Wednesday Wake-Up Call: A paid version of Facebook? Plus, T-Mobile and Sprint in merger talks, again

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Cutouts of Facebook CEO Mark Zuckerberg displayed on the lawn of the Capitol building ahead of the Facebook CEO's testimony there.
Cutouts of Facebook CEO Mark Zuckerberg displayed on the lawn of the Capitol building ahead of the Facebook CEO's testimony there. Credit: Al Drago/Bloomberg

Welcome to Ad Age's Wake-Up Call, our daily roundup of advertising, marketing, media and digital news. What people are talking about today: Facebook CEO Mark Zuckerberg was polite and calm during his first of two days of testimony on Capitol Hill, answering questions that were sometimes not as pointed or well-researched as they could have been. ("How do you sustain a business model in which users don't pay for your service?" Sen. Orrin Hatch asked. Zuckerberg blinked a few times, then responded: "Senator, we run ads.") Wall Street apparently liked Zuckerberg's performance, and Facebook's stock closed up 4.5 percent.

Ad Age's Garett Sloane breaks down six notable moments from the testimony to a joint Senate committee, including this exchange about a rumor that won't die, though Facebook has insisted it isn't snooping on user conversations to serve them more relevant ads.

"Yes or no, does Facebook use audio obtained from mobile devices?" asked Sen. Gary Peters of Michigan. … Zuckerberg called it a "conspiracy theory," and simply said, "No."

11 words that might be important: "There will always be a version of Facebook that is free," Zuckerberg said, answering a question from Sen. Hatch, who asked if the platform would remain free for users. What was Zuckerberg suggesting here with the phrasing, "a version of Facebook"? Was he hinting that maybe Facebook might consider a paid, possibly ad-free version? Some observers interpreted it that way. Wired editor Nicholas Thompson tweeted, "Whoah … That's a VERY INTERESTING hedge suggesting a paid version is under consideration." Zeynep Tufekci, the tech commentator and associate professor at the University of North Carolina, tweeted: "That's a huge shift if it is not a slip of the tongue. I doubt it. That was an obvious question he'd be prepared for."
The issue came up a few times. Zuckerberg also mentioned that people had suggested an ad-free subscription version of Facebook. "Certainly we consider ideas like that," he said, adding that overall, "I think that the ads experience is going to be the best one."
Quote of the day: Sen. John Kennedy of Louisiana to Zuckerberg: "Here's what everyone's been trying to tell you today, and I say it gently, your user agreement sucks. ... The purpose of that user agreement is to cover Facebook's rear end, it's not to inform users of their rights. Now you know that, and I know that."
The other big Facebook news: Facebook says that "a small number of people" whose profile data was harvested by the "This is your digital life" quiz app also had their messages scooped up. Yes, their private messages. And yes, that's the same quiz app that shared data with Cambridge Analytica. Read more in Wired.

Rekindling the flame
The on-again, off-again merger talks between Sprint Corp. and T-Mobile US Inc. are reportedly back on. The Wall Street Journal notes that this is the third time in four years that the two carriers have had merger talks. As the WSJ writes, the two companies combined would have 100 million customers, "just ahead of AT&T, which had 93 million U.S. subscribers at the end of 2017, and behind Verizon Communications Inc., which ended the year with 116 million."
The talks are just preliminary. But if the deal is for real this time, it would be bad news for Madison Avenue, since the two brands are both big ad spenders. Read more along those lines from Simon Dumenco, from the last time the two companies were considering a merger.

Is this an #AD?
On social media, hip-hop star DJ Khaled often posts about booze, sometimes in ways that are bizarrely eye-catching (does anybody else in the world put Ciroc vodka and Belaire sparkling wine on Cinnamon Toast Crunch?) As Ad Age's E.J. Schultz writes, now the star's under "scrutiny from watchdog groups alleging that his boozey social media musings reached minors and were not properly labeled as ads." Schultz writes that Khaled appears to have dialed back the booze plugs since the complaint by Truthinadvertising.org and other groups. Truthinadvertising.org says that since the complaint, DJ Khaled has "come clean about his alcohol endorsement deals in more than 150 posts on Facebook and Instagram by adding '#AD' to posts, while deleting more than a dozen undisclosed alcohol ads on Twitter." Read more on all this from Schultz here.

Reddit and Russian trolls
Reddit announced that it's banning 944 accounts with suspected links to the Internet Research Agency, the Russian "troll farm" with links to the Kremlin, The Financial Times reports. This is the first time the company's given an exact number; as The FT says, "Reddit had previously disclosed in March that a 'few hundred' accounts had been part of a Russian disinformation campaign leading up to the 2016 US election." The FT and other commenters noted that Reddit released its transparency report while Facebook's CEO was giving testimony to the Senate. Conveniently for Reddit, many tech reporters were rather tied up.

Just briefly:
By the numbers: Many advertisers are still avoiding Laura Ingraham's Fox News show, Ad Age's Jeanine Poggi writes. On March 30, Ingraham's last show before she went on vacation for a week, "15 ads ran from 13 marketers, according to iSpot.TV. Monday night's return episode included nine commercials from seven advertisers," Poggi writes.

Goodbye, CAA Marketing: The company has a new name, Observatory Marketing, after private equity fund Stagwell Media bought a majority stake in it, Ad Age's Megan Graham reports.

Turning the tables: IPG's Initiative hosted another "reverse upfront," Ad Age's Jeanine Poggi writes. It pitched "700 sales executives from TV networks and digital publishers like NBC Universal, CBS and Google, among others, guidance on what its clients, including Amazon, Lego, Dr Pepper Snapple Group and Arby's, are looking for from media sellers during the spring bonanza."

Honest ads: Like Facebook, Twitter says it supports the Honest Ads Act, a Senate bill pressing for more transparency in political ads. Read more on Bloomberg News.

New banking brand: Goldman Sachs has a newish consumer-facing online bank called Marcus, and it's got some commercials out. Ad Age's Adrianne Pasquarelli talked to an exec who explains that the campaign is partly "intended to introduce Goldman Sachs to Main Street."

Brands taking a stand: Bank of America will no longer lend money to gun manufacturers that make military-style firearms for civilian use, an executive told Bloomberg TV.

Creativity pick of the day: Yesterday was Equal Pay Day, bringing attention to the pay gap between men and women. The National Organization for Women worked on a campaign with online retailers that offered T-shirts bearing the message, "Women Now Make As Much As Men. About Damn Time." It was all a stunt, obviously, Ad Age's Alexandra Jardine writes. Online, when people click on the T-shirts to buy them, "customers are informed the T-shirts are on backorder until 2119, the projected year for pay equality based on existing data and trends. A separate button lets them donate to NOW," Jardine writes. Check it out here.

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