The world has been abuzz about the role of the media lately, especially after the U.S. election.
One of the reasons why Donald Trump’s victory was so surprising is because virtually nobody in the media predicted it. Many are using this lack of awareness as a way to criticize the media, saying reporters in New York, San Francisco, and Chicago are out of touch, especially with rural America.
The media isn’t taking this criticism lying down. According to many in the industry, Trump won because of fake news.
The strategy went something like this. A media company would make up a story about Hillary Clinton filled with lies, and then use cheap Facebook (NASDAQ:FB) ads to help make the story go viral. Facebook ads are much cheaper in the developing world. These websites would then be flooded with U.S.-based Trump supporters, who would click on ads.
It was a classic case of geographic arbitrage, and these entrepreneurs played it well.
Many in the media are directly blaming the social network for allowing this to happen. They’re calling for the company to put a stop to it. Even President Barack Obama weighed in on the issue.
But at the same time, if Facebook starts to censor ads and make judgement calls about what is real and what isn’t, it could very easily shut down legitimate stories. Making those calls would also inevitably lead to a decline in revenue.
At this point, Facebook investors don’t have to worry. But if this story continues to gain momentum, it could prompt certain advertisers to avoid the social network.
