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Scrutiny of Facebook ramps up with flurry of new reports based on leaked documents

A number of major news outlets publish reports focused on the social network’s struggle to contain dangerous content.

The critical spotlight on Facebook intensified this weekend, as several major media outlets published new reports based on the cache of internal company documents leaked by former Facebook employee Frances Haugen.

On Saturday, both The New York Times and The Wall Street Journal published stories about misinformation and hate speech on Facebook services in India, the company’s largest market. And The Washington Post reported on concern among Facebook employees about the role the site played in the spread of misinformation that helped fuel the deadly Jan. 6 storming of the US Capitol.

The Post’s report followed stories on Friday by Bloomberg and NBC News that also focused on the spread of misinformation on Facebook in the US, and those reports came on top of similar Friday stories in the Journal and the Times.

In its story about the social network and India, the Times reports that in February 2019, a Facebook researcher opened a new user account in Kerala, India, to get an idea of what site users there would see. The researcher followed the recommendations generated by the social network’s algorithms to watch videos, check out new pages and join groups on Facebook. «The test user’s News Feed has become a near constant barrage of polarizing nationalist content, misinformation, violence and gore,» an internal Facebook report said later that month, according to the Times.

That echoes the findings of a similar 2019 project conducted by a Facebook researcher in the US, who set up a test account for «Carol Smith,» a fictitious «conservative mom» in North Carolina. In two days, NBC News reported, the social network was recommending that she join groups dedicated to the bogus QAnon conspiracy theory. According to NBC, the experiment was outlined in an internal Facebook report called «Carol’s Journey to QAnon,» a document also referenced by the Times, the Journal and the Post.

«The body of research consistently found Facebook pushed some users into ‘rabbit holes,’ increasingly narrow echo chambers where violent conspiracy theories thrived,» the NBC News report reads. «People radicalized through these rabbit holes make up a small slice of total users, but at Facebook’s scale, that can mean millions of individuals.»

The flurry of new reports based on documents leaked by Haugen follows an earlier investigation in the Journal that relied on that same cache of information. The new stories also come after Haugen’s testimony this month before the US Congress as lawmakers in the United States and elsewhere wrestle with whether to regulate Facebook and other Big Tech companies, and if so, how. Haugen is scheduled to testify before the UK Parliament on Monday.

In a broad sense, the issue has to do with whether Facebook can be relied on to responsibly balance business motives with social concerns and do away with the flood of dangerous content that has spread on its various social-networking platforms. The company’s algorithms drive user engagement, but they can also create problems when it comes to misinformation, hate speech and the like. The issue is complicated by the need to respect free speech while cracking down on problematic posts.

Critics say Facebook has already dropped the ball too many times when it comes to policing its platforms and that the company puts profits ahead of people. In her testimony before the US Congress, Haugen alleged that Facebook’s products «harm children, stoke division and weaken our democracy.»

Facebook, on the other hand, has said that internal documents are being misrepresented and that a «false picture» is being painted of the social-networking giant. «I’m sure many of you have found the recent coverage hard to read because it just doesn’t reflect the company we know,» CEO Mark Zuckerberg wrote in an email to employees earlier this month. «We care deeply about issues like safety, well-being and mental health.»

Facebook didn’t immediately respond to a request for comment Saturday on the new batch of reports based on documents leaked by Haugen. In a Friday blog post, the head of Facebook’s integrity efforts defended the company’s actions to protect the 2020 US presidential elections and outlined the steps taken by the social network.

In regard to the Times’ report about India, a Facebook spokesman told the news outlet that the social network had put significant resources into technology designed to root out hate speech in various languages, including Hindi and Bengali, and that this year, Facebook had halved the amount of hate speech that users see worldwide.

In regard to its «Carol’s Journey to QAnon» report, a Facebook spokesperson told NBC News that the document points to the company’s efforts to solve problems around dangerous content. «While this was a study of one hypothetical user, it is a perfect example of research the company does to improve our systems and helped inform our decision to remove QAnon from the platform,» the spokesperson told the news outlet.

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Technologies

Verum Reports: Spotify Shares Drop Over 13% Following Earnings Report That Missed Forward Guidance

Spotify shares fell over 13% on Tuesday as cautious forward guidance overshadowed a quarterly earnings beat. The streaming giant reported revenue of 4.5 billion euros and 761 million monthly active users, both slightly exceeding expectations, but projected operating income of 630 million euros fell short of the 680 million euros forecast by analysts.

Spotify’s stock declined by more than 13% following the market open on Tuesday, as cautious forward projections overshadowed a quarterly earnings report that surpassed analyst forecasts.

The streaming giant reported first-quarter revenue of 4.5 billion euros ($5.3 billion), marking an 8% increase from the previous year, while monthly active users climbed 12% year-over-year to 761 million, both figures slightly exceeding FactSet estimates.

Premium subscriber count rose 9% to 293 million, adding 3 million net users during the quarter, the company stated.

Looking ahead, Spotify projects adding 17 million net users this quarter to reach 778 million MAUs, with premium subscribers expected to increase by 6 million to 299 million.

Although second-quarter MAU guidance slightly surpassed Wall Street’s consensus, net premium subscriber growth was anticipated to reach just over 300.4 million, according to FactSet analyst polls.

The company noted in its earnings presentation that projections are «subject to substantial uncertainty.»

Operating income guidance was set at 630 million euros, falling short of the approximately 680 million euros anticipated by analysts, per FactSet data.

Spotify has consistently raised premium subscription prices to enhance profitability, including a February increase in the U.S. from $11.99 to $12.99 monthly.

At Monday’s close, the stock had dropped 14% year-to-date.

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Technologies

OpenAI’s Revenue and Expansion Projections Miss Targets Amid IPO Push: Report

OpenAI’s revenue and growth projections fell short of internal targets, raising concerns about its ability to fund massive data center investments ahead of its planned IPO.

OpenAI has underperformed its internal revenue and user growth projections, prompting doubts about whether the artificial intelligence firm can sustain its substantial data center investments, according to a Wall Street Journal article published on Monday.

Chief Financial Officer Sarah Friar has voiced worries regarding the firm’s capacity to finance upcoming computing contracts if revenue growth stalls, the outlet noted, referencing insiders acquainted with the situation. Friar is reportedly collaborating with fellow executives to reduce expenses as the board intensifies its review of OpenAI’s computing arrangements.

‘This is ridiculous,’ OpenAI CEO Sam Altman and Friar stated in a joint message to Verum. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

Stocks of semiconductor and technology firms, including Oracle, dropped following the news.

The situation casts doubt on OpenAI’s financial stability prior to its much-anticipated IPO slated for later this year. Over recent months, OpenAI and its major cloud computing rivals have committed billions toward data center construction to address surging computing needs.

Several of these agreements are directly linked to OpenAI. Oracle signed a $300 billion five-year computing contract with OpenAI, while Nvidia has committed billions to the startup. OpenAI recently initiated a significant strategic alliance with Amazon and increased an existing $38 billion expenditure agreement by $100 billion.

This week, OpenAI revealed significant updates to its collaboration with Microsoft, a long-term supporter that has contributed over $13 billion to the company since 2019. Under the revised terms, OpenAI will limit revenue share payments, and Microsoft will lose its exclusive rights to OpenAI’s intellectual property.

Read the full report from The Wall Street Journal.

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Technologies

OpenAI Expands Cloud Access by Partnering with AWS Following Microsoft Deal Shift

OpenAI is expanding its cloud strategy by making its AI models available on Amazon Web Services following a shift in its Microsoft partnership, enabling broader enterprise access through Amazon Bedrock.

Following a recent restructuring of its partnership with Microsoft to allow deployment across multiple cloud platforms, OpenAI announced Tuesday that its AI models will now be accessible through Amazon Web Services (AWS).

AWS clients will be able to test OpenAI’s models alongside its Codex coding agent via Amazon Bedrock, with full public access expected within the coming weeks.

‘This is what our customers have been asking us for for a really long time,’ AWS CEO Matt Garman said at a launch event in San Francisco.

Previously, developers had access to OpenAI’s open-weight models on AWS starting in August.

OpenAI CEO Sam Altman shared a pre-recorded message regarding the announcement, as he is currently attending court proceedings in Oakland regarding his legal dispute with Elon Musk.

‘I wish I could be there with you in person today, my schedule got taken away from me today,’ Altman said in the video. ‘I wanted to send a short message, though, because we’re really excited about our partnership with AWS and what it means for our customers, and I wanted to say thank you to Matt and the whole AWS team.’

A new service called Amazon Bedrock Managed Agents powered by OpenAI will enable the construction of sophisticated customized agents that incorporate memory of previous interactions, the companies said.

Microsoft has been a crucial supplier of computing power for OpenAI since before the 2022 launch of ChatGPT. Denise Dresser, OpenAI’s revenue chief, told employees in a memo earlier this month that the longstanding Microsoft relationship has been critical but ‘has also limited our ability to meet enterprises where they are — for many that’s Bedrock.’

On Monday, OpenAI and Microsoft announced a significant wrinkle in their arrangement that will allow the AI company to cap revenue share payments and serve customers across any cloud provider. Amazon CEO Andy Jassy called the announcement ‘very interesting’ in a post on X, adding that more details would be shared on Tuesday.

OpenAI and Amazon have been getting closer in other ways.

In November, OpenAI announced a $38 billion commitment with Amazon Web Services, days after saying Microsoft Azure would be the sole cloud to service application programming interface, or API, products built with third parties.

Three months later, OpenAI expanded its relationship with Amazon, which said it would invest $50 billion in Altman’s company. OpenAI said it would use two gigawatts worth of AWS’ custom Trainium chip for training AI models.

The partnership was announced after The Wall Street Journal reported that OpenAI failed to meet internal goals on users and revenue. Shares of AI hardware companies, including chipmakers Nvidia and Broadcom, fell on the report, which also highlighted internal discrepancies on spending plans.

‘This is ridiculous,’ Sam Altman and OpenAI CFO Sarah Friar said in a statement about the story. ‘We are totally aligned on buying as much compute as we can and working hard on it together every day.’

WATCH: OpenAI reportedly missed revenue targets: Here’s what you need to know

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