Twitter and Facebook just Complicated Matters for Google



Twitter’s decision (TWTR) to stop selling political ads is becoming a problem for Google (GOOG) (GOOGL). Twitter and Facebook (FB) have now made their positions on selling political ads known. Now the pressure is building on Google to follow Twitter’s lead and ban political ads or clearly state it will continue accepting them like Facebook, according to a Politico report.

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Political ads aren’t big business

Twitter revealed that it makes less than $3.0 million from political ads sales. Twitter’s total revenues were $3.0 billion in 2018. Therefore, that shows that political ads sales account for just 0.1% of Twitter’s business.

The political ad business isn’t big for Facebook either. The company expects political ad sales to make up less than 0.5% of its total revenue in 2020. Moreover, Twitter isn’t changing its fourth-quarter guidance because it will stop selling political ads this month. And Facebook views political ads not as a business but as a service to the public, helping politicians get their message across.

If selling political ads is only a tiny business for Twitter and Facebook, then this suggests that it isn’t a big business for Google either. That could go a long way to show that dropping political ads might not hurt Google’s finances much.

Twitter stirs the waters as Google faces scrutiny

Twitter’s move to ban political ads exposes Google to more criticism. It comes when Google already has a lot to worry about. Google is the subject of antitrust probes by congressional, federal, and stated entities. Plus, Google’s advertising business is at the center of these antitrust probes.

Moreover, calls urging regulators to break up Google, Twitter, and other big tech companies have persisted. Google tried to defend itself against accusations that it poses risks to competition and needs to be split up. We think the political ads debate risks keeping Google more on the defensive, potentially distracting Google from more important executions.

If the antitrust investigations decide that Google’s practices hurt competition, we think the company could face fines. Google already faced fines of about $10 billion in antitrust fines in Europe since 2017. The investigations could result in regulators forcing changes that could weaken Google’s advertising business. That could be a big blow to Google alongside the pressure from Twitter. The company is already defending its advertising turf amid Amazon disruption.


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