One day in late February of 2016, Mark Zuckerberg sent a memo to all of Facebook’s employees to address some troubling behavior in the ranks. His message pertained to some walls at the company’s Menlo Park headquarters where staffers are encouraged to scribble notes and signatures. On at least a couple of occasions, someone had crossed out the words “Black Lives Matter” and replaced them with “All Lives Matter.” Zuckerberg wanted whoever was responsible to cut it out.
“ ‘Black Lives Matter’ doesn’t mean other lives don’t,” he wrote. “We’ve never had rules around what people can write on our walls,” the memo went on. But “crossing out something means silencing speech, or that one person’s speech is more important than another’s.” The defacement, he said, was being investigated.
All around the country at about this time, debates about race and politics were becoming increasingly raw. Donald Trump had just won the South Carolina primary, lashed out at the Pope over immigration, and earned the enthusiastic support of David Duke. Hillary Clinton had just defeated Bernie Sanders in Nevada, only to have an activist from Black Lives Matter interrupt a speech of hers to protest racially charged statements she’d made two decades before. And on Facebook, a popular group called Blacktivist was gaining traction by blasting out messages like “American economy and power were built on forced migration and torture.”
So when Zuckerberg’s admonition circulated, a young contract employee named Benjamin Fearnow decided it might be newsworthy. He took a screenshot on his personal laptop and sent the image to a friend named Michael Nuñez, who worked at the tech-news site Gizmodo. Nuñez promptly published a brief story about Zuckerberg’s memo.
A week later, Fearnow came across something else he thought Nuñez might like to publish. In another internal communication, Facebook had invited its employees to submit potential questions to ask Zuckerberg at an all-hands meeting. One of the most up-voted questions that week was “What responsibility does Facebook have to help prevent President Trump in 2017?” Fearnow took another screenshot, this time with his phone.
Fearnow, a recent graduate of the Columbia Journalism School, worked in Facebook’s New York office on something called Trending Topics, a feed of popular news subjects that popped up when people opened Facebook. The feed was generated by an algorithm but moderated by a team of about 25 people with backgrounds in journalism. If the word “Trump” was trending, as it often was, they used their news judgment to identify which bit of news about the candidate was most important. If The Onion or a hoax site published a spoof that went viral, they had to keep that out. If something like a mass shooting happened, and Facebook’s algorithm was slow to pick up on it, they would inject a story about it into the feed.
Facebook prides itself on being a place where people love to work. But Fearnow and his team weren’t the happiest lot. They were contract employees hired through a company called BCforward, and every day was full of little reminders that they weren’t really part of Facebook. Plus, the young journalists knew their jobs were doomed from the start. Tech companies, for the most part, prefer to have as little as possible done by humans—because, it’s often said, they don’t scale. You can’t hire a billion of them, and they prove meddlesome in ways that algorithms don’t. They need bathroom breaks and health insurance, and the most annoying of them sometimes talk to the press. Eventually, everyone assumed, Facebook’s algorithms would be good enough to run the whole project, and the people on Fearnow’s team—who served partly to train those algorithms—would be expendable.
The day after Fearnow took that second screenshot was a Friday. When he woke up after sleeping in, he noticed that he had about 30 meeting notifications from Facebook on his phone. When he replied to say it was his day off, he recalls, he was nonetheless asked to be available in 10 minutes. Soon he was on a videoconference with three Facebook employees, including Sonya Ahuja, the company’s head of investigations. According to his recounting of the meeting, she asked him if he had been in touch with Nuñez. He denied that he had been. Then she told him that she had their messages on Gchat, which Fearnow had assumed weren’t accessible to Facebook. He was fired. “Please shut your laptop and don’t reopen it,” she instructed him.
That same day, Ahuja had another conversation with a second employee at Trending Topics named Ryan Villarreal. Several years before, he and Fearnow had shared an apartment with Nuñez. Villarreal said he hadn’t taken any screenshots, and he certainly hadn’t leaked them. But he had clicked “like” on the story about Black Lives Matter, and he was friends with Nuñez on Facebook. “Do you think leaks are bad?” Ahuja demanded to know, according to Villarreal. He was fired too. The last he heard from his employer was in a letter from BCforward. The company had given him $15 to cover expenses, and it wanted the money back.
The firing of Fearnow and Villarreal set the Trending Topics team on edge—and Nuñez kept digging for dirt. He soon published a story about the internal poll showing Facebookers’ interest in fending off Trump. Then, in early May, he published an article based on conversations with yet a third former Trending Topics employee, under the blaring headline “Former Facebook Workers: We Routinely Suppressed Conservative News.” The piece suggested that Facebook’s Trending team worked like a Fox News fever dream, with a bunch of biased curators “injecting” liberal stories and “blacklisting” conservative ones. Within a few hours the piece popped onto half a dozen highly trafficked tech and politics websites, including Drudge Report and Breitbart News.
The post went viral, but the ensuing battle over Trending Topics did more than just dominate a few news cycles. In ways that are only fully visible now, it set the stage for the most tumultuous two years of Facebook’s existence—triggering a chain of events that would distract and confuse the company while larger disasters began to engulf it.
This is the story of those two years, as they played out inside and around the company. WIRED spoke with 51 current or former Facebook employees for this article, many of whom did not want their names used, for reasons anyone familiar with the story of Fearnow and Villarreal would surely understand. (One current employee asked that a WIRED reporter turn off his phone so the company would have a harder time tracking whether it had been near the phones of anyone from Facebook.)
The stories varied, but most people told the same basic tale: of a company, and a CEO, whose techno-optimism has been crushed as they’ve learned the myriad ways their platform can be used for ill. Of an election that shocked Facebook, even as its fallout put the company under siege. Of a series of external threats, defensive internal calculations, and false starts that delayed Facebook’s reckoning with its impact on global affairs and its users’ minds. And—in the tale’s final chapters—of the company’s earnest attempt to redeem itself.
In that saga, Fearnow plays one of those obscure but crucial roles that history occasionally hands out. He’s the Franz Ferdinand of Facebook—or maybe he’s more like the archduke’s hapless young assassin. Either way, in the rolling disaster that has enveloped Facebook since early 2016, Fearnow’s leaks probably ought to go down as the screenshots heard round the world.
By now, the story of Facebook’s all-consuming growth is practically the creation myth of our information era. What began as a way to connect with your friends at Harvard became a way to connect with people at other elite schools, then at all schools, and then everywhere. After that, your Facebook login became a way to log on to other internet sites. Its Messenger app started competing with email and texting. It became the place where you told people you were safe after an earthquake. In some countries like the Philippines, it effectively is the internet.
The furious energy of this big bang emanated, in large part, from a brilliant and simple insight. Humans are social animals. But the internet is a cesspool. That scares people away from identifying themselves and putting personal details online. Solve that problem—make people feel safe to post—and they will share obsessively. Make the resulting database of privately shared information and personal connections available to advertisers, and that platform will become one of the most important media technologies of the early 21st century.
But as powerful as that original insight was, Facebook’s expansion has also been driven by sheer brawn. Zuckerberg has been a determined, even ruthless, steward of the company’s manifest destiny, with an uncanny knack for placing the right bets. In the company’s early days, “move fast and break things” wasn’t just a piece of advice to his developers; it was a philosophy that served to resolve countless delicate trade-offs—many of them involving user privacy—in ways that best favored the platform’s growth. And when it comes to competitors, Zuckerberg has been relentless in either acquiring or sinking any challengers that seem to have the wind at their backs.
Two years that forced the platform to change
by Blanca Myers
Facebook suspends Benjamin Fearnow, a journalist-curator for the platform’s Trending Topics feed, after he leaks to Gizmodo.
Gizmodo reports that Trending Topics “routinely suppressed conservative news.” The story sends Facebook scrambling.
Rupert Murdoch tells Zuckerberg that Facebook is wreaking havoc on the news industry and threatens to cause trouble.
Facebook cuts loose all of its Trending Topics journalists, ceding authority over the feed to engineers in Seattle.
Donald Trump wins. Zuckerberg says it’s “pretty crazy” to think fake news on Facebook helped tip the election.
Facebook declares war on fake news, hires CNN alum Campbell Brown to shepherd relations with the publishing industry.
Facebook announces that a Russian group paid $100,000 for roughly 3,000 ads aimed at US voters.
Researcher Jonathan Albright reveals that posts from six Russian propaganda accounts were shared 340 million times.
Facebook general counsel Colin Stretch gets pummeled during congressional Intelligence Committee hearings.
Facebook begins announcing major changes, aimed to ensure that time on the platform will be “time well spent.”
In fact, it was in besting just such a rival that Facebook came to dominate how we discover and consume news. Back in 2012, the most exciting social network for distributing news online wasn’t Facebook, it was Twitter. The latter’s 140-character posts accelerated the speed at which news could spread, allowing its influence in the news industry to grow much faster than Facebook’s. “Twitter was this massive, massive threat,” says a former Facebook executive heavily involved in the decisionmaking at the time.
So Zuckerberg pursued a strategy he has often deployed against competitors he cannot buy: He copied, then crushed. He adjusted Facebook’s News Feed to fully incorporate news (despite its name, the feed was originally tilted toward personal news) and adjusted the product so that it showed author bylines and headlines. Then Facebook’s emissaries fanned out to talk with journalists and explain how to best reach readers through the platform. By the end of 2013, Facebook had doubled its share of traffic to news sites and had started to push Twitter into a decline. By the middle of 2015, it had surpassed Google as the leader in referring readers to publisher sites and was now referring 13 times as many readers to news publishers as Twitter. That year, Facebook launched Instant Articles, offering publishers the chance to publish directly on the platform. Posts would load faster and look sharper if they agreed, but the publishers would give up an element of control over the content. The publishing industry, which had been reeling for years, largely assented. Facebook now effectively owned the news. “If you could reproduce Twitter inside of Facebook, why would you go to Twitter?” says the former executive. “What they are doing to Snapchat now, they did to Twitter back then.”
It appears that Facebook did not, however, carefully think through the implications of becoming the dominant force in the news industry. Everyone in management cared about quality and accuracy, and they had set up rules, for example, to eliminate pornography and protect copyright. But Facebook hired few journalists and spent little time discussing the big questions that bedevil the media industry. What is fair? What is a fact? How do you signal the difference between news, analysis, satire, and opinion? Facebook has long seemed to think it has immunity from those debates because it is just a technology company—one that has built a “platform for all ideas.”
This notion that Facebook is an open, neutral platform is almost like a religious tenet inside the company. When new recruits come in, they are treated to an orientation lecture by Chris Cox, the company’s chief product officer, who tells them Facebook is an entirely new communications platform for the 21st century, as the telephone was for the 20th. But if anyone inside Facebook is unconvinced by religion, there is also Section 230 of the 1996 Communications Decency Act to recommend the idea. This is the section of US law that shelters internet intermediaries from liability for the content their users post. If Facebook were to start creating or editing content on its platform, it would risk losing that immunity—and it’s hard to imagine how Facebook could exist if it were liable for the many billion pieces of content a day that users post on its site.
And so, because of the company’s self-image, as well as its fear of regulation, Facebook tried never to favor one kind of news content over another. But neutrality is a choice in itself. For instance, Facebook decided to present every piece of content that appeared on News Feed—whether it was your dog pictures or a news story—in roughly the same way. This meant that all news stories looked roughly the same as each other, too, whether they were investigations in The Washington Post, gossip in the New York Post, or flat-out lies in the Denver Guardian, an entirely bogus newspaper. Facebook argued that this democratized information. You saw what your friends wanted you to see, not what some editor in a Times Square tower chose. But it’s hard to argue that this wasn’t an editorial decision. It may be one of the biggest ever made.
In any case, Facebook’s move into news set off yet another explosion of ways that people could connect. Now Facebook was the place where publications could connect with their readers—and also where Macedonian teenagers could connect with voters in America, and operatives in Saint Petersburg could connect with audiences of their own choosing in a way that no one at the company had ever seen before.
In February of 2016, just as the Trending Topics fiasco was building up steam, Roger McNamee became one of the first Facebook insiders to notice strange things happening on the platform. McNamee was an early investor in Facebook who had mentored Zuckerberg through two crucial decisions: to turn down Yahoo’s offer of $1 billion to acquire Facebook in 2006; and to hire a Google executive named Sheryl Sandberg in 2008 to help find a business model. McNamee was no longer in touch with Zuckerberg much, but he was still an investor, and that month he started seeing things related to the Bernie Sanders campaign that worried him. “I’m observing memes ostensibly coming out of a Facebook group associated with the Sanders campaign that couldn’t possibly have been from the Sanders campaign,” he recalls, “and yet they were organized and spreading in such a way that suggested somebody had a budget. And I’m sitting there thinking, ‘That’s really weird. I mean, that’s not good.’ ”
But McNamee didn’t say anything to anyone at Facebook—at least not yet. And the company itself was not picking up on any such worrying signals, save for one blip on its radar: In early 2016, its security team noticed an uptick in Russian actors attempting to steal the credentials of journalists and public figures. Facebook reported this to the FBI. But the company says it never heard back from the government, and that was that.
Instead, Facebook spent the spring of 2016 very busily fending off accusations that it might influence the elections in a completely different way. When Gizmodo published its story about political bias on the Trending Topics team in May, the article went off like a bomb in Menlo Park. It quickly reached millions of readers and, in a delicious irony, appeared in the Trending Topics module itself. But the bad press wasn’t what really rattled Facebook—it was the letter from John Thune, a Republican US senator from South Dakota, that followed the story’s publication. Thune chairs the Senate Commerce Committee, which in turn oversees the Federal Trade Commission, an agency that has been especially active in investigating Facebook. The senator wanted Facebook’s answers to the allegations of bias, and he wanted them promptly.
The Thune letter put Facebook on high alert. The company promptly dispatched senior Washington staffers to meet with Thune’s team. Then it sent him a 12-page single-spaced letter explaining that it had conducted a thorough review of Trending Topics and determined that the allegations in the Gizmodo story were largely false.
Facebook decided, too, that it had to extend an olive branch to the entire American right wing, much of which was raging about the company’s supposed perfidy. And so, just over a week after the story ran, Facebook scrambled to invite a group of 17 prominent Republicans out to Menlo Park. The list included television hosts, radio stars, think tankers, and an adviser to the Trump campaign. The point was partly to get feedback. But more than that, the company wanted to make a show of apologizing for its sins, lifting up the back of its shirt, and asking for the lash.
According to a Facebook employee involved in planning the meeting, part of the goal was to bring in a group of conservatives who were certain to fight with one another. They made sure to have libertarians who wouldn’t want to regulate the platform and partisans who would. Another goal, according to the employee, was to make sure the attendees were “bored to death” by a technical presentation after Zuckerberg and Sandberg had addressed the group.
The power went out, and the room got uncomfortably hot. But otherwise the meeting went according to plan. The guests did indeed fight, and they failed to unify in a way that was either threatening or coherent. Some wanted the company to set hiring quotas for conservative employees; others thought that idea was nuts. As often happens when outsiders meet with Facebook, people used the time to try to figure out how they could get more followers for their own pages.
Afterward, Glenn Beck, one of the invitees, wrote an essay about the meeting, praising Zuckerberg. “I asked him if Facebook, now or in the future, would be an open platform for the sharing of all ideas or a curator of content,” Beck wrote. “Without hesitation, with clarity and boldness, Mark said there is only one Facebook and one path forward: ‘We are an open platform.’”
Inside Facebook itself, the backlash around Trending Topics did inspire some genuine soul-searching. But none of it got very far. A quiet internal project, codenamed Hudson, cropped up around this time to determine, according to someone who worked on it, whether News Feed should be modified to better deal with some of the most complex issues facing the product. Does it favor posts that make people angry? Does it favor simple or even false ideas over complex and true ones? Those are hard questions, and the company didn’t have answers to them yet. Ultimately, in late June, Facebook announced a modest change: The algorithm would be revised to favor posts from friends and family. At the same time, Adam Mosseri, Facebook’s News Feed boss, posted a manifesto titled “Building a Better News Feed for You.” People inside Facebook spoke of it as a document roughly resembling the Magna Carta; the company had never spoken before about how News Feed really worked. To outsiders, though, the document came across as boilerplate. It said roughly what you’d expect: that the company was opposed to clickbait but that it wasn’t in the business of favoring certain kinds of viewpoints.
The most important consequence of the Trending Topics controversy, according to nearly a dozen former and current employees, was that Facebook became wary of doing anything that might look like stifling conservative news. It had burned its fingers once and didn’t want to do it again. And so a summer of deeply partisan rancor and calumny began with Facebook eager to stay out of the fray.
Shortly after Mosseri published his guide to News Feed values, Zuckerberg traveled to Sun Valley, Idaho, for an annual conference hosted by billionaire Herb Allen, where moguls in short sleeves and sunglasses cavort and make plans to buy each other’s companies. But Rupert Murdoch broke the mood in a meeting that took place inside his villa. According to numerous accounts of the conversation, Murdoch and Robert Thomson, the CEO of News Corp, explained to Zuckerberg that they had long been unhappy with Facebook and Google. The two tech giants had taken nearly the entire digital ad market and become an existential threat to serious journalism. According to people familiar with the conversation, the two News Corp leaders accused Facebook of making dramatic changes to its core algorithm without adequately consulting its media partners, wreaking havoc according to Zuckerberg’s whims. If Facebook didn’t start offering a better deal to the publishing industry, Thomson and Murdoch conveyed in stark terms, Zuckerberg could expect News Corp executives to become much more public in their denunciations and much more open in their lobbying. They had helped to make things very hard for Google in Europe. And they could do the same for Facebook in the US.
Facebook thought that News Corp was threatening to push for a government antitrust investigation or maybe an inquiry into whether the company deserved its protection from liability as a neutral platform. Inside Facebook, executives believed Murdoch might use his papers and TV stations to amplify critiques of the company. News Corp says that was not at all the case; the company threatened to deploy executives, but not its journalists.
Zuckerberg had reason to take the meeting especially seriously, according to a former Facebook executive, because he had firsthand knowledge of Murdoch’s skill in the dark arts. Back in 2007, Facebook had come under criticism from 49 state attorneys general for failing to protect young Facebook users from sexual predators and inappropriate content. Concerned parents had written to Connecticut attorney general Richard Blumenthal, who opened an investigation, and to The New York Times, which published a story. But according to a former Facebook executive in a position to know, the company believed that many of the Facebook accounts and the predatory behavior the letters referenced were fakes, traceable to News Corp lawyers or others working for Murdoch, who owned Facebook’s biggest competitor, MySpace. “We traced the creation of the Facebook accounts to IP addresses at the Apple store a block away from the MySpace offices in Santa Monica,” the executive says. “Facebook then traced interactions with those accounts to News Corp lawyers. When it comes to Facebook, Murdoch has been playing every angle he can for a long time.” (Both News Corp and its spinoff 21st Century Fox declined to comment.)
Zuckerberg took Murdoch’s threats seriously—he had firsthand knowledge of the older man’s skill in the dark arts.
When Zuckerberg returned from Sun Valley, he told his employees that things had to change. They still weren’t in the news business, but they had to make sure there would be a news business. And they had to communicate better. One of those who got a new to-do list was Andrew Anker, a product manager who’d arrived at Facebook in 2015 after a career in journalism (including a long stint at WIRED in the ’90s). One of his jobs was to help the company think through how publishers could make money on the platform. Shortly after Sun Valley, Anker met with Zuckerberg and asked to hire 60 new people to work on partnerships with the news industry. Before the meeting ended, the request was approved.
But having more people out talking to publishers just drove home how hard it would be to resolve the financial problems Murdoch wanted fixed. News outfits were spending millions to produce stories that Facebook was benefiting from, and Facebook, they felt, was giving too little back in return. Instant Articles, in particular, struck them as a Trojan horse. Publishers complained that they could make more money from stories that loaded on their own mobile web pages than on Facebook Instant. (They often did so, it turned out, in ways that short-changed advertisers, by sneaking in ads that readers were unlikely to see. Facebook didn’t let them get away with that.) Another seemingly irreconcilable difference: Outlets like Murdoch’s Wall Street Journal depended on paywalls to make money, but Instant Articles banned paywalls; Zuckerberg disapproved of them. After all, he would often ask, how exactly do walls and toll booths make the world more open and connected?
The conversations often ended at an impasse, but Facebook was at least becoming more attentive. This newfound appreciation for the concerns of journalists did not, however, extend to the journalists on Facebook’s own Trending Topics team. In late August, everyone on the team was told that their jobs were being eliminated. Simultaneously, authority over the algorithm shifted to a team of engineers based in Seattle. Very quickly the module started to surface lies and fiction. A headline days later read, “Fox News Exposes Traitor Megyn Kelly, Kicks Her Out For Backing Hillary."
While Facebook grappled internally with what it was becoming—a company that dominated media but didn’t want to be a media company—Donald Trump’s presidential campaign staff faced no such confusion. To them Facebook’s use was obvious. Twitter was a tool for communicating directly with supporters and yelling at the media. Facebook was the way to run the most effective direct-marketing political operation in history.
In the summer of 2016, at the top of the general election campaign, Trump’s digital operation might have seemed to be at a major disadvantage. After all, Hillary Clinton’s team was flush with elite talent and got advice from Eric Schmidt, known for running Google. Trump’s was run by Brad Parscale, known for setting up the Eric Trump Foundation’s web page. Trump’s social media director was his former caddie. But in 2016, it turned out you didn’t need digital experience running a presidential campaign, you just needed a knack for Facebook.
Over the course of the summer, Trump’s team turned the platform into one of its primary vehicles for fund-raising. The campaign uploaded its voter files—the names, addresses, voting history, and any other information it had on potential voters—to Facebook. Then, using a tool called Lookalike Audiences, Facebook identified the broad characteristics of, say, people who had signed up for Trump newsletters or bought Trump hats. That allowed the campaign to send ads to people with similar traits. Trump would post simple messages like “This election is being rigged by the media pushing false and unsubstantiated charges, and outright lies, in order to elect Crooked Hillary!” that got hundreds of thousands of likes, comments, and shares. The money rolled in. Clinton’s wonkier messages, meanwhile, resonated less on the platform. Inside Facebook, almost everyone on the executive team wanted Clinton to win; but they knew that Trump was using the platform better. If he was the candidate for Facebook, she was the candidate for LinkedIn.
Trump’s candidacy also proved to be a wonderful tool for a new class of scammers pumping out massively viral and entirely fake stories. Through trial and error, they learned that memes praising the former host of The Apprentice got many more readers than ones praising the former secretary of state. A website called Ending the Fed proclaimed that the Pope had endorsed Trump and got almost a million comments, shares, and reactions on Facebook, according to an analysis by BuzzFeed. Other stories asserted that the former first lady had quietly been selling weapons to ISIS, and that an FBI agent suspected of leaking Clinton’s emails was found dead. Some of the posts came from hyperpartisan Americans. Some came from overseas content mills that were in it purely for the ad dollars. By the end of the campaign, the top fake stories on the platform were generating more engagement than the top real ones.
Even current Facebookers acknowledge now that they missed what should have been obvious signs of people misusing the platform. And looking back, it’s easy to put together a long list of possible explanations for the myopia in Menlo Park about fake news. Management was gun-shy because of the Trending Topics fiasco; taking action against partisan disinformation—or even identifying it as such—might have been seen as another act of political favoritism. Facebook also sold ads against the stories, and sensational garbage was good at pulling people into the platform. Employees’ bonuses can be based largely on whether Facebook hits certain growth and revenue targets, which gives people an extra incentive not to worry too much about things that are otherwise good for engagement. And then there was the ever-present issue of Section 230 of the 1996 Communications Decency Act. If the company started taking responsibility for fake news, it might have to take responsibility for a lot more. Facebook had plenty of reasons to keep its head in the sand.
Roger McNamee, however, watched carefully as the nonsense spread. First there were the fake stories pushing Bernie Sanders, then he saw ones supporting Brexit, and then helping Trump. By the end of the summer, he had resolved to write an op-ed about the problems on the platform. But he never ran it. “The idea was, look, these are my friends. I really want to help them.” And so on a Sunday evening, nine days before the 2016 election, McNamee emailed a 1,000-word letter to Sandberg and Zuckerberg. “I am really sad about Facebook,” it began. “I got involved with the company more than a decade ago and have taken great pride and joy in the company’s success … until the past few months. Now I am disappointed. I am embarrassed. I am ashamed.”
It’s not easy to recognize that the machine you’ve built to bring people together is being used to tear them apart, and Mark Zuckerberg’s initial reaction to Trump’s victory, and Facebook’s possible role in it, was one of peevish dismissal. Executives remember panic the first few days, with the leadership team scurrying back and forth between Zuckerberg’s conference room (called the Aquarium) and Sandberg’s (called Only Good News), trying to figure out what had just happened and whether they would be blamed. Then, at a conference two days after the election, Zuckerberg argued that filter bubbles are worse offline than on Facebook and that social media hardly influences how people vote. “The idea that fake news on Facebook—of which, you know, it’s a very small amount of the content—influenced the election in any way, I think, is a pretty crazy idea,” he said.
Zuckerberg declined to be interviewed for this article, but people who know him well say he likes to form his opinions from data. And in this case he wasn’t without it. Before the interview, his staff had worked up a back-of-the-envelope calculation showing that fake news was a tiny percentage of the total amount of election-related content on the platform. But the analysis was just an aggregate look at the percentage of clearly fake stories that appeared across all of Facebook. It didn’t measure their influence or the way fake news affected specific groups. It was a number, but not a particularly meaningful one.
Zuckerberg’s comments did not go over well, even inside Facebook. They seemed clueless and self-absorbed. “What he said was incredibly damaging,” a former executive told WIRED. “We had to really flip him on that. We realized that if we didn’t, the company was going to start heading down this pariah path that Uber was on.”
A week after his “pretty crazy” comment, Zuckerberg flew to Peru to give a talk to world leaders about the ways that connecting more people to the internet, and to Facebook, could reduce global poverty. Right after he landed in Lima, he posted something of a mea culpa. He explained that Facebook did take misinformation seriously, and he presented a vague seven-point plan to tackle it. When a professor at the New School named David Carroll saw Zuckerberg’s post, he took a screenshot. Alongside it on Carroll’s feed ran a headline from a fake CNN with an image of a distressed Donald Trump and the text “DISQUALIFIED; He’s GONE!”
At the conference in Peru, Zuckerberg met with a man who knows a few things about politics: Barack Obama. Media reports portrayed the encounter as one in which the lame-duck president pulled Zuckerberg aside and gave him a “wake-up call” about fake news. But according to someone who was with them in Lima, it was Zuckerberg who called the meeting, and his agenda was merely to convince Obama that, yes, Facebook was serious about dealing with the problem. He truly wanted to thwart misinformation, he said, but it wasn’t an easy issue to solve.
One employee compared Zuckerberg to Lennie in Of Mice and Men—a man with no understanding of his own strength.
Meanwhile, at Facebook, the gears churned. For the first time, insiders really began to question whether they had too much power. One employee told WIRED that, watching Zuckerberg, he was reminded of Lennie in Of Mice and Men, the farm-worker with no understanding of his own strength.
Very soon after the election, a team of employees started working on something called the News Feed Integrity Task Force, inspired by a sense, one of them told WIRED, that hyperpartisan misinformation was “a disease that’s creeping into the entire platform.” The group, which included Mosseri and Anker, began to meet every day, using whiteboards to outline different ways they could respond to the fake-news crisis. Within a few weeks the company announced it would cut off advertising revenue for ad farms and make it easier for users to flag stories they thought false.
In December the company announced that, for the first time, it would introduce fact-checking onto the platform. Facebook didn’t want to check facts itself; instead it would outsource the problem to professionals. If Facebook received enough signals that a story was false, it would automatically be sent to partners, like Snopes, for review. Then, in early January, Facebook announced that it had hired Campbell Brown, a former anchor at CNN. She immediately became the most prominent journalist hired by the company.
Soon Brown was put in charge of something called the Facebook Journalism Project. “We spun it up over the holidays, essentially,” says one person involved in discussions about the project. The aim was to demonstrate that Facebook was thinking hard about its role in the future of journalism—essentially, it was a more public and organized version of the efforts the company had begun after Murdoch’s tongue-lashing. But sheer anxiety was also part of the motivation. “After the election, because Trump won, the media put a ton of attention on fake news and just started hammering us. People started panicking and getting afraid that regulation was coming. So the team looked at what Google had been doing for years with News Lab”—a group inside Alphabet that builds tools for journalists—“and we decided to figure out how we could put together our own packaged program that shows how seriously we take the future of news.”
Facebook was reluctant, however, to issue any mea culpas or action plans with regard to the problem of filter bubbles or Facebook’s noted propensity to serve as a tool for amplifying outrage. Members of the leadership team regarded these as issues that couldn’t be solved, and maybe even shouldn’t be solved. Was Facebook really more at fault for amplifying outrage during the election than, say, Fox News or MSNBC? Sure, you could put stories into people’s feeds that contradicted their political viewpoints, but people would turn away from them, just as surely as they’d flip the dial back if their TV quietly switched them from Sean Hannity to Joy Reid. The problem, as Anker puts it, “is not Facebook. It’s humans.”
Zuckerberg’s “pretty crazy” statement about fake news caught the ear of a lot of people, but one of the most influential was a security researcher named Renée DiResta. For years, she’d been studying how misinformation spreads on the platform. If you joined an antivaccine group on Facebook, she observed, the platform might suggest that you join flat-earth groups or maybe ones devoted to Pizzagate—putting you on a conveyor belt of conspiracy thinking. Zuckerberg’s statement struck her as wildly out of touch. “How can this platform say this thing?” she remembers thinking.
Roger McNamee, meanwhile, was getting steamed at Facebook’s response to his letter. Zuckerberg and Sandberg had written him back promptly, but they hadn’t said anything substantial. Instead he ended up having a months-long, ultimately futile set of email exchanges with Dan Rose, Facebook’s VP for partnerships. McNamee says Rose’s message was polite but also very firm: The company was doing a lot of good work that McNamee couldn’t see, and in any event Facebook was a platform, not a media company.
“And I’m sitting there going, ‘Guys, seriously, I don’t think that’s how it works,’” McNamee says. “You can assert till you’re blue in the face that you’re a platform, but if your users take a different point of view, it doesn’t matter what you assert.”
As the saying goes, heaven has no rage like love to hatred turned, and McNamee’s concern soon became a cause—and the beginning of an alliance. In April 2017 he connected with a former Google design ethicist named Tristan Harris when they appeared together on Bloomberg TV. Harris had by then gained a national reputation as the conscience of Silicon Valley. He had been profiled on 60 Minutes and in The Atlantic, and he spoke eloquently about the subtle tricks that social media companies use to foster an addiction to their services. “They can amplify the worst aspects of human nature,” Harris told WIRED this past December. After the TV appearance, McNamee says he called Harris up and asked, “Dude, do you need a wingman?”
The next month, DiResta published an article comparing purveyors of disinformation on social media to manipulative high-frequency traders in financial markets. “Social networks enable malicious actors to operate at platform scale, because they were designed for fast information flows and virality,” she wrote. Bots and sock puppets could cheaply “create the illusion of a mass groundswell of grassroots activity,” in much the same way that early, now-illegal trading algorithms could spoof demand for a stock. Harris read the article, was impressed, and emailed her.
The three were soon out talking to anyone who would listen about Facebook’s poisonous effects on American democracy. And before long they found receptive audiences in the media and Congress—groups with their own mounting grievances against the social media giant.
Even at the best of times, meetings between Facebook and media executives can feel like unhappy family gatherings. The two sides are inextricably bound together, but they don’t like each other all that much. News executives resent that Facebook and Google have captured roughly three-quarters of the digital ad business, leaving the media industry and other platforms, like Twitter, to fight over scraps. Plus they feel like the preferences of Facebook’s algorithm have pushed the industry to publish ever-dumber stories. For years, The New York Times resented that Facebook helped elevate BuzzFeed; now BuzzFeed is angry about being displaced by clickbait.
And then there’s the simple, deep fear and mistrust that Facebook inspires. Every publisher knows that, at best, they are sharecroppers on Facebook’s massive industrial farm. The social network is roughly 200 times more valuable than the Times. And journalists know that the man who owns the farm has the leverage. If Facebook wanted to, it could quietly turn any number of dials that would harm a publisher—by manipulating its traffic, its ad network, or its readers.
Emissaries from Facebook, for their part, find it tiresome to be lectured by people who can’t tell an algorithm from an API. They also know that Facebook didn’t win the digital ad market through luck: It built a better ad product. And in their darkest moments, they wonder: What’s the point? News makes up only about 5 percent of the total content that people see on Facebook globally. The company could let it all go and its shareholders would scarcely notice. And there’s another, deeper problem: Mark Zuckerberg, according to people who know him, prefers to think about the future. He’s less interested in the news industry’s problems right now; he’s interested in the problems five or 20 years from now. The editors of major media companies, on the other hand, are worried about their next quarter—maybe even their next phone call. When they bring lunch back to their desks, they know not to buy green bananas.
This mutual wariness—sharpened almost to enmity in the wake of the election—did not make life easy for Campbell Brown when she started her new job running the nascent Facebook Journalism Project. The first item on her to-do list was to head out on yet another Facebook listening tour with editors and publishers. One editor describes a fairly typical meeting: Brown and Chris Cox, Facebook’s chief product officer, invited a group of media leaders to gather in late January 2017 at Brown’s apartment in Manhattan. Cox, a quiet, suave man, sometimes referred to as “the Ryan Gosling of Facebook Product,” took the brunt of the ensuing abuse. “Basically, a bunch of us just laid into him about how Facebook was destroying journalism, and he graciously absorbed it,” the editor says. “He didn’t much try to defend them. I think the point was really to show up and seem to be listening.” Other meetings were even more tense, with the occasional comment from journalists noting their interest in digital antitrust issues.
As bruising as all this was, Brown’s team became more confident that their efforts were valued within the company when Zuckerberg published a 5,700-word corporate manifesto in February. He had spent the previous three months, according to people who know him, contemplating whether he had created something that did more harm than good. “Are we building the world we all want?” he asked at the beginning of his post, implying that the answer was an obvious no. Amid sweeping remarks about “building a global community,” he emphasized the need to keep people informed and to knock out false news and clickbait. Brown and others at Facebook saw the manifesto as a sign that Zuckerberg understood the company’s profound civic responsibilities. Others saw the document as blandly grandiose, showcasing Zuckerberg’s tendency to suggest that the answer to nearly any problem is for people to use Facebook more.
Shortly after issuing the manifesto, Zuckerberg set off on a carefully scripted listening tour of the country. He began popping into candy shops and dining rooms in red states, camera crew and personal social media team in tow. He wrote an earnest post about what he was learning, and he deflected questions about whether his real goal was to become president. It seemed like a well-meaning effort to win friends for Facebook. But it soon became clear that Facebook’s biggest problems emanated from places farther away than Ohio.
One of the many things Zuckerberg seemed not to grasp when he wrote his manifesto was that his platform had empowered an enemy far more sophisticated than Macedonian teenagers and assorted low-rent purveyors of bull. As 2017 wore on, however, the company began to realize it had been attacked by a foreign influence operation. “I would draw a real distinction between fake news and the Russia stuff,” says an executive who worked on the company’s response to both. “With the latter there was a moment where everyone said ‘Oh, holy shit, this is like a national security situation.’”
That holy shit moment, though, didn’t come until more than six months after the election. Early in the campaign season, Facebook was aware of familiar attacks emanating from known Russian hackers, such as the group APT28, which is believed to be affiliated with Moscow. They were hacking into accounts outside of Facebook, stealing documents, then creating fake Facebook accounts under the banner of DCLeaks, to get people to discuss what they’d stolen. The company saw no signs of a serious, concerted foreign propaganda campaign, but it also didn’t think to look for one.
During the spring of 2017, the company’s security team began preparing a report about how Russian and other foreign intelligence operations had used the platform. One of its authors was Alex Stamos, head of Facebook’s security team. Stamos was something of an icon in the tech world for having reportedly resigned from his previous job at Yahoo after a conflict over whether to grant a US intelligence agency access to Yahoo servers. According to two people with direct knowledge of the document, he was eager to publish a detailed, specific analysis of what the company had found. But members of the policy and communications team pushed back and cut his report way down. Sources close to the security team suggest the company didn’t want to get caught up in the political whirlwind of the moment. (Sources on the politics and communications teams insist they edited the report down, just because the darn thing was hard to read.)
On April 27, 2017, the day after the Senate announced it was calling then FBI director James Comey to testify about the Russia investigation, Stamos’ report came out. It was titled “Information Operations and Facebook,” and it gave a careful step-by-step explanation of how a foreign adversary could use Facebook to manipulate people. But there were few specific examples or details, and there was no direct mention of Russia. It felt bland and cautious. As Renée DiResta says, “I remember seeing the report come out and thinking, ‘Oh, goodness, is this the best they could do in six months?’”
One month later, a story in Time suggested to Stamos’ team that they might have missed something in their analysis. The article quoted an unnamed senior intelligence official saying that Russian operatives had bought ads on Facebook to target Americans with propaganda. Around the same time, the security team also picked up hints from congressional investigators that made them think an intelligence agency was indeed looking into Russian Facebook ads. Caught off guard, the team members started to dig into the company’s archival ads data themselves.
Eventually, by sorting transactions according to a series of data points—Were ads purchased in rubles? Were they purchased within browsers whose language was set to Russian?—they were able to find a cluster of accounts, funded by a shadowy Russian group called the Internet Research Agency, that had been designed to manipulate political opinion in America. There was, for example, a page called Heart of Texas, which pushed for the secession of the Lone Star State. And there was Blacktivist, which pushed stories about police brutality against black men and women and had more followers than the verified Black Lives Matter page.
Numerous security researchers express consternation that it took Facebook so long to realize how the Russian troll farm was exploiting the platform. After all, the group was well known to Facebook. Executives at the company say they’re embarrassed by how long it took them to find the fake accounts, but they point out that they were never given help by US intelligence agencies. A staffer on the Senate Intelligence Committee likewise voiced exasperation with the company. “It seemed obvious that it was a tactic the Russians would exploit,” the staffer says.
When Facebook finally did find the Russian propaganda on its platform, the discovery set off a crisis, a scramble, and a great deal of confusion. First, due to a miscalculation, word initially spread through the company that the Russian group had spent millions of dollars on ads, when the actual total was in the low six figures. Once that error was resolved, a disagreement broke out over how much to reveal, and to whom. The company could release the data about the ads to the public, release everything to Congress, or release nothing. Much of the argument hinged on questions of user privacy. Members of the security team worried that the legal process involved in handing over private user data, even if it belonged to a Russian troll farm, would open the door for governments to seize data from other Facebook users later on. “There was a real debate internally,” says one executive. “Should we just say ‘Fuck it’ and not worry?” But eventually the company decided it would be crazy to throw legal caution to the wind “just because Rachel Maddow wanted us to.”
Ultimately, a blog post appeared under Stamos’ name in early September announcing that, as far as the company could tell, the Russians had paid Facebook $100,000 for roughly 3,000 ads aimed at influencing American politics around the time of the 2016 election. Every sentence in the post seemed to downplay the substance of these new revelations: The number of ads was small, the expense was small. And Facebook wasn’t going to release them. The public wouldn’t know what they looked like or what they were really aimed at doing.
This didn’t sit at all well with DiResta. She had long felt that Facebook was insufficiently forthcoming, and now it seemed to be flat-out stonewalling. “That was when it went from incompetence to malice,” she says. A couple of weeks later, while waiting at a Walgreens to pick up a prescription for one of her kids, she got a call from a researcher at the Tow Center for Digital Journalism named Jonathan Albright. He had been mapping ecosystems of misinformation since the election, and he had some excellent news. “I found this thing,” he said. Albright had started digging into CrowdTangle, one of the analytics platforms that Facebook uses. And he had discovered that the data from six of the accounts Facebook had shut down were still there, frozen in a state of suspended animation. There were the posts pushing for Texas secession and playing on racial antipathy. And then there were political posts, like one that referred to Clinton as “that murderous anti-American traitor Killary.” Right before the election, the Blacktivist account urged its supporters to stay away from Clinton and instead vote for Jill Stein. Albright downloaded the most recent 500 posts from each of the six groups. He reported that, in total, their posts had been shared more than 340 million times.
To McNamee, the way the Russians used the platform was neither a surprise nor an anomaly. “They find 100 or 1,000 people who are angry and afraid and then use Facebook’s tools to advertise to get people into groups,” he says. “That’s exactly how Facebook was designed to be used.”
McNamee and Harris had first traveled to DC for a day in July to meet with members of Congress. Then, in September, they were joined by DiResta and began spending all their free time counseling senators, representatives, and members of their staffs. The House and Senate Intelligence Committees were about to hold hearings on Russia’s use of social media to interfere in the US election, and McNamee, Harris, and DiResta were helping them prepare. One of the early questions they weighed in on was the matter of who should be summoned to testify. Harris recommended that the CEOs of the big tech companies be called in, to create a dramatic scene in which they all stood in a neat row swearing an oath with their right hands in the air, roughly the way tobacco executives had been forced to do a generation earlier. Ultimately, though, it was determined that the general counsels of the three companies—Facebook, Twitter, and Google—should head into the lion’s den.
And so on November 1, Colin Stretch arrived from Facebook to be pummeled. During the hearings themselves, DiResta was sitting on her bed in San Francisco, watching them with her headphones on, trying not to wake up her small children. She listened to the back-and-forth in Washington while chatting on Slack with other security researchers. She watched as Marco Rubio smartly asked whether Facebook even had a policy forbidding foreign governments from running an influence campaign through the platform. The answer was no. Rhode Island senator Jack Reed then asked whether Facebook felt an obligation to individually notify all the users who had seen Russian ads that they had been deceived. The answer again was no. But maybe the most threatening comment came from Dianne Feinstein, the senior senator from Facebook’s home state. “You’ve created these platforms, and now they’re being misused, and you have to be the ones to do something about it,” she declared. “Or we will.”
After the hearings, yet another dam seemed to break, and former Facebook executives started to go public with their criticisms of the company too. On November 8, billionaire entrepreneur Sean Parker, Facebook’s first president, said he now regretted pushing Facebook so hard on the world. “I don’t know if I really understood the consequences of what I was saying,” h
Paytm claims 68 million UPI transactions on its platform in February
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Blogging The Boys (blog)
How to prepare yourself, as a Cowboys fan, for the silly season
Blogging The Boys (blog)
It is a yearly occurrence, as predictable as the buzzards coming back to Hinckley. The NFL Combine has arrived, free agency is about to get into full swing, and arguments rage about all the rumors and questions surrounding the Dallas Cowboys. At times …
Black Panther is the rare film that doesn’t just live up to the hype. It exceeds it.
The first-screening social media takes were breathless. The ensuing reviews were glowing to the point they may have blinded you. Pre-sale numbers hinted at a ravenous appetite for the film, and box office soothsayers predicted that the final tallies, when all was said and done after President’s Day weekend, could be historic.
They were—and then some. Which is just how so many people who packed theaters across the globe over the weekend felt about Black Panther: It was all that we had hoped, but more than we could have dreamt.
Black Panther sent a $242 million message to Hollywood this past weekend. The question now is whether it will listen.
The latest Marvel film wasn’t just the first to center around the story of a black superhero, it featured an almost entirely black cast. Chadwick Boseman plays the titular character, called T’Challa out of his bionic spandex, the king of the East African nation of Wakanda. Orbiting around him are characters played by Lupita Nyong’o, Michael B. Jordan, Angela Bassett, Danai Gurira, Letitia Wright, Daniel Kaluuya, Forest Whitaker, and Winston Duke.
That this cast and this film is this historic reflects the intrinsic fallacy of the industry: that films starring black actors and telling black stories don’t sell.
But what’s even more significant is that Black Panther didn’t just put a black actor in a superhero suit, it, with the guidance of director Ryan Coogler, soaked the film in blackness, in African culture, in that authentic wardrobe and culture and spirit. In response, audiences didn’t’ just turn out. The film became an event.
The receipts were staggering. With a four-day holiday weekend tally estimated at $242 million, Black Panther was the second-best opening in that frame ever, behind only Star Wars: The Force Awakens. Its global haul of $404 million is monstrous in its own right.
It was the fifth-best opening of all time. It was the biggest opening ever for a black director, the first superhero film to feature a nearly all-black cast, and, perhaps in response to its ensemble of female ass-kickers (has any blockbuster ever crushed the Bechdel test this hard?), boasted ticket sales that were 45 percent women. Typically, that number is in the 35 percent range for superhero movies.
That idea that superhero films need to pander to fanboys to be a hit? Ha.
Oh, and by the way, it was really good. With a Rotten Tomatoes score of 97 percent fresh and a Kevin Fallon post-screening astonished whisper of, “Wow…” it is the best-reviewed superhero movie ever. As always happens after a critical and commercial hit like this, pundits are all having the big O—“Oscar!”—and for once it doesn’t seem like ludicrous, premature hyberbole.
Those lingering assumptions that black casts can’t open films, that black films don’t play globally, that mass audiences won’t respond to a culturally specific story? Black Panther just hurled a grenade at all of them.
It’s both beautiful and frustrating to witness the fawning over the uniqueness of this phenomenon. It’s beautiful because it’s so deserved. It’s frustrating because each time we paint a success like this as unique, we are perpetuating that myth.
In fact, recent history has proven that this success shouldn’t be considered surprising at all. Yet we’ll continue to treat it as such.
Let’s take a brief walk through box office history.
As Wired editor Peter Rubin pointed out on Twitter, Straight Outta Compton had a $60 million opening weekend on its way to a $161 million domestic total. Get Out earned $176 million. Just last summer, Girls Trip earned $115 million—an R-rated comedy starring four black women, with that kind of haul.
But it’s not just those films. Hidden Figures made $170 million domestically last year, ending up the highest-grossing of all the 2017 Best Picture nominees. Creed, which was also directed by Ryan Coogler, took in $109 million stateside on just a $35 million budget. The Butler, Selma, Think Like a Man Too, Best Man Holiday: they were all box office and critical smashes.
It’s when you really look at what these films were that the message is driven home. You have a biopic, a horror film, a raunchy comedy, a family-friendly historical drama, a boxing movie, race dramas, and rom-coms. These movies cross all genres, all demographics, and all genders. Diversity so clearly sells. Yet because of Hollywood’s institutionalized myopia and racial biases, we’re still astonished each time it does, and wonder if things will change when it comes to seeing the value of race—in other words, of humanity—in Hollywood.
The remarkable thing about Black Panther is that this was not a movie about black oppression, e.g. a slave movie. It features a black cast and all the big-budget production value of any other Marvel popcorn flick, without sacrificing the specificity of that black story in exchange for those expensive costumes and special effects. The message is that Hollywood responds to quality, especially when that quality reflects back a world that we know, but rarely see on screen.
Michelle Obama said as much on Twitter this weekend: “Congrats to the entire Black Panther team! Because of you, young people will finally see superheroes that look like them on the big screen. I loved this movie and I know it will inspire people of all backgrounds to dig deep and find the courage to be heroes of their own stories.”
How many major box office bombs featuring formulaic storytelling and whitewashed casts do we forgive as a casualty of the industry’s risk-taking, all the while refusing to read the receipts when it comes to the bankability of diversity in film? Black film successes are ignored at the same rate that white film failures are.
Will that change going forward after Black Panther?
Fans are clamoring for sequels and spinoffs, and Marvel would be insane not to consider them. (According to Vulture, a spinoff centered on the film’s prodigious female ensemble is already enticing the suits at Marvel HQ.) But what about outside of the spandex?
Disney is releasing A Wrinkle in Time next month, which promises to be another major hit for an African American director (this time Ava Duvernay, who happened to edit her film in the office next to Coogler’s while he was prepping Black Panther). Steve McQueen’s Widows, starring Viola Davis and Cythia Erivo, comes this fall. Next summer will see the remake of The Lion King from Disney. We foresee huge numbers for all three, while at the same time recognize that three is a paltry number to be able to point to.
At the end of March, one of Hollywood’s most reliably bankable black directors will release a psychological thriller called Acrimony, starring Taraji P. Henson. While we can’t speak to the quality of the movie—it hasn’t screened yet—it will be a fascinating test case at this post-Black Panther crossroads in the industry.
Henson recently opened the film Proud Mary, a movie that was hardly good, but saw its commercial potential torpedoed by a studio that ultimately decided to bury it, skimp on promotion, and deny it the support that could have elevated it to an action-movie success, one that put up the kind of box office number that social media buzz suggested it could attain.
“[Studios] never expect [black films] to do well overseas,” Henson said while promoting Proud Mary. “Meanwhile, you go overseas and what do you see? People trying to look like African Americans with Afros and dressing in hip-hop fashions. To say that black culture doesn’t sell well overseas, that’s a lie. Somebody just doesn’t want to do their job and promote the film overseas. Do you not have people streaming my Christmas specials in Australia? Come on, y’all! I don’t understand the thinking. Send me over there, and if it fails, then we don’t do it again, but why not try? If I knew this movie was gonna make money domestically, I would try to get more money overseas. It’s business!”
It’s business, and for so long Hollywood has been bafflingly bad at it. Maybe it took a superhero to finally make the lesson hit home.Continue reading
For a little while, endorphin addicts across New York City achieved the dream: Cheap, unlimited exercise classes were available almost anywhere at any time with the touch of the button. On Wednesday, that dream came to an end.
ClassPass, which charges a monthly fee for people to attend exercise classes without committing to a single gym, is significantly hiking the price of its unlimited passes in New York City. The company is also adding two lower tiers of membership, letting customers take a limited number of classes per month for a smaller fee.
Current ClassPass members let out a collective moan across the Internet this week, but the service is following a rather predictable trajectory for a startup: It lured customers in with low prices, found gyms with extra class space (in part because it had enough customers to make that attractive), and brought them together. It now has to turn its sights to balancing the two sides and, hopefully, to actually make money after several rounds of venture capital funding.
It may lose some customers as a result of this price hike, but ultimately, that might be the point — and it might make the service even better for those who stick around.
New York, one of the most expensive of the more than 30 cities where ClassPass operates, will see unlimited passes increase to $190 for current members and $200 for new members. That’s huge, considering the plan debuted at $99 and slowly crept up to $125. The two cheaper options will offer five classes a month for $75, or 10 classes at $125 for existing members and $135 new members.
“[A] one-size-fits-all membership is not diverse enough to serve all of our members’ unique needs, which is why we have decided to roll out new plans,” said Payal Kadakia, the CEO of ClassPass, in an emailed statement to the Huffington Post. “We wanted an easier entry point for new users who have an appetite for boutique fitness as well as the ability to keep offering an exceptional experience to those who love our unlimited product.”
This is to be expected, says Arun Sundararajan, a professor at New York University’s Stern Business School and the author of the upcoming book The Sharing Economy.
Sundararajan likened ClassPass’ new subscription options to mobile data plans, saying: “We used to pay a fixed amount for unlimited internet on our phones, and now have moved to tiered plans. It’s a natural part of the evolution of a business like that.”
The problem with ClassPass is that while there may be a huge number of potential new customers in a city like New York, there is limited physical gym space. If ClassPass gets too many customers, it actually hurts its own business. There’s an easy, proven way to get fewer customers without losing money: raise prices.
“One of the interesting things about marketplaces is sometimes it’s the more the merrier: If the market grows larger, everybody is better off,” said Marina Krakovsky, author of The Middleman Economy: How Brokers, Agents, Dealers, and Everyday Matchmakers Create Value and Profit. Telephone networks, and social networks like Facebook, work that way.
“That’s not really the case with something like gym memberships,” Krakovsky said.
It’s true: Nobody wants to pay to be in a sweaty room so full of people they end up Zumbaing on top of the person next to them.
“Classes can get overcrowded,” said Krakovsky, adding, “You may be better off having fewer members paying more.”
Sundararajan explained that a nascent business like ClassPass might start out not really knowing what the right price is. Thus, it will set prices low to bring in customers and adjust them upward as, over time, it gets a better grasp on how much people actually use the service and how much that costs the company.
That seems to be what’s happening here. Even though ClassPass is raising prices for unlimited memberships, it won’t auto-enroll its current members in that plan unless they opt in. Instead, it will enroll them in the 10 classes per month tier, which is the same price as the unlimited plan was in the past.
“The majority of our members never exceed 10 classes in a month, so we wanted to provide an option more in line with their needs,” the company said in its statement.
“Customers are going to be unhappy, naturally, because they feel like it’s a bait and switch,” said Krakovsky. “But at the same time, it’s not like they’re locked in. If someone doesn’t like it they can walk away, they’re not any worse off than they would be without ClassPass.”