It's not every morning that a manager wakes up to find that one of the most powerful corporations in the world has filed a lawsuit seeking to shut down his business, but this is what happened to Alon Leibovich, CEO and co-founder of Israeli startup BrandTotal. In early December, Leibovich found out about Facebook's lawsuit through the media. He is now in the throes of a legal battle, with a pre-hearing due this month.
Until this happened, life had smiled on Leibovich, who began his career as a planner at the Mccann Tel Aviv advertising agency. The realization that advertisers need business intelligence from the web led him to found his company in 2016. It is active in the US, the UK and Israel, and has raised $20 million.
Asked what the company does, Leibovich describes it as a technological Nielsen: "At Mccann, I worked on large accounts. One day, we noticed declines in market share of one of the consumer companies. We didn't understand what was happening, until one of the brand managers wrote that a competitor had run a campaign targeting teenage girls. It tuned that that she had seen the advertisement on her daughters' computer. I realized then that, today, the majority of advertising is Dark Ad, advertising that only reaches the target audience, and 85% of the advertisements on Facebook are like that.
"While advertising today is more technological, more focused, and more effective, this makes it hard for an advertising executive to be able describe to the advertiser what's happening out there. We act as a 'technological Nielsen'. We use a panel of consumers who give us their consent to monitoring of their digital activity, and they're paid for that. The monitoring is by means of an add-on, a sort of app that sees the range of advertisements to which the user is exposed. The activity is entirely in conformity with privacy laws. I can see what competitors are doing: whom they are targeting, with what advertising message, what the strategy is, whether it's to create awareness or generate sales, how effective it is, and consumer sentiment. Marketing intelligence in every respect."
BrandTotal's business started to thrive, but then the news that Facebook had filed a petition to shut them down came like a thunderclap on a clear day. "At the end of 2020, I received a WhatsApp message from a friend that a news item had appeared on TechCrunch that Facebook was suing the company. Facebook did not try to get in touch or give warning. They sued us claiming that we had breached their terms of use."
Perhaps they had only just discovered your existence?
"We know of a suspicious chain of events. Facebook knew about us a long time before they sued us, and decided to leave us in peace. They started to act only in 2020, shortly after we announced a $12 million funding round, and advertisers with whom we work contacted Facebook and asked about us. They suggested that it might be worthwhile for Facebook to partner with us. We know this, because part of the legal process is discovery of evidence, and we have email messages that show that Facebook considered collaborating with us. But they have a strategy of being a bully under cover of the law and of trying to use force against small startups to make them retreat."
Perhaps they realized that the business had potential?
"We come from a good place - to give value to the advertisers on whose behalf we act. There's a need for metrics in the industry, and there's a 'BrandTotal' in each of the other media that exist today. But on Facebook there's no third party measuring them, and it's a situation in which the cat guards the cream, because they tell you whom you're reaching and how successful you are. Absurdly enough, advertisers who work with us spend more money on Facebook over time, because their advertising is more effective."
How are they claiming breach of the community rules if you act with the consent of the users?
"They set the terms of use and they enforce them. When we started, it was stipulated that it was forbidden to gather data automatically. That's a general condition to designed to stop any possibility of gathering data efficiently. If I were to ask our panel members to write down every network activity on a piece of paper and mail it to us, would that be alright under the terms of use? It's an unenforceable term.
"If Facebook decides tomorrow to ban the presence of women on the platform, should that also be enforced? Facebook's behavior is anti-competitive. They want to suffocate everything that grows in the ecosystem. Facebook strangles competition exactly as it is accused of doing in the lawsuit by the US Federal Trade Commission. Their strategy is to 'kill or copy' their competitors, only now the company is under pressure from the allegations of illegal monopolization and is trying to divert the fire towards other companies. It's a monopolistic predator disguised as a persecuted saint that aims at stifling innovation and competition and at blocking transparency in order to maximize its profits."
How does a manager feel when a giant like Facebook wants to shut him down?<
"A punch in the gut. That they justify their reputation as a monopoly. One day they can decide that a business shuts down because they feel like it, and that's what they're currently being investigated for. How can it be that one company has accumulated such power that it can do whatever it likes? Uber and Airbnb were sued in every city they entered. Apparently that's what you have to go through. It's not surprising that the old establishment, and it's funny to look at Facebook that way, says, 'There's someone new here trying to breach what I dictated.'"
How do you deal with it?
"When Facebook sues a startup, the startup usually capitulates. It's David versus Goliath. The startup doesn't have the money to contend with it in court, but we believe that we're on the right side. We have resources and funds backing us, and we even welcome this battle, because our lawyers believe we have good arguments and that there's a chance of winning. Otherwise we wouldn't fight. We have filed a petition for an injunction, and we'll go to a pre-hearing to fight for the right of advertisers to receive data that will help them do better work.
"Facebook asked the app stores to remove the component that enables us to gather data. They approached Google asking them to remove the component from the Chrome store, which caused the loss of some of our data. We know that it was Facebook that made the approach because they admitted as much. So we asked the court to restore the status quo. The substance of the dispute is that Facebook says that we are not allowed to gather data automatically, and we say that the user is permitted to let us do so because the data belong to the user and not to the platform. So how can it be that they act as judge, jury and executioner? We're asking to be allowed to run the business as usual until the case is decided. A pre-hearing is due to take place this month. This is a fast track, and if we succeed in it, that will be an indication that the activity can continue."
How much have they managed to damage you?
"In any case about 90% of startups close, so when a huge monster sets on you, it shakes you up. But we're on the right side of history. The world existed before Facebook and it will exist after it. It had the privilege of guarding the cream, but that cannot continue."
Facebook declined to comment.
Published by Globes, Israel business news - en.globes.co.il - on April 7, 2021
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