Facebook Inc. (NASDAQ:FB) has officially been defined by an Australian watchdog organization – and it’s possible the social-media site could be transformed because of that definition. The Australian Advertising Standards Board, which regulates advertisements in Australia media and web sites, ruled recently that Facebook in an advertising medium and thus company “brand” pages – also known as “fan” pages – are thus subject to the same regulatory controls as other forms of advertising.
The ruling came in a case involving Smirnoff vodka – which is Australian, by the way. The alcoholic beverage had a “fan” page on Facebook Inc. (NASDAQ:FB), on which some “fans” posted comments – one in partcular referred to the drink helping the poster have success with women. While an opinn by a fan, Smirnoff claimed, the advertising board ruled that because Facebook is an advertising medium, it is up to each company with a “fan” page to vett, moderate and review all posts on its “fan” page to eliminate sexist, racist, or other potentially offensive remarks, as well as factual inaccuracies.
Diageo, the parent company of Smirnoff and Foster’s (the beer) said in its defense that “Smirnoff’s Facebook page is a networking tool for communication between company and customer rather than a medium for advertising.” However, the ruling now puts the impetus on companies to make sure that posters post facts instead of just opinions. The ruling covers everythig on a company’s fan page, not just the company’s own content, but that of posters and commenters – with some larger companies generating thougsands of such comments or posts on a daily basis.
“This is in some ways surprising and may be counterproductive, as it creates an extra burden for brand managers as they are going to have to have people monitoring Facebook. The question is does it apply daily or do you have to look hourly?” asked John Swinson, partner at law firm King & Wood Mallesons.
The question now becomes, how far-reaching will this be, as Facebook Inc. (NASDAQ:FB) has an Australian version, but comments and pages can come from all over the world. Will all companies who have Facebook pages in Australia have to monitor their comments? Will it be only Australia-based companies? And how does opinion become fact, and how does a company screen comments?
While this likely won’t apply here in America, this can set a precedent for the future – and if fans of companies are discouraged from posting opinions on fan pages due to censorship regulations, does that drive down usage, pageviews and fans of the company pages, and will it discourage users on Facebook in the first place? And if so, that will affect Facebook Inc (NASDAQ:FB) in its future earnings reports.
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