New Delhi: Meta, the parent company of Facebook, Instagram, and WhatsApp, is facing fresh controversy over earning billions of dollars from fraudulent advertisements on its platforms. According to reports, despite internal warnings about risks and policy violations, the company did not take stringent action against scam ads, apparently to protect revenue streams. The issue has raised serious questions about Meta’s governance, particularly regarding China-linked scam advertisements.
Meta in the Spotlight Again
Meta reportedly allowed scam and other restricted advertisements to run on its platforms, earning over $3 billion in revenue from such ads. Reuters’ investigation revealed that in the past year alone, Meta earned more than $18 billion from Chinese companies’ advertisements, accounting for over 10% of its global revenue. A significant portion of this revenue came from ads that were technically prohibited under Meta’s policies.
The investigation involved reviewing internal documents from the past four years, prepared by Meta’s engineering, finance, security, and lobbying teams. The documents indicate that the company avoided implementing reforms that could have reduced advertising revenue, despite being aware of the risks associated with scam advertisements.
China Emerges as a Major Source of Scam Ads
Although Facebook and Instagram are banned in China, Chinese companies are permitted to advertise to foreign users. According to the report, nearly 25% of scam and prohibited ads on Meta’s platforms were linked to China. Internal employees reportedly referred to China as a “scam-exporting nation.”
Meta temporarily formed an anti-fraud team to curb scam ads from China, which reduced the revenue share from 19% to 9%. However, by the end of 2024, this team was disbanded and restrictions on Chinese advertising agencies were lifted. Following this, revenue from scam ads rose again to 16%.
Meta’s Response
Meta spokesperson Andy Stone told Reuters that the anti-fraud team was a temporary measure. He clarified that CEO Mark Zuckerberg did not order the team to be disbanded but instructed the company to intensify global efforts to reduce scam activity. Meta stated that in the past 18 months, it had removed 46 million Chinese advertisements from its platforms.
Implications and Industry Concerns
The revelations highlight a tension between revenue generation and ethical responsibility for global tech platforms. Experts suggest that Meta’s prioritization of ad revenue, despite knowing about scam activities, raises concerns about corporate governance, user safety, and the effectiveness of internal oversight mechanisms.
Global Attention and Regulatory Scrutiny
With billions at stake and scam advertisements reaching users worldwide, Meta is likely to face increased regulatory scrutiny in multiple countries. Analysts note that such practices can damage user trust and attract stricter enforcement actions from governments concerned with digital fraud and cross-border scam operations.
