Google's stock rating downgraded as YouTube ad boycott contagion goes global

Advertisers, please help us build a better swamp

Google has responded to a contagious YouTube advertising boycott which yesterday prompted a downgrade on Wall Street.

Pivotal Research Group downgraded Alphabet shares from "Buy" to "Hold" based on its response to the boycott, which now includes more than 200 big brands, as well as public sector ad spending. Marks & Spencer and Hargreaves Lansdown became the latest to hit pause yesterday.

The boycott follows a series of reports in The Times demonstrating that Google was running advertisements promoting big brands against jihadi and racist videos on YouTube, the world's second most popular website after Google's search page. Like so:

Source: The Times

The boycott has rapidly gone global [paywalled]. The UK is Google's second largest market after the USA, bringing in 9 per cent of Alphabet's revenue, and the only territory where Google breaks out revenue in its financial statements.

Pivotal's Brian Wieser explained he'd taken the decision because Google wasn't taking the problem seriously, and accused it of "attempting to minimize the problem rather than eliminating it, which is the standard we think that many large brand advertisers expect".

It's four years since Google's Theo Bertram promised to "drain the swamp". What's in the latest evacuation?

In a post titled 'Expanded safeguards for advertisers', Philipp Schindler, Google's chief business officer, reiterated a commitment to give spenders more control over where their ads appear. Schindler euphemistically refers to "higher risk content".

Promises include a pledge to tighten up the threshold for "acceptable content" and make exclusions easier.

Speaking at an advertising conference yesterday, Google's European boss Matt Brittin walked a fine line. He simultaneously accepted that "we take responsibility for it" while points out that it wasn't entirely to blame: agencies and brands didn't always "fully" use the controls that Google offered.

Conspicuously absent from the post is any promise about filtering and content removal. The Times team flagged six "virulently antisemitic" videos on YouTube last week but Google ignored the notifications, and left two up even after the newspaper had contacted it again.

Despite strong growth from what Google classifies as "other revenue" (the Android Play Store and cloud licensing), most of Google's income is derived from advertising. "Other revenue" brought home $10.08bn in FY 2016 while advertising brought the bulk of Alphabet's income, $79.3bn. What the company calls "Other Bets" – a category including Nest home equipment and Google Fiber – grossed just $809m but incurred huge losses.

Inappropriate matching isn't the only mortal threat to Alphabet's cash cow. By the company's own research, 52 per cent of its ads are never seen by humans. Read more here. ®

Similar topics

Broader topics

Other stories you might like

  • EU-US Trade and Technology Council meets to coordinate on supply chains
    Agenda includes warning system for disruptions, and avoiding 'subsidy race' for chip investments

    The EU-US Trade and Technology Council (TTC) is meeting in Paris today to discuss coordinated approaches to global supply chain issues.

    This is only the second meeting of the TTC, the agenda for which was prepared in February. That highlighted a number of priorities, including securing supply chains, technological cooperation, the coordination of measures to combat distorting practices, and approaches to the decarbonization of trade.

    According to a White House pre-briefing for US reporters, the EU and US are set to announce joint approaches on technical discussions to international standard-setting bodies, an early warning system to better predict and address potential semiconductor supply chain disruptions, and a transatlantic approach to semiconductor investments aimed at ensuring security of supply.

    Continue reading
  • US cops kick back against facial recognition bans
    Plus: DeepMind launches new generalist AI system, and Apple boffin quits over return-to-work policy

    In brief Facial recognition bans passed by US cities are being overturned as law enforcement and lobbyist groups pressure local governments to tackle rising crime rates.

    In July, the state of Virginia will scrap its ban on the controversial technology after less than a year. California and New Orleans may follow suit, Reuters first reported. Vermont adjusted its bill to allow police to use facial recognition software in child sex abuse investigations.

    Elsewhere, efforts are under way in New York, Colorado, and Indiana to prevent bills banning facial recognition from passing. It's not clear if some existing vetoes set to expire, like the one in California, will be renewed. Around two dozen US state or local governments passed laws prohibiting facial recognition from 2019 to 2021. Police, however, believe the tool is useful in identifying suspects and can help solve cases especially in places where crime rates have risen.

    Continue reading
  • RISC-V needs more than an open architecture to compete
    Arm shows us that even total domination doesn't always make stupid levels of money

    Opinion Interviews with chip company CEOs are invariably enlightening. On top of the usual market-related subjects of success and failure, revenues and competition, plans and pitfalls, the highly paid victim knows that there's a large audience of unusually competent critics eager for technical details. That's you.

    Take The Register's latest interview with RISC-V International CEO Calista Redmond. It moved smartly through the gears on Intel's recent Platinum Membership of the open ISA consortium ("they're not too worried about their x86 business"), the interest from autocratic regimes (roughly "there are no rules, if some come up we'll stick by them"), and what RISC-V's 2022 will look like. Laptops. Thousand-core AI chips. Google hyperscalers. Edge. The plan seems to be to do in five years what took Arm 20.

    RISC-V may not be an existential risk to Intel, but Arm had better watch it.

    Continue reading

Biting the hand that feeds IT © 1998–2022