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YouTube Can’t Stay Out of Trouble. Here’s How That Could Change

We’re more than halfway through with 2019, meaning tech giants have had ample time this year to show us how much they’ve furthered — or stagnated on — efforts to rid unsavory content from their platforms. And like other years, there are platforms that have found themselves in hot water on brand safety issues more so than others.

Enter: YouTube. The world’s largest video website in 2019 has already come under fire for content moderation-related gaffes including acting as a “digital playground” for child predators and seemingly ignoring the bigoted harrassment of a Vox journalist. The platform has also recently been blamed for radicalizing young adults and serving content to children that’s unsuitable for them. And most recently, a Wall Street Journal investigation found misinformation about cancer treatment widely available on large digital platforms including YouTube

YouTube has faced repercussions from these less-than-ideal occurrences. In February, some of the country’s major advertisers like Disney and Hasbro pulled their ads from YouTube after reports surfaced that videos on the platform of young children facilitated predatory comments from pedophiles.

These are concerning hiccups for a company that wants to be the de facto digital video advertising platform for brands globally, to be sure. But at the same time, there’s a very high possibility that YouTube’s ad revenue will remain largely unscathed from its 2019 content gaffes and the most recent (relatively mini) brand boycott. 

The fact is that 2 billion people use YouTube monthly worldwide, and 73% of U.S. adults use the video platform. Comparatively, Facebook and Instagram, two of the biggest digital platforms around, reach 69% and 37% of U.S. adults, according to Pew Research. In other words, YouTube’s scale makes its occasional ad-in-the-wrong-place a tolerable risk for many brands. That’s why several advertisers told Adweek earlier this year that YouTube’s reach, targeting capabilities, and ad inventory make them willing to “stick it out” on the platform.

This helps explain why content controversies of yesteryears haven’t made YouTube completely radioactive in the eyes of advertisers. As far back as 2017, reports surfaced that YouTube was running ads next to hateful and extremist videos, which led to hundreds of advertisers pausing their ad spending on the platform. YouTube apologized while pledging to do more to protect brands from similar gaffes, and most of the boycotting advertisers returned to YouTube just months later. 

In the following year, CNN found ads of many big companies running on more extremist channels, which led Under Armour to pause its advertising on the platform. That same day, Bloomberg reported that P&G would resume advertising on YouTube after its year-long hiatus from the platform. There’s a pattern here, and it’s likely to be repeated with YouTube’s most recent ad-pullers.

Returning ad-pullers will allow YouTube to continue bolstering its top line. The company was estimated to generate over $3.3 billion in U.S. video ad revenue in 2018, a figure up 17% year-over-year, per eMarketer estimates. And this figure is estimated to grow to about $4.4 billion by 2020. YouTube’s anticipated ad revenue shows how the company is able to grow its ad business in the face of content headaches.

If anything, YouTube should be more concerned with what action will be taken by regulators, rather than advertisers, as it further sharpens its content moderation abilities. The Federal Trade Commission is already investigating YouTube after consumer groups complained the platform improperly harvested children’s data and allowed unsavory videos to show up in searches for kids content. The investigation is something that could result in fines being levied against the video platform, and privacy advocates have recently called on the FTC to impose fines of tens of billions of dollars against YouTube for its violations, according to The Wall Street Journal. 

There are already indications that the FTC wants to act more strictly against big tech too: Facebook in April said that it expects to be fined $3 to $5 billion by the FTC over privacy violations, which would represent the largest fine ever levied against a tech company by a government agency. The government agency may choose to act similarly harshly against YouTube by imposing a big fine on it to further discourage other big tech companies from becoming overzealous on their data collection practices.  

Of course, the FTC may not choose to fine YouTube billions of dollars for its mishandling of children’s videos and data. But receiving a fine in the billions would likely be more financially damaging to the company than any brand safety-advertiser boycott incident. Analysts in March 2017 estimated YouTube’s brand safety debacle would cost the company $750 million, for example. And this estimate may have been on the bearish end, as Google’s ad revenue still grew about 19% from Q1 to Q2 2017.

Meanwhile, the U.S. government has already signaled that it’s interested in potentially investigating tech giants including Google for antitrust violations. And Google-owned YouTube again growing its ad spend in 2019 in the midst of fresh content moderation blunders could further embolden regulators that believe big tech companies wield too much power.

One argument for regulators against Google could go as such: Companies may not necessarily want to continue returning to advertise on a video platform that is repeatedly placing some ads next to unsavory content, but more-or-less feel inclined to because of the platform’s reach, and because advertisers can extend their YouTube campaigns across multiple other Google properties like maps and search. Of all companies, Google already has the biggest share of U.S. digital ad revenue at 37%

So it shouldn’t be allowed to acquire additional tech companies to potentially allow advertisers to extend their campaigns across and make YouTube advertising even more enticing, regulators might argue, because this could help other companies retain digital ad clients and promote competition in the digital ad marketplace.

Another potential route for antitrust regulators to pursue is to force a spin-off of one of Google’s businesses that helps it dominate the U.S. ad market, such as YouTube. But such an action is less likely to occur, because unwinding mergers are generally difficult for the government to get in motion. “Far more remedies have been taken in antitrust cases that do not deal with massive scale breakups,” former FTC antitrust lawyer Charlotte Slaiman told Wired in June. Part of this is due to the difficulty in figuring out which parts of a business need to be broken off, according to Slaiman. Moreover, antitrust enforcement may become more difficult if the government is unsuccessful in a case against a tech company.

Regardless of which way regulators want to take it, YouTube’s blunders certainly don’t help its parent company Google look any better under the lens of antitrust scrutiny. Breaking up big tech has been a recurring talking point for some on the 2020 presidential campaign trail, and could become a bigger hot button issue as big tech gives politicians and regulators more reason for it to be moving forward.

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