Homepage / Technology / The real source of the internet's problems might be the advertising business
Amazon says this Prime Day was its biggest shopping event ever Kudlow says President Trump is 'so dissatisfied' with China trade talks that he is keeping the pressure on As stocks regain their footing, an ominous warning looms Goldman Sachs downgrades Clorox to sell, says valuation is 'unsustainably high' How Satya Nadella has spurred a tripling of Microsoft's stock price in just over four years Kudlow says economic growth could top 4% for 'a quarter or two,' more tax cuts could be coming The one chart that explains Netflix’s stunning comeback US housing starts plunge 12% in June to a nine-month low Aerospace titans Boeing and Airbus top $110 billion in orders at Farnborough Target uses Prime Day to its advantage, logging its 'biggest online shopping day' so far this year Billionaire Marc Lasry sees bitcoin reaching up to $40,000 as it becomes more mainstream and easier to trade These are the 10 US airports where you're most likely to be hacked Amazon shares slightly higher as investors await Prime Day results Wreck of Russian warship found, believed to hold gold worth $130 billion A bullish ‘phenomenon’ in bond market is weeks away from fading, top credit strategist says Stocks making the biggest moves premarket: MS, GOOGL, TXN, UAL, NFLX & more Twitter shares up 50% since late April means most upside priced in, analyst says in downgrade EU fines Google $5 billion over Android antitrust abuse Mortgage applications fall 2.5% as buyers struggle to find affordable homes America may not have the tools to counter the next financial crisis, warn Bernanke, Geithner and Paulson Investors are getting spooked as the risk of a no-deal Brexit rises EU expected to fine Google $5 billion over Android antitrust abuse Ex-FBI chief James Comey urges Americans to vote for Democrats in midterm elections Elon Musk apologizes to British cave diver following baseless 'pedo guy' claim Disney, Comcast and Fox: All you need to know about one of the biggest media battles ever Xiaomi shares notch new high after Hong Kong, mainland China stock exchanges reach agreement The trade war is complicating China's efforts to fix its economy European markets set for a strong open amid earnings; Google in focus Hedge fund billionaire Einhorn places sixth in major poker tournament The biggest spender of political ads on Facebook? President Trump Asian stocks poised to gain after Fed's Powell gives upbeat comments; dollar firmer Stocks are setting up to break to new highs Not all FAANG stocks are created equal EU ruling may be too little, too late to stop Google's mobile dominance Cramer explains how Netflix's stock managed to taper its drop after disappointing on earnings Airbnb condemns New York City's 'bellhop politics,' threatens legal retaliation Amazon sellers say they were unfairly suspended right before Prime Day, and now have two bad choices Investor explains why 'duller' tech stocks can have better returns than 'high-flying' tech names Elon Musk is 'thin-skinned and short-tempered,' says tech VC Texas Instruments CEO Brian Crutcher resigns for violating code of conduct Google Cloud Platform fixes issues that took down Spotify, Snapchat and other popular sites Uber exec: We want to become the 'one stop' transportation app 'What a dumb hearing,' says Democrat as Congress grills tech companies on conservative bias Amazon shares rebound, report says Prime Day sales jumped 89 percent in first 12 hours of the event How to put your medical history on your iPhone in less than 5 minutes Investment chief: Watch these two big events in 2018 Even with Netflix slowing, the market rally is likely not over Cramer: Netflix subscriber weakness debunks the 'sky's the limit' theory on the stock Netflix is looking at watch time as a new area of growth, but the competition is stiff Why Nobel laureate Richard Thaler follows Warren Buffett's advice to avoid bitcoin Rolls-Royce is developing tiny 'cockroach' robots to crawl in and fix airplane engines After Netflix plunge, Wall Street analysts forecast just tame returns ahead for the once high-flying FANG group Roku shares rise after analyst raises streaming video company's price target due to customer growth China is investing 9 times more into Europe than into North America, report reveals Amazon says US Prime Day sales 'so far bigger than ever' as glitch is resolved Netflix is on pace for its worst day in two years US lumber producers see huge opportunity, rush to expand San Francisco to consider tax on companies to help homeless Homebuilder sentiment, still high, stalls as tariffs, labor and land drive up costs Powell backs more rate hikes as economy growing 'considerably stronger' Netflix history is filled with big stock declines – like today – followed by bigger rebounds Intel shares get downgraded by Evercore ISI due to rising competition from Nvidia, AMD Petco aims to reinvent the pet store with something you can't buy online Genetic testing is coming of age, but for consumers it's buyer beware Tech 'FAANG' was the most-crowded trade in the world heading into the Netflix implosion, survey shows Netflix weak subscriber growth may indicate a 'maturity wall' that could whack the stock even more: Analyst This chart may be predicting the bull market's demise Wall Street says Netflix's stock plunge is a ‘compelling’ buying opportunity because the streaming giant ‘never misses twice’ Tesla sinks after Musk tweets, again Boeing announces new division devoted to flying taxis Stocks making the biggest move premarket: NFLX, UNH, GS, AMZN, WMT & more Deutsche Bank downgrades Netflix, but says big subscriber miss is not 'thesis changing' IBM is experimenting with a cryptocurrency that’s pegged to the US dollar North Korea and Zimbabwe: A friendship explained Virgin Galactic spinoff Orbit to launch rockets from the UK with space deal Artificial intelligence will create more jobs than it destroys? That’s what PwC says ‘Treasonous’ Trump and ‘Putin’s poodle:' Scathing headlines follow the Trump-Putin summit China’s fintech companies offer ‘enormous’ opportunity, investment manager says Trump's performance at summit with Putin was 'unprecedented,' experts say Walmart and Microsoft link up on cloud technology as they both battle Amazon European stocks seen mixed amid earnings; Fed’s Powell to address Congress How I knew I should quit my day job and run my start-up full-time: Viral website founder China's stocks have been trounced, but the trade war may ultimately be good news for those shares Billionaire tech investor Peter Thiel bets on crypto start-up Block.one Asian shares subdued open after mixed close on Wall Street; energy stocks under pressure Amazon cloud hits snags after Amazon Prime Day downtime Netflix isn't doomed by one quarter unless people start questioning the long-term investor thesis Tech stocks set to sink on Tuesday after rough evening for ‘FANG’ Netflix plummets after missing big on subscriber growth This wristband lets humans control machines with their minds The U.S. has a rocky history convincing Russia to extradite computer criminals Amazon suffers glitches at the start of Prime Day Jeff Bezos is now the richest man in modern history 'The United States has been foolish': Read Trump and Putin's full exchange Goldman Sachs recommends these 5 highly profitable companies — including Nvidia — to combat rising inflation Goldman Sachs releases 'tactical' stock picks for this earnings season Three red flags for Netflix ahead of its earnings report The bond market may be raising recession fears, but don't expect one anytime soon Cramer: Banks are 'making fortunes' but are still as hated as they were during the financial crisis Putin told Trump at summit: Russia never meddled in US election

Technology

The real source of the internet's problems might be the advertising business

Pretend you are the lead detective on a hit new show, “CSI: Terrible Stuff on the Internet.” In the first episode, you set up one of those crazy walls plastered with headlines and headshots, looking for hidden connections between everything awful that’s been happening online recently.

There’s a lot of dark stuff. In one corner, you have the Russian campaign to influence the 2016 presidential election with digital propaganda. In another, a rash of repugnant videos on YouTube, with children being mock-abused, cartoon characters bizarrely committing suicide on the kids’ channel, and a popular vlogger recording a body hanging from a tree.

Then there’s tech “addiction,” the rising worry that adults and kids are getting hooked on smartphones and social networks despite our best efforts to resist the constant desire for a fix. And all over the internet, general fakery abounds — there are millions of fake followers on Twitter and Facebook, fake rehab centers being touted on Google, and even fake review sites to sell you a mattress.

So who is the central villain in this story, the driving force behind much of the chaos and disrepute online?

This isn’t that hard. You don’t need a crazy wall to figure it out, because the force to blame has been quietly shaping the contours of life online since just about the beginning of life online: It’s the advertising business, stupid.

And if you want to fix much of what ails the internet right now, the ad business would be the perfect perp to handcuff and restrain — and perhaps even reform.

More from The New York Times:

Ads are the lifeblood of the internet, the source of funding for just about everything you read, watch and hear online. The digital ad business is in many ways a miracle machine — it corrals and transforms latent attention into real money that pays for many truly useful inventions, from search to instant translation to video hosting to global mapping.

But the online ad machine is also a vast, opaque and dizzyingly complex contraption with underappreciated capacity for misuse — one that collects and constantly profiles data about our behavior, creates incentives to monetize our most private desires, and frequently unleashes loopholes that the shadiest of people are only too happy to exploit.

And for all its power, the digital ad business has long been under-regulated and under-policed, both by the companies who run it and by the world’s governments. In the United States, the industry has been almost untouched by oversight, even though it forms the primary revenue stream of two of the planet’s most valuable companies, Google and Facebook.

“In the early days of online media, the choice was essentially made — give it away for free, and advertising would produce the revenue,” said Randall Rothenberg, the chief executive of the Interactive Advertising Bureau, a trade association that represents companies in the digital ad business. “A lot of the things we see now flow out from that decision.”

Mr. Rothenberg’s organization has long pushed for stronger standards for online advertising. In a speech last year, he implored the industry to “take civic responsibility for our effect on the world.” But he conceded the business was growing and changing too quickly for many to comprehend its excesses and externalities — let alone to fix them.

“Technology has largely been outpacing the ability of individual companies to understand what is actually going on,” he said. “There’s really an unregulated stock market effect to the whole thing.”

Facebook, which reports its earnings on Wednesday, said its advertising principles hold that ads should “be safe and civil,” and it pointed to several steps it has taken to achieve that goal. “We’ve tightened our ad policies, hired more ad reviewers, and created a new team to help detect and prevent abuses,” said Rob Goldman, the company’s vice president of advertising. “We’re also testing a tool that will bring more transparency to ads running on our platform. We know there is more work to do, but our goal is to keep people safe.”

A spokesman for Google, whose parent company, Alphabet, reports earnings on Thursday, said that it is constantly policing its ad system, pointing out recent steps it has taken to address problems arising from the ad business, including several changes to YouTube.

The role of the ad business in much of what’s terrible online was highlighted in a recent report by two think tanks, New America and Harvard’s Shorenstein Center on Media, Politics and Public Policy.

“The central problem of disinformation corrupting American political culture is not Russian spies or a particular social media platform,” two researchers, Dipayan Ghosh and Ben Scott, wrote in the report, titled “Digital Deceit.” “The central problem is that the entire industry is built to leverage sophisticated technology to aggregate user attention and sell advertising.”

The report chronicles just how efficient the online ad business has become at profiling, targeting, and persuading people. That’s good news for the companies that want to market to you — as the online ad machine gets better, marketing gets more efficient and effective, letting companies understand and influence consumer sentiment at a huge scale for little money.

But the same cheap and effective persuasion machine is also available to anyone with nefarious ends. The Internet Research Agency, the troll group at the center of Russian efforts to influence American politics, spent $46,000 on Facebook ads before the 2016 election. That’s not very much — Hillary Clinton and Donald J. Trump’s campaigns spent tens of millions online. And yet the Russian campaign seems to have had enormous reach; Facebook has said the I.R.A.’s messages — both its ads and its unpaid posts — were seen by nearly 150 million Americans.

How the I.R.A. achieved this mass reach likely has something to do with the dynamics of the ad business, which lets advertisers run many experimental posts to hone their messages, and tends to reward posts that spark outrage and engagement — exactly the sort that the Russians were pushing.

“You can’t have it both ways,” Mr. Scott said. “Either you have a brilliant technology that permits microtargeting to exactly the people you want to influence at exactly the right time with exactly the right message — or you’re only reaching a small number of people and therefore it couldn’t be influential.”

The consequences of the ad business don’t end at foreign propaganda. Consider all the nutty content recently found on YouTube Kids — not just the child-exploitation clips but also videos that seem to be created in whole or in part by algorithms that are mining the system for what’s popular, then creating endless variations.

Why would anyone do such a thing? For the ad money. One producer of videos that show antics including his children being scared by clowns told BuzzFeed that he had made more than $100,000 in two months from ads on his videos.

YouTube, which is owned by Google, has since pulled down thousands of such disturbing videos; the company said late last year that it’s hiring numerous moderators to police the platform. It also tightened the rules for which producers can make money from its ad system.

Facebook, too, has made several recent fixes. The company has built a new tool — currently being tested in Canada and slated to be rolled out more widely this year — that lets people see the different ads being placed by political pages, a move meant to address I.R.A.-like influence campaigns. It has also fixed holes that allowed advertisers to target campaigns by race and religion. And it recently unveiled a new version of its News Feed that is meant to cut down on passively scrolling through posts — part of Mark Zuckerberg’s professed effort to improve the network even, he has said, at the cost of advertising revenue.

The tinkering continued on Tuesday, when Facebook also said it would ban ads promoting crypto currency schemes, some of which have fallen into scammy territory.

Yet these are all piecemeal efforts. They don’t address the underlying logic of the ad business, which produces endless incentives for gaming the system in ways that Google and Facebook often only discover after the fact. Mr. Rothenberg said this is how regulating advertising is likely to go — a lot of fixes resembling “whack-a-mole.”

Of course, there is the government. You could imagine some regulator imposing stricter standards for who has access to the online ad system, who makes money from it, how it uses private information, and how transparent tech companies must be about it all. But that also seems unlikely; the Honest Ads Act, a proposal to regulate online political ads, has gone nowhere in Congress.

One final note: In 2015, Timothy D. Cook, Apple’s chief executive, warned about the dangers of the online ad business, especially its inherent threat to privacy. I wrote a column in which I took Mr. Cook to task — I argued that he had not acknowledged how ad-supported services improved his own company’s devices.

I stand by that view, but now I also regret dismissing his warning so cavalierly. Socially, politically and culturally, the online ad business is far more dangerous than I appreciated. Mr. Cook was right, and we should have listened to him.

Source: Tech CNBC
The real source of the internet's problems might be the advertising business

Comments are closed.