The Surprising Truth About Twitter’s Political Ad Ban

Twitter CEO Jack Dorsey’s decision to abolish all political ads from the platform on Wednesday earned it goodwill from its critics—and a yawn from its investors, who have been dumping shares after a revenue shortfall last week.

It’s a move that’s not likely to cost it much. Political advertisements constitute just a tiny fraction of its total revenue. During the 2018 midterms, political ads were “less than $3 million for us,” Twitter CFO Ned Segal said last week.

For some perspective, Twitter reported a revenue of $909 million in the fourth quarter of 2018, meaning that the 2018 midterm political ads represented less than half a percent of revenue during the quarter.

“We try to be really principled about the decisions that we make around advertising, whether it’s political or otherwise,” said Segal. “And those numbers just give you a sense for the impact and how from one election.”

Twitter shares rose Thursday after the decision, then fell Friday, adding to the more than 20% losses that followed a disappointing third-quarter financial report last week. They’re now trading near lows of the year.

While the move is proving a footnote to investors concerns over advertising growth, Dorsey’s stance has earned it some applause from political and media circles, who have frequently criticized its handling of abuse on the platform.

Dorsey’s comment that “we believe political message reach should be earned, not bought” was perceived as a shot across the bow of his greatest Silicon Valley rival, Facebook CEO Mark Zuckerberg. In the preceding weeks, Zuckerberg had led an unprecedented and relentless media campaign promoting free speech, American values and defending his controversial decision to allow false claims in Facebook political ads.

“Political ads were less than $3 million for us [during the 2018 midterms].”

Although the 2018 midterms raked in a fairly small amount of money, it appears that spending on political ads is on the rise this year. Top democratic candidates are already spending nearly a million dollars each on Twitter promotions, according to Forbes.

In aggregate, presidential candidates have spent more than $3.6 million on Twitter political ads since June 2018, according to a Forbes analysis. Democratic contenders Kamala Harris and Elizabeth Warren led the spending, purchasing $1.1 million and $902,200 in Twitter ads, respectively, over that time period. President Donald Trump spent less than $7,000.

For Facebook, the issue is more complicated. “Some people accuse us of allowing this speech because they think all we care about is making money,” said Zuckerberg during the company’s third-quarter earnings call this week. “That’s wrong.”

Donald Trump and Hillary Clinton spent a combined total of $81 million on Facebook political advertising ahead of the 2016 presidential election.

“We estimate these ads from politicians will be less than 0.5% of our revenue next year,” he added. “That’s not why we’re doing this.”

Donald Trump and Hillary Clinton spent a combined total of $81 million on Facebook political advertising ahead of the 2016 presidential election, according to sworn testimony from the company’s general counsel, Colin Stretch. Facebook made about $28 billion in revenue in 2016.

Still, even though political advertising makes up a small portion of the company’s total revenue, Facebook has long used political ads as an example of how powerful its targeted advertising engine is. Facebook’s website had a section devoted to “success stories” of political campaigns that used the social network to influence elections. Facebook quietly tried to scuttle this section of the website following the 2016 presidential election, according to a report from The Intercept.

“I can assure you, from a business perspective, the controversy this creates far outweighs the very small percent of our business that these political ads make up,” said Zuckerberg on the third-quarter earnings call. “ The reality is we believe deeply that political speech is important, and that’s what is driving us.”