Facebook is having a torrid time of things at the moment. Only a week after they were forced to reveal that just shy of 10% of registered accounts were fakes that were either run by spammers or duplicate users, Facebook's shares have hit an all-time low of $19 - roughly 50% of their original IPO value. Mark Zuckerberg must have been nursing his wounds, wondering what could possibly go wrong next.
It now seems that a landmark decision made yesterday in Australia means that Facebook advertisers could soon be forced to moderate all comments made on their pages. The Australian Advertising Standards Board ruled that all posts made on Smirnoff's Facebook page were advertising - regardless of whether they were made by Smirnoff themselves, or by members of the public. This could well mean that all companies using Facebook in the future will have to pre-moderate comments, to avoid misleading or derogatory statements.
The most damning part of the ruling from an advertiser's perspective was that: "The Board considered that the Facebook site of an advertiser is a marketing communication tool over which the advertiser has a reasonable degree of control". Smirnoff tried to argue that Facebook was an engagement platform, not a marketing communication tool, but this stance was quickly declined. In a nutshell; "Comments that make claims about a product which are not true, are racist or sexist or are defamatory about another company could leave the advertiser open to being sued."
While the ruling is not yet applicable outside Australia, this statute is likely to represent the first of many. It seems equally likely that this benchmark will set a precedent, and could well lead to action by advertising watchdogs across Europe, the Americas, and beyond. If that is the case, then it would inevitably have a major impact on how brands value their presence on Facebook. From an end-user's perspective, it would have a cataclysmic effect on the way people are able to engage and interact with brands - something we have all become hugely familiar with.
If enforced globally, the ruling would be utterly disastrous for Facebook as an advertising platform. Firstly, pre-moderation would signify a major increase in the workload for page administrators. Secondly, and most importantly, this level of moderation would completely alter the way in which brands are able to partake in real-time conversations with their fans. That is exactly the type of social media engagement that Facebook has built their brand platform on, and arguably the key contributor to why brands have been willing to invest such huge amounts of time and money in the platform. Without the opportunity to instantly connect with customers, could we start to see a Facebook Exodus by brands? - It certainly seems possible that brands would have to consider moving to new pastures, where they would be able to fulfil the level of social media engagement that their fans have come to enjoy, and expect.
An acquaintance of mine commented on Twitter a couple of months back that they expected Facebook's IPO value to reach $50 by Christmas. If this ruling spreads beyond Australia, to the countries where Facebook's main investors are based, then it wouldn't surprise me to see the valuation fall below $10 by the end of the year. I never thought I'd say that.