How do fake accounts impact Twitter’s business?

The company lost $3 billion in valuations after it started deleting fake and spammy accounts
10 July 2018

Twitter CEO Jack Dorsey. Source: Flickr / JD Lasica

When you think of fake accounts that are created to spread fake news on the internet, you may wish that internet companies would take steps to remove these accounts. And you’d be willing to reward them for doing so.

However, when The Washington Post revealed that Twitter, one of the most popular social media platforms on the internet was getting rid of fake accounts, investors started dumping shares.

As a result, the company lost US$3 billion in valuations.

According to the news article, Twitter suspended more than 70 million accounts in May and June, and the pace has continued in July.

Data obtained by The Washington Post suggests that the company has escalated its battle against fake and suspicious accounts and suspended more than one million a day in recent months.

The slump wiped about US$3 billion from the microblogging site’s market valuation, which had stood at about US$35 billion on Friday.

It seems that shareholders weren’t too pleased with Twitter’s actions.

“Such reaction is due likely to the assumption that the lower user count would attract less ad dollars,” Morningstar Analyst Ali Mogharabi told Reuters.

However, the question really is – will removing spam accounts really impact Twitter negatively?

In the short run, it seems like that’s what is happening. However, analysts feel that the long term holds more promise for social media and content platforms that weed out fake user accounts.

“Big advertisers now paying more attention to the quality content alongside which their ads are placed,” said Mogharabi.

In light of the financial impact, however, the company’s CFO Ned Segal tweeted:

“Most accounts we remove are not included in our reported metrics as they have not been active on the platform for 30 days or more, or we catch them at sign up and they are never counted. If we removed 70M accounts from our reported metrics, you would hear directly from us.”

Although the company may not have removed 70 million fake accounts in the past few months, its recent blogposts suggest that the company is more aware and actively auditing new accounts.

Twitter is working on improving its sign up process to make it harder to register spam accounts. The company will now demand that new accounts confirm either an email address or a phone number when they sign up to Twitter.

However, existing accounts are also under scrutiny.

“We’re also conducting an audit to secure a number of legacy systems used to create accounts. Our goal is to ensure that every account created on Twitter has passed some simple, automatic security checks designed to prevent automated signups. The new protections we’ve developed as a result of this audit have already helped us prevent more than 50,000 spammy sign-ups per day,” said a blogpost by Twitter executives Del Harvey, VP, Trust and Safety and Yoel Roth, Platform Policy.