Meta had to come to terms with the fact that through advertisements on Facebook, Instagram, and WhatsApp, China-based bad actors were defrauding their users.
Chinese companies are only allowed to advertise abroad; they cannot do it in China.
Because of this, Meta has been able to make huge profits off their Chinese users, and thanks to this, in 2024, the company’s annual sales surpassed $18 billion, about a tenth of global revenue.
Meta found out that a lot of that money was being generated through advertisements of scams, illegal gambling, pornography, as well as other content not allowed on the platforms.
Documents were recently uncovered that show several of Meta’s divisions looking into the matter, but ultimately hesitating to act promptly and stamp out the issue.
After staff at Meta warned higher-ups of their findings, an anti-fraud team was assembled to counteract Chinese scams, which reduced the amount of troublesome ads.
This resulted in a huge loss of revenue in the second half of the year.
Counter-Productive Actions
The team was “asked to pause” after input supposedly from Mark Zuckerberg, Meta’s chief executive.
Soon after, the team monitoring the ads in China was dispersed, and new Chinese companies were allowed to advertise after a brief hiatus, looking into the matter.
Following these changes, the number of ads on Meta’s apps with prohibited content experienced a significant increase.
Meta’s profit began to rise again afterwards.
Facebook’s former senior director of product management, Andy Stone, spoke out about the company’s alleged disregard for consumer protection, as revealed in the documents.
The spokesperson for Meta told Reuters that the anti-fraud team has not been disbanded; its operational area has instead increased to not just China but the entire world.
In the documents, China is referred to cheekily as the company’s “Scam Exporting Nation”.
Door Wide Open
Meta’s users could suffer extreme damage from ads coming out of China
A huge amount of the ads are going into China through 11 major advertising partners.
Stone told Reuters these partners can’t advertise or work with similar companies from outside of the country.
An incredibly complicated system has come into place, which has made it easier for prohibited things to be advertised.
A report by Propellerfish was hired last year to find out why so many ads with banned content were coming out of China.
They found it was relatively easy for someone to post an ad on Facebook; the process requires only a name and a birthday.
In China, tools that can hide someone’s identity and pass off fake as legitimate ones are available through tech companies.
The report also mentions an industry aimed strictly at creating scam ads by using weak spots in Meta’s system.