1:34
Speaker 1: debate this important information quickly, raucously. I don't want to
1:38
Speaker 1: lose that. And if Section 230 were repealed or reformed,
1:43
Speaker 1: it is possible that we could. But at the same time,
1:48
Speaker 1: in the last year or so especially, I find myself
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Speaker 1: more and more noticing the negative effects of Section 230.
1:56
Speaker 1: Because this same law, this same legal foundation that the
2:00
Speaker 1: modern internet rests on, it's also propping up some pretty gnarly, rotting,
2:04
Speaker 1: and extremely unsafe structures. If you look at a list
2:08
Speaker 1: of cases where Section 230 has helped internet companies escape accountability,
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Speaker 1: it's like a carnival of horrors. There's a guy who
2:15
Speaker 1: begged Grindr to get rid of a fake profile made
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Speaker 1: by an ex that said he was looking for violent
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Speaker 1: sex and led to him getting harassed in real life.
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Speaker 1: Grindr used Section 230. to get that case dismissed. There's
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Speaker 1: the family members of victims of an attack by Hamas
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Speaker 1: who sued Facebook, saying the platform not only allowed known
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Speaker 1: Hamas members to have accounts, but helped them recruit by
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Speaker 1: recommending their content to people. Facebook used Section 230 to
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Speaker 1: get that case dismissed. Minors who sued Reddit for letting
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Speaker 1: illegal sexual images of them spread. Reddit got the case
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Speaker 1: dismissed with Section 230. There are so many cases like
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Speaker 1: this over the years. For better and for worse, Section
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Speaker 1: 230 has made it so that companies are largely not
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Speaker 1: responsible for what happens on their online platforms, even if
3:02
Speaker 1: they're making huge profits from that activity. As a journalist
3:06
Speaker 1: for a long time, my reflex has been to say,
3:09
Speaker 1: you know what, this is a necessary evil. We need
3:12
Speaker 1: to have a hands-off approach to the internet in order
3:14
Speaker 1: to protect free speech. And I get that point of view.
3:17
Speaker 1: I know many of you hold it too. I've been
3:19
Speaker 1: hearing from some of you. I don't deny that there
3:22
Speaker 1: are risks to changing Section 230. But also, I think
3:25
Speaker 1: it's important that as journalists especially, we fairly acknowledge the
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Speaker 1: costs of this law. I know for a while I
3:31
Speaker 1: was reluctant to do that. And once we do, maybe
3:34
Speaker 1: we can imagine more productive, fairer ways to approach the internet.
3:39
Speaker 1: There's a story that just broke that is yet another
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Speaker 1: revelation of how Section 230 is invisibly shaping our world.
3:45
Speaker 1: How it allows big tech companies to do really shitty
3:47
Speaker 1: things with impunity. a new leak of sensitive files in
3:51
Speaker 1: just the last few weeks from inside Facebook's parent company, Meta.
3:56
Speaker 1: That's what our show's about today, on a week when,
3:58
Speaker 1: you may have heard, Meta just had a big win
4:00
Speaker 1: in court, defeating the federal government's attempt to break it
4:03
Speaker 1: up as a monopoly. The company emerges even stronger, and
4:07
Speaker 1: it makes what's revealed in these recently leaked files even
4:10
Speaker 1: more maddening.
4:12
Speaker 2: They believe they do not owe any user... a duty
4:16
Speaker 2: to remove fraudulent ads from the platform.
4:19
Speaker 1: Like that's just not a thing that they are responsible for.
4:22
Speaker 1: From Placement Theory and KCRW, this is Question Everything. I'm
4:25
Speaker 1: Brian Reed. Stick around. So you've been hearing me talk
4:32
Speaker 1: a bit on the show about this device, the Plod,
4:35
Speaker 1: which is this small AI-powered, note-taking, personal assistant thinking device,
4:40
Speaker 1: I guess is what I call it. I actually reached
4:43
Speaker 1: out to them. I thought it might be able to
4:44
Speaker 1: help us And there's one idea in particular, one kind
4:49
Speaker 1: of weird idea I had that I was having trouble
4:52
Speaker 1: figuring out a tech solution for, that when I saw
4:54
Speaker 1: this device called Plod, I thought, oh, maybe this can
4:57
Speaker 1: help us. It's a little bit of an experiment, question
4:59
Speaker 1: everything type experiment. All right, Plod, I want you to
5:02
Speaker 1: help me track my media consumption. And the Plod is
5:06
Speaker 1: helping us do it. I'm going to tell you more
5:08
Speaker 1: about that a little bit later. the newly leaked information
5:15
Speaker 1: from inside Meta. It came to investigative reporter Jeff Horowitz,
5:19
Speaker 1: based in California.
5:21
Speaker 2: Covering Meta, I've had a lot of luck in people
5:25
Speaker 2: wanting to give me documents.
5:28
Speaker 1: Jeff works for Reuters. That's where he published this recent story.
5:31
Speaker 1: But he's been investigating tech companies for a while. He
5:34
Speaker 1: was on the team at the Wall Street Journal that
5:36
Speaker 1: got documents from former Facebook engineer Frances Haugen when she
5:40
Speaker 1: wanted to blow the whistle on disturbing practices she saw
5:42
Speaker 1: inside the company. These became known as the Facebook files.
5:46
Speaker 1: Jeff also wrote a book based on employee leaks called
5:49
Speaker 1: Broken Code, Inside Facebook and the Fight to Expose Its
5:52
Speaker 1: Harmful Secrets.
5:54
Speaker 2: It's never anybody's first choice. Nobody's like, hi, my well-paid
5:58
Speaker 2: tech job, I would like to put that at risk.
6:02
Speaker 2: But people sort of have some qualms about things. They
6:06
Speaker 2: raise things internally. Maybe the internal concerns don't get handled
6:10
Speaker 2: the way they think they should. And I think at
6:13
Speaker 2: that point, somebody might be open to talking to an outsider.
6:18
Speaker 1: Jeff can't say a ton about when or how he
6:21
Speaker 1: got the recent leak to protect his sources. But he
6:24
Speaker 1: describes it as a collection of material from inside Meta,
6:27
Speaker 1: including documentation about policy decisions the companies made, engineering information,
6:32
Speaker 1: internal data about Facebook, Instagram, and WhatsApp, and screenshots of discussions,
6:37
Speaker 1: including with management, on Meta's internal Facebook system, which is
6:41
Speaker 1: called Facebook Workplace. And what these records are about is fraud.
6:46
Speaker 1: Fraudulent advertisers on Facebook, Instagram, and WhatsApp, along with fraudulent
6:50
Speaker 1: accounts and pages used to scam people.
6:53
Speaker 2: So I don't think you would have invited me on
6:56
Speaker 2: here if the breaking news was that there are scams
6:59
Speaker 2: on the internet, right? Like we all understand that there
7:03
Speaker 2: is fraud in the ecosystem. People get swindled in e-commerce.
7:07
Speaker 2: They get pig butchered. which is the fancy name for
7:10
Speaker 2: winning someone's trust and then draining their life savings.
7:13
Speaker 1: Pig butchered? That's what it's called? I've never heard that before.
7:16
Speaker 2: The idea is that you are forming a relationship with
7:19
Speaker 2: the animal and fattening them up so that when it's
7:22
Speaker 2: time to butcher them, it's all very easy.
7:23
Speaker 1: Wow, very graphic. Okay. What's staggering about this recent leak
7:28
Speaker 1: is the scale of fraud on Meta's platforms.
7:31
Speaker 2: So Meta did $ 160 billion worth of revenue last year
7:35
Speaker 2: from advertising, more or less. And It determined that around 10%
7:40
Speaker 2: of that was coming from banned ads.
7:46
Speaker 1: 10% of all the money Meta made last year came
7:49
Speaker 1: from ads that really should never be on the platform
7:51
Speaker 1: in the first place, per Meta's own estimate. These are
7:55
Speaker 1: fake businesses selling fake products that steal your money or
7:58
Speaker 1: your credit card details, bunk investment schemes you might transfer
8:01
Speaker 1: cash to and never see again, crackpot medical products. 10%
8:06
Speaker 1: of all their revenue, $ 16 billion last year alone. Just
8:10
Speaker 1: to give you two other crazy numbers from the Reuters
8:12
Speaker 1: story here, Meta was feeding its users 15 billion scam
8:17
Speaker 1: ad impressions every day. And Meta, this one company, estimated
8:22
Speaker 1: that its platforms were involved in a third of all
8:25
Speaker 1: successful scams in the U.S. As Jeff puts it in
8:28
Speaker 1: his report, Meta's own research suggests its products have become
8:32
Speaker 1: a pillar of the global fraud economy.
8:35
Speaker 2: This is a significant piece of their actual business. And
8:40
Speaker 2: Meta knows it.
8:41
Speaker 1: That's the other thing that's damning about the records Jeff
8:44
Speaker 1: was given. They make it clear that Meta is aware
8:47
Speaker 1: of the scale of fraud and scams on its platforms.
8:50
Speaker 1: And they give a view into how Meta operates behind
8:53
Speaker 1: this shield of Section 230, where the company knows it's
8:57
Speaker 1: going to be really hard for people to successfully sue them.
9:00
Speaker 1: We get to see what Meta does or doesn't do
9:03
Speaker 1: when it knows everything. Its users are being ripped off.
9:06
Speaker 1: Can you give me some examples of the scam ads
9:08
Speaker 1: that you came across in your reporting on this? Like
9:10
Speaker 1: I know in your story, you have a picture of
9:12
Speaker 1: an ad. It seems to be posted from an account
9:14
Speaker 1: called Spice Flavor. It has a picture of a box
9:17
Speaker 1: of spices with the name McCormick on the box. And
9:20
Speaker 1: I guess McCormick's a spice brand. I have some other
9:22
Speaker 1: spices in my drawer at home. And then the post says,
9:26
Speaker 1: McCormick celebrates 136 years of presence in the USA, exclamation point.
9:31
Speaker 1: a special offer in honor of this event, a coaster
9:34
Speaker 1: with a set of your favorite McCormick spices for your dishes.
9:37
Speaker 1: And then you can like click on Facebook shop now
9:39
Speaker 1: and I guess buy this spice coaster.
9:43
Speaker 2: Yeah, if you do click on that, you are going
9:44
Speaker 2: to give someone your credit card and that credit card
9:47
Speaker 2: is going to go see the world. McCormick has had
9:50
Speaker 2: to like issue statements online being like, for the love
9:54
Speaker 2: of God, people, please don't try to buy these things.
9:58
Speaker 2: Hundreds and hundreds of people in the comment were like,
10:00
Speaker 2: oh man, they got me. So this has been going
10:03
Speaker 2: on for a long time.
10:04
Speaker 1: People really like McCormick spices. I didn't know there was
10:07
Speaker 1: such like a kind of an emotional connection. I mean,
10:09
Speaker 1: they're good, but yeah, it's good.
10:10
Speaker 2: It's kind of grandma coded, I think a little bit. Yeah.
10:13
Speaker 2: I wrote about it first, the McCormick thing at the
10:15
Speaker 2: Wall Street Journal.
10:16
Speaker 1: When you reported on it for the Journal, for the
10:20
Speaker 1: alerted Facebook about it.
10:21
Speaker 2: Oh, yeah.
10:21
Speaker 1: No, no.
10:22
Speaker 2: They were very aware of the McCormick Spice scam.
10:25
Speaker 1: And did they take it down at that point or no?
10:27
Speaker 2: I mean, yeah, that particular ad came down immediately, as
10:30
Speaker 2: did the other ones, you know, that I flagged. But like, obviously,
10:34
Speaker 2: this is not a system that is, you know, going
10:37
Speaker 2: to work for a platform that's running 15 billion scam
10:40
Speaker 2: ad impressions a day.
10:41
Speaker 1: You're the janitor of Meta.
10:43
Speaker 2: Yes. Yeah, a little bit.
10:46
Speaker 1: And just to clarify, if I fell for the McCormick
10:48
Speaker 1: spices and I gave my money, who can I go after?
10:52
Speaker 2: I mean, functionally, no one.
10:54
Speaker 1: And that's because of Section 230?
10:56
Speaker 2: That's certainly a portion of it. A big portion of
10:59
Speaker 2: it is that there's just an expectation that platforms aren't
11:03
Speaker 2: liable for the content that runs on them.
11:06
Speaker 1: Did you end up interviewing anybody who'd been taken in
11:09
Speaker 1: by one of these scams?
11:10
Speaker 2: Oh, yeah. I've talked to a lot of people. In
11:13
Speaker 2: this story was a Canadian Air Force recruiter who got
11:17
Speaker 2: hacked and account got taken over by a scammer. Basically,
11:21
Speaker 2: she woke up one morning and was not in control
11:24
Speaker 2: of her account. And her account was suddenly posting about how,
11:27
Speaker 2: you know, great news. She's been crypto certified, whatever the
11:31
Speaker 2: hell that means. Posted an ID badge of like the
11:34
Speaker 2: crypto trading firm that she was now working at, supposedly.
11:38
Speaker 2: This was an interesting one. I think it really goes
11:40
Speaker 2: to Meta's overall enforcement because the scam in question was
11:43
Speaker 2: like a slow burn.
11:46
Speaker 1: A pig butchering of sorts, though in this case the
11:49
Speaker 1: butcher is pretending to be someone the pig knows. The
11:52
Speaker 1: scammer wants to get the Air Force recruiter's followers to
11:54
Speaker 1: send them money under the guise of selling them crypto.
11:57
Speaker 1: And whoever was behind this really took their time with it.
12:00
Speaker 2: The scammer hacked the account and then they were just
12:03
Speaker 2: literally posting about their success crypto trading and how great
12:06
Speaker 2: this was and like, They even posted a picture of
12:09
Speaker 2: this plot of land that supposedly the recruiter had purchased
12:13
Speaker 2: to build their dream home. You know, weeks and weeks
12:16
Speaker 2: of posting. Meanwhile, this Canadian Air Force recruiter is trying
12:19
Speaker 2: to get this stuff taken down. First through reporting and
12:22
Speaker 2: then by getting people that she knows to report and
12:24
Speaker 2: then by getting her bosses to get in touch with
12:27
Speaker 2: the Mounties, Canada's police force.
12:29
Speaker 1: But even trying to use her connections at the Canadian
12:32
Speaker 1: military and police to stop this identity theft, that didn't work.
12:37
Speaker 2: What came back is like, look, Meta doesn't frequently respond
12:40
Speaker 2: to them either. Meta has a lot of law enforcement
12:42
Speaker 2: requests come in, and most of them don't get processed, right?
12:46
Speaker 1: And she wants to get it taken down because it's
12:48
Speaker 1: still her name.
12:49
Speaker 2: It's her name, and it's very clearly trying to defraud
12:52
Speaker 2: everyone she knows. And this is someone who has thousands
12:55
Speaker 2: of Facebook friends because they're a recruiter, they're a social person,
12:59
Speaker 2: they know people, right? And it was about a month in.
13:03
Speaker 2: that the first person got in touch being like, that
13:06
Speaker 2: wasn't you, was it? Tens of thousands of dollars got
13:10
Speaker 2: lost by four or five different people in this particular scam.
13:14
Speaker 2: The recruiter just kind of like broke down in tears
13:17
Speaker 2: because people were being defrauded quite literally because they trusted her.
13:22
Speaker 2: Meta actually didn't shut down the account. for weeks more
13:26
Speaker 2: until she basically organized a brigade of everyone she knew
13:30
Speaker 2: to just try to like repeatedly report her account over
13:33
Speaker 2: and over for scam activity and for impersonation and for
13:37
Speaker 2: being hacked and like just any report they could file
13:40
Speaker 2: like she estimates that there were more than 100 reports
13:42
Speaker 2: filed before meta actually took action on this thing.
13:44
Speaker 1: Yeah you write about this one guy mike lavery he's
13:47
Speaker 1: a he's someone she had worked with as a recruiter
13:49
Speaker 1: basically who called her and said he'd lost a bunch
13:50
Speaker 1: of money.
13:51
Speaker 2: Yeah i think he lost around 40 000 and like
13:54
Speaker 2: Mike Lavery, a really good guy. And by the way,
13:56
Speaker 2: like hats off to people who are willing to talk
13:58
Speaker 2: about this stuff. I think sometimes there's like a sense
14:00
Speaker 2: of stigma that like, oh my God, I got ripped
14:03
Speaker 2: off on the internet. What a dummy. You know, Mike
14:05
Speaker 2: definitely did not strike me as a dummy. Mike is
14:08
Speaker 2: a smart guy who let his guard down because he
14:11
Speaker 2: was talking to someone who he had the highest personal
14:14
Speaker 2: and professional respect for that he knew.
14:17
Speaker 1: How did she feel about it? What had happened when
14:19
Speaker 1: she learned that people had actually given money to these scammers?
14:23
Speaker 1: that were using her face and account and her credibility.
14:26
Speaker 2: Just horror? I mean, that people were being defrauded precisely
14:30
Speaker 2: because they trusted her?
14:32
Speaker 1: The people being scammed aren't the only victims here. Organized
14:36
Speaker 1: crime is behind a lot of these schemes. And reporters,
14:40
Speaker 1: including some of Jeff's colleagues at Reuters, have documented how
14:43
Speaker 1: these organizations have set up a vast system of human trafficking,
14:48
Speaker 1: where people, oftentimes in Asia, are lured to a meeting
14:51
Speaker 1: with the promise of a job and then drawn into
14:54
Speaker 1: indentured servitude, put in a compound, and forced to scam
14:58
Speaker 1: people around the world.
15:00
Speaker 2: These are basically prison camps where people who've been mostly
15:04
Speaker 2: human trafficked are forced to work in what are essentially
15:08
Speaker 2: scam call centers. This is an industry that has a
15:12
Speaker 2: few hundred thousand people working in it. Myanmar border, basically
15:16
Speaker 2: in the jungle. This is one of the more lawless
15:19
Speaker 2: places Areas of the world and people are.
15:23
Speaker 1: Being held against their will and not being paid to
15:25
Speaker 1: do this or how's it?
15:26
Speaker 2: Yeah, you can you can see these compounds and satellite
15:28
Speaker 2: photos like basically towns like tens of thousands of people
15:32
Speaker 2: and they're surrounded by barbed wire and guards and Inside
15:36
Speaker 2: they are busy attempting to scam people via text to
15:39
Speaker 2: be a social media via, you know any method they
15:42
Speaker 2: can find and So it's kind of a really abusive
15:45
Speaker 2: ecosystem on both sides, right? Like the people committing the
15:49
Speaker 2: fraud are like in an even worse position than the
15:51
Speaker 2: people they're defrauding quite often.
15:54
Speaker 1: While Facebook is making money in the process. Up next,
16:00
Speaker 1: Meta's way of fighting fraud. Spoiler, it involves charging even
16:05
Speaker 1: more money. So that weird idea I told you about earlier,
16:14
Speaker 1: it was a reporting experiment I wanted to try. I'm
16:17
Speaker 1: interested in people's media diets. Like, we all take in
16:20
Speaker 1: so much media content every day. How can you track
16:25
Speaker 1: all the little pieces of content you're taking in? There
16:28
Speaker 1: actually isn't a really good tech solution to do this.
16:30
Speaker 1: We thought about having people take diaries, but that seemed
16:33
Speaker 1: kind of hard for the digital era. It was suggested
16:35
Speaker 1: to us to try parental monitoring apps, but that actually
16:38
Speaker 1: wasn't right. And then I learned about the Plodd. which
16:41
Speaker 1: is this little device. I have it right here. And
16:43
Speaker 1: you push it, and it starts recording. I turned it on,
16:47
Speaker 1: and I'm just using my phone, like I use my phone,
16:49
Speaker 1: going on social media, seeing what's coming across my feeds,
16:52
Speaker 1: scrolling through stuff, letting it play.
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Speaker 2: We have some big news right now. Corporations are announcing
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Speaker 1: code question. Welcome back. I'm talking to Reuters reporter Jeff
18:00
Speaker 1: Horwitz about his recent scoop from Inside Meta showing the
18:03
Speaker 1: massive amount of fraud and scams happening on its platforms
18:07
Speaker 1: and the role that Section 230 has played in allowing
18:09
Speaker 1: this to fester. It's worth mentioning that while reporting this story,
18:13
Speaker 1: Jeff reached out to Meta and a spokesman told him
18:16
Speaker 1: the files he was looking at, quote, present a selective
18:19
Speaker 1: view that distorts Meta's approach to fraud and scams. While
18:23
Speaker 1: those internal records showed the company projected about 10% of
18:26
Speaker 1: its 2024 revenue would be from scam ads, the spokesman
18:30
Speaker 1: said the number was actually lower. But he wouldn't tell
18:33
Speaker 1: Jeff what that supposedly lower figure was. One of the
18:37
Speaker 1: things I found most enraging about your reporting is is
18:40
Speaker 1: that Meta knows this is happening, right? Like you found
18:44
Speaker 1: this information from their own internal research and reports and documentation.
18:48
Speaker 2: Very definitely, yes.
18:51
Speaker 1: These records Jeff was given from inside Meta show that
18:54
Speaker 1: in 2023, the company dismissed or ignored 96% of all
19:00
Speaker 1: valid complaints people sent in about scam ads. In a
19:04
Speaker 1: typical week, Facebook and Instagram and WhatsApp were getting about
19:07
Speaker 1: 100,000 complaints from users saying scammers were targeting them and
19:12
Speaker 1: dismissing all but about 4,000. That's pretty damn close to
19:16
Speaker 1: dismissing all of the complaints. So when that Canadian Air
19:20
Speaker 1: Force recruiter was making hundreds of requests to Facebook asking
19:23
Speaker 1: him to do something about her page being hacked, it's
19:26
Speaker 1: not unusual that Facebook was doing nothing because that seems
19:30
Speaker 1: to be their M.O. Jeff saw in the files that
19:33
Speaker 1: Meta did resolve to do better with this. According to
19:35
Speaker 1: another 2023 document, instead of dismissing nearly all of the
19:39
Speaker 1: complaints users send in about scam ads, their target for
19:42
Speaker 1: the future was to dismiss three quarters of them. That
19:46
Speaker 1: was their goal. Just to give you a sense of
19:48
Speaker 1: how few fucks Meta seems to give about this, there's
19:51
Speaker 1: this guy, Andrew Forrest. He's an Australian billionaire with a
19:55
Speaker 1: cute nickname.
19:56
Speaker 2: Twiggy.
19:57
Speaker 1: Twiggy. His nickname is Twiggy.
19:58
Speaker 2: That's right. You gotta love the Australians for this stuff.
20:02
Speaker 1: Scammers started using pictures of Twiggy in ads, trying to
20:05
Speaker 1: get people to send money for investment schemes and things
20:08
Speaker 1: like that. It was really bad. There were hundreds of
20:11
Speaker 1: thousands of these scams.
20:12
Speaker 2: Dr. Forrest was very incensed about the sheer volume of
20:16
Speaker 2: ads ripping off Australians using his likeness and, you know,
20:19
Speaker 2: in some cases, voice, because they were using generative AI
20:22
Speaker 2: impersonations to say, Twiggy thinks you should invest in crypto
20:26
Speaker 2: with this, you know, altcoin type stuff. He got really incensed.
20:31
Speaker 2: He tried to talk to Meta about it. I think, like,
20:33
Speaker 2: tried to sort this out with Mark Zuckerberg personally, billionaire
20:35
Speaker 2: to billionaire. did not receive the attention that I think
20:40
Speaker 2: he was hoping in terms of getting this to be
20:41
Speaker 2: taken down. And so he sued.
20:45
Speaker 1: If a fellow billionaire can't appeal to Mark Zuckerberg personally
20:48
Speaker 1: and get a scam ad taken down, what hope do
20:51
Speaker 1: any of us have? Twiggy's lawsuit is pretty interesting. Meta
20:58
Speaker 1: does what it normally does in these situations. It filed
21:01
Speaker 1: a motion to dismiss the lawsuit, saying Meta is not
21:03
Speaker 1: responsible for these scam ads of Twiggy. Because they come
21:06
Speaker 1: from other users, and so Section 230 shields the company.
21:10
Speaker 1: But the court, in a very rare move, did not
21:13
Speaker 1: rule in Meta's favor here. The court said it's possible,
21:16
Speaker 1: in Andrew Forrest's case, that Section 230 may not apply.
21:20
Speaker 1: And so for now, Twiggy has been able to puncture
21:22
Speaker 1: Section 230 just a little bit. The lawsuit's moving forward,
21:26
Speaker 1: and the next phase could get juicy because Meta has
21:29
Speaker 1: to disclose how its ad system works. This could become
21:32
Speaker 1: a landmark Section 230 case if Twiggy is successful. though
21:36
Speaker 1: there's a lot further to go and we'll see where
21:37
Speaker 1: it ends up. In the meantime, Jeff says the contents
21:41
Speaker 1: of the leak do give a sense of what Meta
21:44
Speaker 1: has tried to do to combat scams and frauds. And
21:47
Speaker 1: it's telling about how the company tends to approach problems
21:50
Speaker 1: like this.
21:52
Speaker 2: So, for example, there was an effort last year, and
21:54
Speaker 2: I think it's still ongoing, to put extremely high risk advertisers,
21:58
Speaker 2: like the ones that Meta is like virtually certain are
22:01
Speaker 2: bad news.
22:02
Speaker 1: From like previous behavior, like they can just tell?
22:04
Speaker 2: Yeah, from previous behavior or let's say, you know, like,
22:07
Speaker 2: I don't know if they're using a credit card that
22:09
Speaker 2: was used in three separate scam attempts. You know, that
22:11
Speaker 2: might be an indication of something like that.
22:14
Speaker 1: Jeff says Meta has models it can use to predict
22:17
Speaker 1: the likelihood based on various factors like that an account
22:20
Speaker 1: or a post or user is a scammer. And it
22:23
Speaker 1: started this effort where it would put higher risk accounts
22:27
Speaker 1: through extra steps before it allowed them to buy advertising.
22:30
Speaker 1: Extra verification, for instance. Sounds reasonable, but here's the thing.
22:35
Speaker 2: That program was given a limit for how much revenue
22:38
Speaker 2: it could cost Meta. And that limit was 0.15% of
22:42
Speaker 2: all Meta revenue. Don't get me wrong, that's like well
22:45
Speaker 2: over $ 100 million. But It's also not much, if that
22:50
Speaker 2: makes sense.
22:51
Speaker 1: According to Jeff's reporting, Meta's position is basically, there are
22:55
Speaker 1: all these accounts we know are probably bad actors, but
22:58
Speaker 1: once going after them costs us a hundred or so
23:01
Speaker 1: million dollars, we're going to stop there. We're not going
23:04
Speaker 1: to sacrifice any more money. Everybody else can just escape by.
23:07
Speaker 1: They could have just said, if we're virtually certain that
23:11
Speaker 1: an account or advertiser is a scam, we just don't
23:14
Speaker 1: do business with them ever, right?
23:17
Speaker 2: Yeah, or we're going to put high-risk advertisers through their
23:20
Speaker 2: paces a little more, and it'll cost us what it
23:22
Speaker 2: costs us. That's kind of not a way that they
23:25
Speaker 2: tend to approach things. It tends to be like, okay, well,
23:27
Speaker 2: here's the budget.
23:28
Speaker 1: When Jeff reached out to Meta for his story, the
23:31
Speaker 1: company told him this revenue percentage he saw in the leak,
23:34
Speaker 1: it wasn't meant to be a hard and fast number.
23:36
Speaker 2: But internally, people are talking about this as a number
23:39
Speaker 2: that they can't exceed, which is 0.15%. They were going
23:43
Speaker 2: to do it, but it was limited by revenue impact.
23:46
Speaker 2: And so that's one approach. Another approach that they, I think,
23:51
Speaker 2: have leaned into a little more heavily and which actually
23:53
Speaker 2: is effective, even if it's a little like queasy making,
23:58
Speaker 2: is they charge extra to advertisers that they suspect are scammers.
24:04
Speaker 2: If there's an entity that seems likely to be a scammer,
24:09
Speaker 2: but isn't like certain to be a scammer, they'll actually
24:12
Speaker 2: charge them a penalty bid. So like, Let's say Scammer
24:16
Speaker 2: Brian is assumed to be 80% likely to be a
24:19
Speaker 2: scammer by Meta. And Honest Jeff, who's another advertiser and
24:25
Speaker 2: selling legitimate goods, has no risk. Meta is going to
24:30
Speaker 2: charge a penalty on whatever you bid, depending on how
24:33
Speaker 2: likely it is that you're a scammer. This is something
24:37
Speaker 2: that does reduce how many scam ads get sold, but
24:41
Speaker 2: they make more on every ad they do sell.
24:44
Speaker 1: Dicey, huh? The more likely an ad buyer is to
24:47
Speaker 1: defraud Meta's users, the more money Meta makes off them.
24:51
Speaker 1: What is the argument that that is not Meta being
24:54
Speaker 1: complicit in the fraud?
24:56
Speaker 2: I think the argument is that Meta's goal is to
25:00
Speaker 2: reduce the rate of scam activity on its platforms overall.
25:04
Speaker 2: And this does that because penalizing scammers does cost them money.
25:09
Speaker 2: They make less revenue overall per the company. And I
25:12
Speaker 2: think that's credible. So you are hurting their business disproportionately.
25:16
Speaker 1: Right. That's like the kind of a thousand foot view.
25:19
Speaker 1: But like the 10 foot view on, you know, one
25:22
Speaker 1: account where they're they have a high level of certainty
25:24
Speaker 1: that it's a scammer and they're going to make more
25:27
Speaker 1: money on it rather than just saying we're not going
25:29
Speaker 1: to do business with you. What's the argument from that
25:32
Speaker 1: perspective that that one instance, which is replicated many times over,
25:36
Speaker 1: is not meta being part of fraud?
25:39
Speaker 2: I would say that some of the documentation I've seen
25:42
Speaker 2: did express similar concerns to what you've raised about exactly
25:47
Speaker 2: how Meta was going to apply this and under what
25:51
Speaker 2: circumstances and all sorts of questions like that. It was awkward, right?
25:55
Speaker 2: I think it's just a feels wrong tool, I think,
25:58
Speaker 2: to a lot of people. If you think about it
26:00
Speaker 2: in an offline sense, before you recommend someone does business
26:05
Speaker 2: with someone or you show them something... If you have
26:09
Speaker 2: questions about whether they're legit, you check them out first, right?
26:13
Speaker 2: You don't just be like, ah, 15% scammer, let them go.
26:17
Speaker 2: You're like, okay, no, I'm going to need to see
26:18
Speaker 2: your ID. I'm going to need to verify that you're,
26:20
Speaker 2: to the best of my knowledge, clean. I think this
26:23
Speaker 2: is a place where just the business of the internet
26:28
Speaker 2: just works in a way that is kind of fundamentally
26:33
Speaker 2: uncomfortable to an offline mindset.
26:37
Speaker 1: This is the business model that Section 230, plus the
26:41
Speaker 1: lack of significant regulation of social media companies in the U.S.,
26:44
Speaker 1: has allowed to develop.
26:45
Speaker 2: You know, the company is aware that fraud is uncomfortably
26:49
Speaker 2: high on its platforms and is, you know, working to
26:54
Speaker 2: bring that down in future years, but has chosen to
26:57
Speaker 2: not take what it referred to as like the aggressive
27:02
Speaker 2: fast train.
27:03
Speaker 1: Because in the meantime, it makes them a lot of money.
27:05
Speaker 2: I have not seen any document that says we love
27:08
Speaker 2: scams because they make us money. I have seen a
27:11
Speaker 2: lot of documents that say that we can't do things
27:16
Speaker 2: because the revenue impact would be too high, or we
27:19
Speaker 2: are very concerned about hitting legitimate advertisers. So I think
27:24
Speaker 2: the threat, this is something that I think is just
27:26
Speaker 2: important to understand about how the company approaches these things.
27:29
Speaker 2: For an advertiser that Meta's automated system thinks is dirty,
27:33
Speaker 2: suspects is dirty, and is likely attempting to defraud people,
27:37
Speaker 2: the level of certainty that Meta's prediction system needs to
27:41
Speaker 2: have to cut that advertiser off is at least 95%.
27:47
Speaker 2: So if it's like 85% likely that an advertiser is
27:52
Speaker 2: a scammer, they will not stop taking their money.
27:55
Speaker 1: And this is like a formal metric they have.
27:58
Speaker 2: Yeah, yeah, absolutely. Look, this is kind of not wildly
28:02
Speaker 2: surprising in context of the history of the Facebook files
28:06
Speaker 2: and the level of certainty that you had to have
28:08
Speaker 2: to take down, say, violence inciting content, you know, was
28:12
Speaker 2: in that same ballpark. The level of certainty you had
28:15
Speaker 2: to have before you'd remove an account that you thought
28:17
Speaker 2: was likely sort of, shall we say, interested in children
28:21
Speaker 2: in the wrong way, also in that same ballpark.
28:25
Speaker 1: It seems, I mean, just as kind of a layperson
28:27
Speaker 1: to this who's new to this relatively, like it seems
28:29
Speaker 1: high to me, but how should I think about that benchmark?
28:34
Speaker 2: I mean, I think you should think about it any
28:38
Speaker 2: way you want, Brian.
28:40
Speaker 1: Jeff's a reporter's reporter. He's not going to tell me
28:43
Speaker 1: or you what to think. He's going to give us
28:45
Speaker 1: the facts, let us make up our minds. As he
28:48
Speaker 1: and I were talking about Section 230, he seemed reluctant
28:50
Speaker 1: to stake out a position on it. He told me
28:52
Speaker 1: he doesn't know what the right solution is there. whether
28:55
Speaker 1: reforming 230 is the way to go or not, given
28:57
Speaker 1: the trade-offs. What he does know, though, the legal framework
29:00
Speaker 1: we've set up for the online world in the U.S.
29:03
Speaker 1: has allowed Meta to act the way it does.
29:06
Speaker 2: One of the things that the Meta documents I've seen
29:08
Speaker 2: make very clear is that the company does have the
29:11
Speaker 2: capacity to reduce the rate of scams. And in fact,
29:14
Speaker 2: it could do so very dramatically and abruptly if it
29:17
Speaker 2: so chose. But that's just sort of not the balance
29:21
Speaker 2: it struck. Let's say I ran a pawn shop and
29:25
Speaker 2: 10 guys walked through the door, each with some gold jewelry,
29:27
Speaker 2: and I knew that nine of them had probably stolen that.
29:30
Speaker 2: The 10th one was clean. I probably wouldn't do business
29:34
Speaker 2: with them, right? Yeah. I would be worried about my
29:36
Speaker 2: legal exposure. But that's kind of nonchalant. the model that
29:41
Speaker 2: we've taken in the online world. It just seems strange
29:45
Speaker 2: to think that you could have no responsibility for targeting
29:48
Speaker 2: fraudulent ads to your user base. Yeah. I mean, that
29:52
Speaker 2: is what Meta has said, right? In the Andrew Forrest case,
29:55
Speaker 2: they explicitly state in their effort to get this thing
29:58
Speaker 2: dismissed that They believe they do not owe Dr. Forrest
30:03
Speaker 2: or any user a duty to remove fraudulent ads from
30:07
Speaker 2: the platform. Like that's just not a thing that they
30:09
Speaker 2: are responsible for. They may do so. But like that's
30:13
Speaker 2: up to them and it's not a thing that legally
30:15
Speaker 2: they are responsible for. It's just weird reading.
30:17
Speaker 1: That, right? Yeah, I've encountered this too as I've kind
30:19
Speaker 1: of dug into this world more where we've, I think,
30:21
Speaker 1: kind of accepted as a society this too big to
30:24
Speaker 1: fail kind of mindset. Like just the scale and volume
30:27
Speaker 1: of activity on these platforms and on the internet means
30:30
Speaker 1: the rules have to be different. But do they like,
30:33
Speaker 1: is that like a fundamental truth that we have to
30:36
Speaker 1: accept or could it be These businesses are fundamentally flawed
30:41
Speaker 1: and maybe shouldn't exist as they do.
30:45
Speaker 2: I mean, something that I try to make very clear
30:47
Speaker 2: in my work is that there are other ways this
30:50
Speaker 2: could be. There are other ways that things could be prioritized.
30:53
Speaker 2: I think there's still the sense of like, well, you know,
30:56
Speaker 2: it's the internet. What are you going to do? People
30:58
Speaker 2: do crazy stuff on the internet. And they do. But
31:02
Speaker 2: it is a platform choice to figure out what sorts
31:04
Speaker 2: of behavior are rewarded by a platform, right? Like, do
31:07
Speaker 2: you reward... people who, you know, share moderately things that
31:12
Speaker 2: don't later get reported as misinformation? Or do you reward
31:15
Speaker 2: the people who share a ton and post the most
31:19
Speaker 2: inflammatory stuff possible? Like I remember during the pandemic. significant
31:24
Speaker 2: amount of like anti-vaccine content was coming from users who
31:29
Speaker 2: were commenting more than 200 times per hour on posts.
31:33
Speaker 1: Oh my God.
31:34
Speaker 2: Which is like an indication of like what behavior is rewarding.
31:37
Speaker 2: And I don't know what the appropriate limit on how
31:39
Speaker 2: many times a comment per hour can be made that
31:41
Speaker 2: affects what people see on the platform is, but like
31:45
Speaker 2: maybe it's not 200. Those are decisions that can be
31:48
Speaker 2: mathematically accurate. embedded in a platform, and one of them
31:51
Speaker 2: leads to a very different environment than the other.
31:54
Speaker 1: This is exactly what I'm saying, and this is why
31:56
Speaker 1: you need more external accountability, basically. Imagine if Section 230
32:02
Speaker 1: were changed so users could easily sue Meta for serving
32:05
Speaker 1: them scam ads. One thing I found noteworthy from Jeff's reporting,
32:09
Speaker 1: internal records showed that Meta prioritized cleaning up its platforms
32:13
Speaker 1: of fraud in countries where there are regulations about it.
32:16
Speaker 1: I guess outside accountability works. In the U.S., we have
32:20
Speaker 1: very few examples of that. And so we're left in
32:22
Speaker 1: large part to rely on reporters like Jeff to fill
32:25
Speaker 1: in the gaps.
32:27
Speaker 2: Leaks are a primary source of information about how the
32:31
Speaker 2: hell products that are so deeply ingrained in our lives
32:34
Speaker 2: actually work. This is not an ideal way for information
32:39
Speaker 2: about such societally important platforms to make it into the
32:44
Speaker 2: public domain. It's periodic. It requires on, you know, individual
32:48
Speaker 2: employees to take risks. This is a broken system that,
32:54
Speaker 2: you know, perhaps my career has been the beneficiary of.
33:00
Speaker 2: I think social media is something that we are still
33:03
Speaker 2: trying to get used to, right? Like it feels like
33:06
Speaker 2: it's old hat. We've had it forever now. But in the,
33:10
Speaker 2: you know, terms of like relative novelty of forms of
33:14
Speaker 2: communication and media, It is brand spanking new. You think
33:19
Speaker 2: of the printing press and how that changed Europe and
33:23
Speaker 2: made the world better in many places and also led
33:26
Speaker 2: to literally decades upon decades of warfare. That took a
33:32
Speaker 2: lot of time before society adjusted to that.
33:37
Speaker 1: And the thing I'm learning to keep in mind, we
33:39
Speaker 1: can shape it. Our online experience, the state of our
33:43
Speaker 1: information ecosystem, It is not inevitable.
33:47
Speaker 2: I think if the entire impact of my career were
33:50
Speaker 2: to make clear that social media platforms, that how people
33:54
Speaker 2: behave on them is heavily influenced by the design choices
33:58
Speaker 2: of the owners of those platforms. If that was the
34:01
Speaker 2: only thing that people took away from my career, I
34:03
Speaker 2: would be wildly pleased with myself.
34:09
Speaker 1: Jeff Horowitz at Reuters. Today's show was produced and edited
34:15
Speaker 1: by managing editor Kevin Sullivan. Check out our Substack, questioneverything.substack.com,
34:21
Speaker 1: where there's debate of Bruin over my Section 230 stance.
34:25
Speaker 1: And keep tuning in here on the podcast as well.
34:29
Speaker 1: Before we go, you may have seen in the news
34:30
Speaker 1: this week that Meta had a huge victory in court.
34:33
Speaker 1: The federal government was trying to break the company up,
34:36
Speaker 1: claiming it was a monopoly. This was a real potential
34:39
Speaker 1: threat to the company, but the judge disagreed. He sided
34:42
Speaker 1: with Meta. They get to keep operating as they are.
34:45
Speaker 1: And I saw this one statement from a Meta spokesperson
34:48
Speaker 1: after the decision that jumped out at me, given the
34:51
Speaker 1: reporting you just heard on our show. The spokesperson said
34:54
Speaker 1: Meta's social media platforms are, quote, beneficial for people and
34:57
Speaker 1: businesses and exemplify American innovation and economic growth. The executive
35:06
Speaker 1: producers of Question Everything are Robin Simeon and me, Brian Reed.
35:10
Speaker 1: Our team here at Question Everything also includes producers Sophie
35:12
Speaker 1: Kazis and Zach St. Louis, contributing editors Neil Drumming and
35:15
Speaker 1: Jen Kinney, associate producer Kevin Shepard, and contributing producer Sam Egan.
35:20
Speaker 1: This episode was fact-checked by Annika Robbins, mixing and sound
35:23
Speaker 1: design by Brendan Baker. Our music is by Matt McGinley.
35:26
Speaker 1: Special thanks to Blake Morrison. Our partners at KCRW include
35:30
Speaker 1: Arnie Seipel, Tejal Jumeirah, Natalie Hill, and Jennifer Farrow. We'll
35:34
Speaker 1: see you next week. Before we go, just one more
35:37
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