Facebook’s Oversight Board threw the company a Trump-shaped curveball

Facebook’s controversial policy-setting supergroup issued its verdict on Trump’s fate Wednesday, and it wasn’t quite what most of us were expecting.

We’ll dig into the decision to tease out what it really means, not just for Trump, but also for Facebook’s broader experiment in outsourcing difficult content moderation decisions and for just how independent the board really is.

What did the Facebook Oversight Board decide?

The Oversight Board backed Facebook’s determination that Trump violated its policies on “Dangerous Individuals and Organizations,” which prohibits anything that praises or otherwise supports violence. The the full decision and accompanying policy recommendations are online for anyone to read.

Specifically, the Oversight Board ruled that two Trump posts, one telling Capitol rioters “We love you. You’re very special” and another calling them “great patriots” and telling them to “remember this day forever” broke Facebook’s rules. In fact, the board went as far as saying the pair of posts “severely” violated the rules in question, making it clear that the risk of real-world harm in Trump’s words was was crystal clear:

The Board found that, in maintaining an unfounded narrative of electoral fraud and persistent calls to action, Mr. Trump created an environment where a serious risk of violence was possible. At the time of Mr. Trump’s posts, there was a clear, immediate risk of harm and his words of support for those involved in the riots legitimized their violent actions. As president, Mr. Trump had a high level of influence. The reach of his posts was large, with 35 million followers on Facebook and 24 million on Instagram.”

While the Oversight Board praised Facebook’s decision to suspend Trump, it disagreed with the way the platform implemented the suspension. The group argued that Facebook’s decision to issue an “indefinite” suspension was an arbitrary punishment that wasn’t really supported by the company’s stated policies:

It is not permissible for Facebook to keep a user off the platform for an undefined period, with no criteria for when or whether the account will be restored.

In applying this penalty, Facebook did not follow a clear, published procedure. ‘Indefinite’ suspensions are not described in the company’s content policies. Facebook’s normal penalties include removing the violating content, imposing a time-bound period of suspension, or permanently disabling the page and account.”

The Oversight Board didn’t mince words on this point, going on to say that by putting a “vague, standardless” punishment in place and then kicking the ultimate decision to the Oversight Board, “Facebook seeks to avoid its responsibilities.” Turning things around, the board asserted that it’s actually Facebook’s responsibility to come up with an appropriate penalty for Trump that fits its set of content moderation rules.

 

Is this a surprise outcome?

If you’d asked me yesterday, I would have said that the Oversight Board was more likely to overturn Facebook’s Trump decision. I also called Wednesday’s big decision a win-win for Facebook, because whatever the outcome, it wouldn’t ultimately be criticized a second time for either letting Trump back onto the platform or kicking him off for good. So much for that!

A lot of us didn’t see the “straight up toss the ball back into Facebook’s court” option as a possible outcome. It’s ironic and surprising that the Oversight Board’s decision to give Facebook the final say actually makes the board look more independent, not less.

Facebook likely saw a more clear-cut decision on the Trump situation in the cards. This is a challenging outcome for a company that’s probably ready to move on from its (many, many) missteps during the Trump era. But there’s definitely an argument that if the board declared that Facebook made the wrong call and reinstated Trump that would have been a much bigger headache.

What does it mean that the Oversight Board sent the decision back to Facebook?

Ultimately the Oversight Board is asking Facebook to either a) give Trump’s suspension and end date or b) delete his account. In a less severe case, the normal course of action would be for Facebook to remove whatever broke the rules, but given the ramifications here and the fact that Trump is a repeat Facebook rule-breaker, this is obviously all well past that option.

What will Facebook do?

We’re in for a wait. The board called for Facebook to evaluate the Trump situation and reach a final decision within six months, calling for a “proportionate” response that is justified by its platform rules. Since Facebook and other social media companies are re-writing their rules all the time and making big calls on the fly, that gives the company a bit of time to build out policies that align with the actions it plans to take. See you again on November 5.

In the months following the violence at the U.S. Capitol, Facebook repeatedly defended its Trump call as “necessary and right.” It’s hard to imagine the company deciding that Trump will get reinstated six months from now, but in theory Facebook could decide that length of time was an appropriate punishment and write that into its rules. The fact that Twitter permanently banned Trump means that Facebook could comfortably follow suit at this point.

If Trump had won reelection, this whole thing probably would have gone down very differently. As much as Facebook likes to say its decisions are aligned with lofty ideals — absolute free speech, connecting people — the company is ultimately very attuned to its regulatory and political environment. Trump’s actions were on January 6 were dangerous and flagrant, but Biden’s looming inauguration two weeks later probably influenced the company’s decision just as much.

In direct response to the decision, Facebook’s Nick Clegg wrote only: “We will now consider the board’s decision and determine an action that is clear and proportionate.” Clegg says Trump will stay suspended until then but didn’t offer further hints at what comes next.

Did the board actually change anything?

Potentially. In its decision, the Oversight Board said that Facebook asked for “observations or recommendations from the Board about suspensions when the user is a political leader.” The board’s policy recommendations aren’t binding like its decisions are, but since Facebook asked, it’s likely to listen.

If it does, the Oversight Board’s recommendations could reshape how Facebook handles high profile accounts in the future:

The Board stated that it is not always useful to draw a firm distinction between political leaders and other influential users, recognizing that other users with large audiences can also contribute to serious risks of harm.

While the same rules should apply to all users, context matters when assessing the probability and imminence of harm. When posts by influential users pose a high probability of imminent harm, Facebook should act quickly to enforce its rules. Although Facebook explained that it did not apply its ‘newsworthiness’ allowance in this case, the Board called on Facebook to address widespread confusion about how decisions relating to influential users are made. The Board stressed that considerations of newsworthiness should not take priority when urgent action is needed to prevent significant harm.

Facebook and other social networks have hidden behind newsworthiness exemptions for years instead of making difficult policy calls that would upset half their users. Here, the board not only says that political leaders don’t really deserve special consideration while enforcing the rules, but that it’s much more important to take down content that could cause harm than it is to keep it online because it’s newsworthy.

So… we’re back to square one?

Yes and no. Trump’s suspension may still be up in the air, but the Oversight Board is modeled after a legal body and its real power is in setting precedents. The board kicked this case back to Facebook because the company picked a punishment for Trump that wasn’t even on the menu, not because it thought anything about his behavior fell in a gray area.

The Oversight Board clearly believed that Trump’s words of praise for rioters at the Capitol created a high stakes, dangerous threat on the platform. It’s easy to imagine the board reaching the same conclusion on Trump’s infamous “when the looting starts, the shooting starts” statement during the George Floyd protests, even though Facebook did nothing at the time. Still, the board stops short of saying that behavior like Trump’s merits a perma-ban — that much is up to Facebook.

Facebook launches Neighborhoods, a Nextdoor clone

Facebook is launching a new section of its app designed to connect neighbors and curate neighborhood-level news. The new feature, predictably called Neighborhoods, is available now in Canada and will be rolling out soon for U.S. users to test.

As we reported previously, Neighborhoods has technically been around since at least October of last year, but that limited test only recruited residents of Calgary, Canada.

On Neighborhoods, Facebook users can create a separate sub-profile and can populate it with interests and a custom bio. You can join your own lower-case neighborhood and nearby neighborhoods and complain about porch pirates, kids these days, or whatever you’d otherwise be doing on Nextdoor.

Aware of the intense moderation headaches on Nextdoor, Facebook says that it will have a set of moderators dedicated to Neighborhoods to will review comments and posts to keep matters “relevant and kind.” Within Neighborhoods neighborhoods, deputized users can steer and strike up conversations and do some light moderation, it sounds like. The new corner of Facebook will also come with blocking features.

As far as privacy goes, well, it’s Facebook. Neighborhoods isn’t its own standalone app and will naturally be sharing your neighborly behavior to serve you targeted ads elsewhere.

Facebook’s hand-picked ‘oversight’ panel upholds Trump ban — for now

Facebook’s content decision review body, a quasi-external panel that’s been likened to a ‘Supreme Court of Facebook’ but isn’t staffed by sitting judges, can’t be truly independent of the tech giant which funds it, has no legal legitimacy or democratic accountability, and goes by the much duller official title ‘Oversight Board’ (aka the FOB) — has just made the biggest call of its short life…

Facebook’s hand-picked ‘oversight’ panel has voted against reinstating former U.S. president Donald Trump’s Facebook account.

However it has sought to row the company back from an ‘indefinite’ ban — finding fault with its decision to impose an indefinite restriction, rather than issue a more standard penalty (such as a penalty strike or permanent account closure).

In a press release announcing its decision the board writes:

Given the seriousness of the violations and the ongoing risk of violence, Facebook was justified in suspending Mr. Trump’s accounts on January 6 and extending that suspension on January 7.

However, it was not appropriate for Facebook to impose an ‘indefinite’ suspension.

It is not permissible for Facebook to keep a user off the platform for an undefined period, with no criteria for when or whether the account will be restored.”

The board wants Facebook to revision its decision on Trump’s account within six months — and “decide the appropriate penalty”. So it appears to have succeeded in… kicking the can down the road.

The FOB is due to hold a press conference to discuss its decision shortly so stay tuned for updates.

This story is developing… refresh for updates…

It’s certainly been a very quiet five months on mainstream social media since Trump had his social media ALL CAPS megaphone unceremoniously shut down in the wake of his supporters’ violent storming of the capital.

For more on the background to Trump’s deplatforming do make time for this excellent explainer by TechCrunch’s Taylor Hatmaker. But the short version is that Trump finally appeared to have torched the last of his social media rule-breaking chances after he succeeded in fomenting an actual insurrection on U.S. soil on January 6. Doing so with the help of the massive, mainstream social media platforms whose community standards don’t, as a rule, give a thumbs up to violent insurrection…

Facebook’s hand-picked ‘oversight’ panel upholds Trump ban — for now

Facebook’s content decision review body, a quasi-external panel that’s been likened to a ‘Supreme Court of Facebook’ but isn’t staffed by sitting judges, can’t be truly independent of the tech giant which funds it, has no legal legitimacy or democratic accountability, and goes by the much duller official title ‘Oversight Board’ (aka the FOB) — has just made the biggest call of its short life…

Facebook’s hand-picked ‘oversight’ panel has voted against reinstating former U.S. president Donald Trump’s Facebook account.

However it has sought to row the company back from an ‘indefinite’ ban — finding fault with its decision to impose an indefinite restriction, rather than issue a more standard penalty (such as a penalty strike or permanent account closure).

In a press release announcing its decision the board writes:

Given the seriousness of the violations and the ongoing risk of violence, Facebook was justified in suspending Mr. Trump’s accounts on January 6 and extending that suspension on January 7.

However, it was not appropriate for Facebook to impose an ‘indefinite’ suspension.

It is not permissible for Facebook to keep a user off the platform for an undefined period, with no criteria for when or whether the account will be restored.”

The board wants Facebook to revision its decision on Trump’s account within six months — and “decide the appropriate penalty”. So it appears to have succeeded in… kicking the can down the road.

The FOB is due to hold a press conference to discuss its decision shortly so stay tuned for updates.

This story is developing… refresh for updates…

It’s certainly been a very quiet five months on mainstream social media since Trump had his social media ALL CAPS megaphone unceremoniously shut down in the wake of his supporters’ violent storming of the capital.

For more on the background to Trump’s deplatforming do make time for this excellent explainer by TechCrunch’s Taylor Hatmaker. But the short version is that Trump finally appeared to have torched the last of his social media rule-breaking chances after he succeeded in fomenting an actual insurrection on U.S. soil on January 6. Doing so with the help of the massive, mainstream social media platforms whose community standards don’t, as a rule, give a thumbs up to violent insurrection…

For Trump and Facebook, judgement day is around the corner

Facebook unceremoniously confiscated Trump’s biggest social media megaphone months ago, but the former president might be poised to snatch it back.

Facebook’s Oversight Board, an external Supreme Court-like policy decision making group, will either restore Trump’s Facebook privileges or banish him forever on Wednesday. Whatever happens, it’s a huge moment for Facebook’s nascent experiment in outsourcing hard content moderation calls to an elite group of global thinkers, academics and political figures and allowing them to set precedents that could shape the world’s biggest social networks for years to come.

Facebook CEO Mark Zuckerberg announced Trump’s suspension from Facebook in the immediate aftermath of the Capitol attack. It was initially a temporary suspension, but two weeks later Facebook said that the decision would be sent to the Oversight Board. “We believe the risks of allowing the President to continue to use our service during this period are simply too great,” Facebook CEO Mark Zuckerberg wrote in January.

Facebook’s VP of Global Affairs Nick Clegg, a former British politician, expressed hope that the board would back the company’s own conclusions, calling Trump’s suspension an “unprecedented set of events which called for unprecedented action.”

Trump inflamed tensions and incited violence on January 6, but that incident wasn’t without precedent. In the aftermath of the murder of George Floyd, an unarmed Black man killed by Minneapolis police, President Trump ominously declared on social media “when the looting starts, the shooting starts,” a threat of imminent violence with racist roots that Facebook declined to take action against, prompting internal protests at the company.

The former president skirted or crossed the line with Facebook any number of times over his four years in office, but the platform stood steadfastly behind a maxim that all speech was good speech, even as other social networks grew more squeamish.

In a dramatic address in late 2019, Zuckerberg evoked Martin Luther King Jr. as he defended Facebook’s anything goes approach. “In times of social turmoil, our impulse is often to pull back on free expression,” Zuckerberg said. “We want the progress that comes from free expression, but not the tension.” King’s daughter strenuously objected.

A little over a year later, with all of Facebook’s peers doing the same and Trump leaving office, Zuckerberg would shrink back from his grand free speech declarations.

In 2019 and well into 2020, Facebook was still a roiling hotbed of misinformation, conspiracies and extremism. The social network hosted thousands of armed militias organizing for violence and a sea of content amplifying QAnon, which moved from a fringe belief on the margins to a mainstream political phenomenon through Facebook.

Those same forces would converge at the U.S. Capitol on January 6 for a day of violence that Facebook executives characterized as spontaneous, even though it had been festering openly on the platform for months.

 

How the Oversight Board works

Facebook’s Oversight Board began reviewing its first cases last October. Facebook can refer cases to the board, like it did with Trump, but users can also appeal to the board to overturn policy decisions that affect them after they exhaust the normal Facebook or Instagram appeals process. A five member subset of its 20 total members evaluate whether content should be allowed to remain on the platform and then reach a decision, which the full board must approve by a majority vote. Initially, the Oversight Board was only empowered to reinstate content removed on Facebook and Instagram, but in mid-April began accepting requests to review controversial content that stayed up.

Last month, the Oversight Board replaced departing member Pamela Karlan, a Stanford professor and voting rights scholar critical of Trump, who left to join the Biden administration. Karlan’s replacement, PEN America CEO Susan Nossel, wrote an op-ed in the LA Times in late January arguing that extending a permanent ban on Trump “may feel good” but that decision would ultimately set a dangerous precedent. Nossel joined the board too late to participate in the Trump decision.

The Oversight Board’s earliest batch of decisions leaned in the direction of restoring content that’s been taken down — not upholding its removal. While the board’s other decisions are likely to touch on the full spectrum of frustration people have with Facebook’s content moderation preferences, they come with far less baggage than the Trump decision. In one instance, the Oversight Board voted to restore an image of a woman’s nipples used in the context of a breast cancer post. In another, the board decided that a quote from a famous Nazi didn’t merit removal because it wasn’t an endorsement of Nazi ideology. In all cases, the Oversight Board can issue policy recommendations, but Facebook isn’t obligated to implement them — just the decisions.

Befitting its DNA of global activists, political figures and academics, the Oversight Board’s might have ambitions well beyond one social network. Earlier this year, Oversight Board co-chair and former Prime Minister of Denmark Helle Thorning-Schmidt declared that other social media companies would be “welcome to join” the project, which is branded in a conspicuously Facebook-less way. (The group calls itself the “Oversight Board” though everyone calls it the “Facebook Oversight Board.”)

“For the first time in history, we actually have content moderation being done outside one of the big social media platforms,” Thorning-Schmidt declared, grandly. “That in itself… I don’t hesitate to call it historic.”

Facebook’s decision to outsource some major policy decisions is indeed an experimental one, but that experiment is just getting started. The Trump case will give Facebook’s miniaturized Supreme Court an opportunity to send a message, though whether the takeaway is that it’s powerful enough to keep a world leader muzzled or independent enough to strike out from its parent and reverse the biggest social media policy decision ever made remains to be seen.

If Trump comes back, the company can shrug its shoulders and shirk another PR firestorm, content that its experiment in external content moderation is legitimized. If the board doubles down on banishing Trump, Facebook will rest easy knowing that someone else can take the blowback this round in its most controversial content call to date. For Facebook, for once, it’s a win-win situation.

Gatheround raises millions from Homebrew, Bloomberg and Stripe’s COO to help remote workers connect

Remote work is no longer a new topic, as much of the world has now been doing it for a year or more because of the COVID-19 pandemic.

Companies — big and small — have had to react in myriad ways. Many of the initial challenges have focused on workflow, productivity and the like. But one aspect of the whole remote work shift that is not getting as much attention is the culture angle.

A 100% remote startup that was tackling the issue way before COVID-19 was even around is now seeing a big surge in demand for its offering that aims to help companies address the “people” challenge of remote work. It started its life with the name Icebreaker to reflect the aim of “breaking the ice” with people with whom you work.

“We designed the initial version of our product as a way to connect people who’d never met, kind of virtual speed dating,” says co-founder and CEO Perry Rosenstein. “But we realized that people were using it for far more than that.” 

So over time, its offering has evolved to include a bigger goal of helping people get together beyond an initial encounter –– hence its new name: Gatheround.

“For remote companies, a big challenge or problem that is now bordering on a crisis is how to build connection, trust and empathy between people that aren’t sharing a physical space,” says co-founder and COO Lisa Conn. “There’s no five-minute conversations after meetings, no shared meals, no cafeterias — this is where connection organically builds.”

Organizations should be concerned, Gatheround maintains, that as we move more remote, that work will become more transactional and people will become more isolated. They can’t ignore that humans are largely social creatures, Conn said.

The startup aims to bring people together online through real-time events such as a range of chats, videos and one-on-one and group conversations. The startup also provides templates to facilitate cultural rituals and learning & development (L&D) activities, such as all-hands meetings and workshops on diversity, equity and inclusion. 

Gatheround’s video conversations aim to be a refreshing complement to Slack conversations, which despite serving the function of communication, still don’t bring users face-to-face.

Image Credits: Gatheround

Since its inception, Gatheround has quietly built up an impressive customer base, including 28 Fortune 500s, 11 of the 15 biggest U.S. tech companies, 26 of the top 30 universities and more than 700 educational institutions. Specifically, those users include Asana, Coinbase, Fiverr, Westfield and DigitalOcean. Universities, academic centers and nonprofits, including Georgetown’s Institute of Politics and Public Service and Chan Zuckerberg Initiative, are also customers. To date, Gatheround has had about 260,000 users hold 570,000 conversations on its SaaS-based, video platform.

All its growth so far has been organic, mostly referrals and word of mouth. Now, armed with $3.5 million in seed funding that builds upon a previous $500,000 raised, Gatheround is ready to aggressively go to market and build upon the momentum it’s seeing.

Venture firms Homebrew and Bloomberg Beta co-led the company’s latest raise, which included participation from angel investors such as Stripe COO Claire Hughes Johnson, Meetup co-founder Scott Heiferman, Li Jin and Lenny Rachitsky. 

Co-founders Rosenstein, Conn and Alexander McCormmach describe themselves as “experienced community builders,” having previously worked on President Obama’s campaigns as well as at companies like Facebook, Change.org and Hustle. 

The trio emphasize that Gatheround is also very different from Zoom and video conferencing apps in that its platform gives people prompts and organized ways to get to know and learn about each other as well as the flexibility to customize events.

“We’re fundamentally a connection platform, here to help organizations connect their people via real-time events that are not just really fun, but meaningful,” Conn said.

Homebrew Partner Hunter Walk says his firm was attracted to the company’s founder-market fit.

“They’re a really interesting combination of founders with all this experience community building on the political activism side, combined with really great product, design and operational skills,” he told TechCrunch. “It was kind of unique that they didn’t come out of an enterprise product background or pure social background.”

He was also drawn to the personalized nature of Gatheround’s platform, considering that it has become clear over the past year that the software powering the future of work “needs emotional intelligence.”

“Many companies in 2020 have focused on making remote work more productive. But what people desire more than ever is a way to deeply and meaningfully connect with their colleagues,” Walk said. “Gatheround does that better than any platform out there. I’ve never seen people come together virtually like they do on Gatheround, asking questions, sharing stories and learning as a group.” 

James Cham, partner at Bloomberg Beta, agrees with Walk that the founding team’s knowledge of behavioral psychology, group dynamics and community building gives them an edge.

“More than anything, though, they care about helping the world unite and feel connected, and have spent their entire careers building organizations to make that happen,” he said in a written statement. “So it was a no-brainer to back Gatheround, and I can’t wait to see the impact they have on society.”

The 14-person team will likely expand with the new capital, which will also go toward helping adding more functionality and details to the Gatheround product.

“Even before the pandemic, remote work was accelerating faster than other forms of work,” Conn said. “Now that’s intensified even more.”

Gatheround is not the only company attempting to tackle this space. Ireland-based Workvivo last year raised $16 million and earlier this year, Microsoft  launched Viva, its new “employee experience platform.”

Facebook rolls out vaccine finder tool in India, donates $10 million

Facebook has announced a $10 million grant to support emergency response efforts in India and has rolled out its Vaccine Finder tool in the country as the South Asian nation grapples with the latest wave of the coronavirus pandemic.

The American social network said that it has partnered with a number of organizations including United Way, Swasth, Hemkunt Foundation, I Am Gurgaon, Project Mumbai and US-India Strategic Partnership Forum (USISPF) to help augment critical medical supplies with over 5,000 oxygen concentrators and other life-saving equipments such as ventilators, BiPAP machines and to increase hospital bed capacity.

Facebook also said it has partnered with the Government of India to roll out a Vaccine Finder tool on the company’s marquee app. The tool, available in 17 languages, is designed to help people identify and spot vaccine centres in their vicinity.

Last week, India opened vaccination to people aged between 18 to 45, though its website quickly crashed and wasn’t immediately accepting appointment requests from most people in that age group.

Also worth checking out: Folks over at WiFi Dabba, a Bangalore-based startup that is working to build a low-cost ISP, have also developed a tool to help people easily find vaccination slots.

A bigger challenge confronting India currently, however, is the shortage of vaccine.

Facebook said it is also supporting non-government organizations and United Nation agencies in India with ad credits to reach the majority of people on Facebook with Covid-19 vaccine and preventive health information.

Additionally, the company said it is providing health resources to people from UNICEF India about when to seek emergency care and how to manage mild Covid-19 symptoms at home.

Scores of firms, startups, entrepreneurs, and investors have stepped up their efforts in recent weeks to help India, the world’s second most populous country, fight the pandemic after the federal and state governments were caught ill-prepared to handle it.

On Monday, Pfizer said it was sending medicines worth $70 million to India. “We are committed to being a partner in India’s fight against this disease and are quickly working to mobilize the largest humanitarian relief effort in our company’s history,” said company’s chairman and chief executive Albert Bourla.

Instagram Live takes on Clubhouse with options to mute and turn off the video

In addition to Facebook’s Clubhouse competitor built within Messenger Rooms and its experiments with a Clubhouse-like Q&A platform on the web, the company is now leveraging yet another of its largest products to take on the Clubhouse threat: Instagram Live. Today, Instagram announced it’s adding new features that will allow users to mute their microphones and even turn their video off while using Instagram Live.

Instagram explains these new features will give hosts more flexibility during their livestream experiences, as they can decrease the pressure to look or sound a certain way while broadcasting live. While that may be true, the reality is that Facebook is simply taking another page from Clubhouse’s playbook by enabling a “video off” experience that encourages more serendipitous conversations.

When people don’t have to worry about how they look, they’ll often be more amenable to jumping into a voice chat. In addition, being audio-only allows creators to engage with their community while multitasking — perhaps they’re doing chores or moving around, and can’t sit and stare right at the camera. To date, this has been one of the advantages about using Clubhouse versus live video chat. You could participate in Clubhouse’s voice chat rooms without always having to give the conversation your full attention or worrying about background noise.

For the time being, hosts will not be able to turn on or off the video or mute others in the livestream, but Instagram tells us it’s working on offering more of these types of capabilities to the broadcaster, and expects to roll them out soon.

Instagram notes it tested the new features publicly earlier this week during an Instagram Live between Facebook CEO Mark Zuckerberg and Head of Instagram Adam Mosseri.

This isn’t the first feature Instagram has added in recent weeks to lure the creator community to its platform instead of Clubhouse or other competitors. In March, Instagram rolled out the option for creators to host Live Rooms that allow up to four people to broadcast at the same time. The Rooms were meant to appeal to creators who wanted to host live talk shows, expanded Q&As, and more — all experiences that are often found on Clubhouse. It also added the ability for fans to buy badges to support the hosts, to cater to the needs of professional creators looking to monetize their reach.

Although Instagram parent company Facebook already has a more direct Clubhouse clone in development with Live Audio Rooms on Facebook and Messenger, the company said it doesn’t expect it to launch into testing until this summer. And it will first be available to Groups and public figures, not the broader public.

Instagram Live’s new features, meanwhile, are rolling out to Instagram’s global audience on both iOS and Android starting today.

Today’s big tech earnings in a mere 700 words

Today was yet another day of earnings from tech’s biggest names. To keep you up to speed without burying you in an endless crush of numbers we’ve pulled out the key data from each of the major reports.

In each you will also find a link to their earnings reports. What does all of the data from the week’s earnings downloads mean for startups? We’ll have a full roundup on that front tomorrow morning, so stay tuned.

Here’s what you need to know:

  • Facebook crushed financial expectations, missed slightly on users. Shares of Facebook are up around 5% after it reported its recent financial results. Facebook had a somewhat two-part report. The first piece of its results was a huge financial beat; the second was that it missed ever-so-slightly on active usage. Investors are weighing the former more heavily than the latter. In numerical terms, Facebook had been expected to report $23.67 billion in revenue. Instead, it posted $26.17 billion. And its earnings per share beat expectations by $0.93 per share, or just under 40%. Facebook is a controversial company with known issues. But turning in better than expected financial results is not one of them.
  • Shopify smashed expectations, again. Its shares spiked, again. The post-IPO Shopify story of the Canadian e-commerce infra player kicking the heck out of expectations continued today. Investors had expected Shopify to post $865.48 million in total Q1 2021 revenue. Shopify managed $988.6 million instead. And it beat profit expectations by a multiple. What drove the Shopify results? The company’s so-called “Merchant Solutions” business, which grew by 137%, faster than the company’s aggregate 110% growth rate in the quarter. Merchant Solutions at the company encompasses its payments, shipping, and capital services, among other elements of its business.
  • Apple shares rose after the company reported strong growth across its product categories. Apple, like Facebook, demolished investor expectations for its most recent quarter. In the three-month period ending March 27, 2021, Apple produced revenues of $89.6 billion and earnings per diluted share of $1.40 were miles ahead of an expected $77.35 billion in revenue and $0.99 in diluted EPS. What drove the huge win? Growth in every single product category that the company reports, compared to the year-ago period. iPhone sales totaled $47.94 billion, compared to a year-ago result of $28.96 billion. And the company’s key services business line grew from $13.35 billion to $16.90 billion over the same temporal interval. For the nerds in the room, Apple’s net income as a percentage of gross profit in the quarter was just over 62%. Wow.
  • Spotify shares fell sharply after it reported slower-than-anticipated user growth. In financial terms, Spotify had a pretty good quarter. It met revenue expectations (around €2.15 billion), and lost less money per share than was anticipated. However, the music streaming company’s user base only reached 356 million in the first quarter of the year, the low end of Spotify’s 354 million to 364 million guidance, and under the market’s expectation of just over 360 million. Its shares were off around 12% today. Why did Facebook shares rise after its usage miss, while Spotify’s fell? Facebook crushed financial expectations. Spotify merely met them. And Facebook’s user base miss appears smaller than what Spotify detailed.
  • GrubHub grew its revenues and losses ahead of its acquisition. GrubHub, which is in the final stages of being digested by JustEat Takeaway, brought in more money in the first quarter than in the same period a year ago, but also lost more money too. Here’s the breakdown: Revenue grew 52% year-over-year to $550.6 million thanks to all that pandemic-driven demand for delivery. GrubHub also reported a negative Adjusted EBITDA of $9.3 million. GrubHub blamed its adjusted EBITDA results on several factors, including temporary fee caps (which it opposes), increased delivery driver costs caused by short-term driver supply imbalances from surging demand, extreme winter weather in numerous parts of the country and, to a lesser degree, the issuance of stimulus payments that caused some drivers to temporarily reduce hours in March. Active diners rose 38% year-over-year to 33.0 million, another positive sign for the company. But alas, its net loss grew to $75 million, or a loss of $0.81 per diluted share compared to a net loss of $33.4 million or a loss of $0.36 per diluted share in the same year-ago period.

You can catch up on Microsoft and Alphabet earnings, among others, here.

 

Monetisation is Key to drive The Second Renaissance in the CREATOR ECONOMY

Creators that are able to grow a community while keeping engagement levels high have a greater opportunity to make a living from their craft more than ever before in history.

Consider this:

Jack Conte, Patreon’s CEO summarised it beautifully in the video below (or on this blog post if you prefer reading) by breaking down the evolution of the creator economy. He calls this period in time “The Second Renaissance”. You’ll notice that monetisation is a key part of the flywheel.

  • There are over 4 billion people online
  • Over a billion of them have a smartphone capable of creating high quality media
  • Creativity and content creation online are booming
  • The cost of creating content has gone down to almost zero
  • More than 50 million people in the US alone describe themselves as ‘creators’
  • New monetisation tools mean that creators are able to make a living from their craft
  • Their success is starting to impact culture, as kids aspire to become creators themselves

Show creators the money

As you can see, unlocking payments is key to driving more content creation and the platforms are racing to introduce new monetisation tools for creators. We’re moving from an ads model (based on volume) to a subscription/commerce model, based on engagement/value.

The audio space is heating up and a flurry of announcements around creator monetisation came out in the past few weeks:

And elsewhere creator monetisation tools and revenue streams continue to expand:

  • Ads and bran dealsYoutube reported $6 billion in revenue for Q1 2021, a 50% growth rate from the equivalent period last year. The sum is equivalent to the combined annual revenue of Snap and Twitter for 2020. While not all of it goes to creators, Covid-19 lockdowns drove a huge amount of volume to the platform.
  • Donations/pledges – Patreon, the early mover of creator monetisation tools, raised $155M on a $4 billion valuation in April 2021, tripling the valuation from a previous round in Sept 2020. They already distribute over $100M a month amongst their 200,000+ creators.
  • Premium contentTwitter announced “super follow” to enable users to charge their followers for access to additional content.
  • Digital collectibles and NFTs exploded (and then calmed down) as a way for creators to monetise digital collectibles and art
  • Social commerce – creators can monetise fandom by driving ecommerce purchases or selling their own merchandise via the social platforms. Examples include Benchmark-backed Popshop Live, or India’s SoftBank-backed unicorn Meesho.
  • Paid 1:1 Interactions and Livestreaming – from the celebrity greetings marketplace Cameo to dedicated providers like SuperPeer, Wisio or Heywith.
  • Subscription – OnlyFans, the adult content subscription platform reported that revenues surged to $2.4 Billion in 2020. Fans pay between $5 and $50 a month to get access to images, videos and other content.
  • Merchandising – t-shirts, hoodies, caps – anything you can put your name/brand on that will make fans interested is fair game. Merch is big on Twitch and with gaming streamers, esports teams, musicians etc. For example, Youtuber PewDiePie makes $6.8 million a month from Merch alone.

For creators to monetise better, the platforms need to continue innovating. A16Z, did a great job summarising how companies (vs. individual creators) are monetising beyond ads in their series ‘social is back’.

Source: A16Z, Six Ways New Social Companies Will Monetize Beyond Ads

Platform take rates = tax

Most creators build their audiences on Platforms etc. The platform provides the tools and in most cases the audience, but that of course, comes at a cost. The top creators are able to negotiate rates directly with the platforms and cut deals. For everyone else, take rates are ‘an invisible tax‘ on creators as Li Jin from Atalier Ventures puts it. Jin is advocating for the need to create a creator middle class to broaden the path for success.

The issue of payment fragmentation and take rates deserves as post of its own, but Lenny Rachitsky shared an interesting take on the topic earlier this week.

Creator Funds

If you agree that creators can effectively become small businesses by building a community and engagement, one of the opportunities in this space is providing the start capital for emerging creators. Patreon already provides cash advances, effectively ‘equity investments’ in the creator’s future revenue streams, and Tiktok announced a $1 billion creator fund last March to attract creators to the platform. Not everyone is happy, it seems.

New ‘creator funds’ are starting to emerge. A recent example is Creative Juice, a $2M fund to invest in emerging creators, backed partly by Index Ventures, Inspired Capital and creators like MrBeast. It’s described as “a groundbreaking way for creators to support each other and invest in their peers’ businesses.”

Creators are also increasingly becoming angel investors in B2C startups, similar to celebrity investments which are also on the rise, leveraging their profile to help their portfolio stand out.

Finally, a small plug to Remagine Ventures. If you’re a founder in the creator economy with a fresh take on these issues, we’d love to hear from you! We’ve made several investments in the space (some are still in stealth).

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