Please note: On 2 September 2019, Bailador released an announcement to the ASX which relayed a statement from one of our portfolio companies, Stackla.
Aussie IPO hopeful in limbo after sudden Facebook ban
By Paul Smith, Technology Editor
Australian social media marketing start-up Stackla knew it had moved into Facebook's crosshairs when its name started appearing in US trade articles about companies that were breaking rules about the proper use of users' data last month.
In the post-Cambridge Analytica era, Facebook is making a concerted push to show regulators and users of both its eponymous platform and Instagram, that it is doing all it can to stamp out the bad actors who scrape and sell personal user data for profit, political and even academic purposes.
Stackla's Damien Mahoney says Facebook has made a mistake in banning his company from its apps, and will be looking to resolve the matter quickly. Cole Bennetts
Scraping means to use automated software to trawl a site and hoover up information. Facebook's automated data collection terms prohibit it, without express written permission.
Stackla was listed among a group of companies, including fellow Australians Sked Social, as those Facebook had "taken action" against in this regard.
Stackla provides its clients with a User Generated Content Platform. This essentially searches social media and other online platforms for people saying nice things about their clients, before seeking permission to re-use it and packaging it up for various forms of marketing content.
It has built up such a successful business that it has relocated its head operations to San Francisco, raised millions in external funding and been positioned as a likely near-term initial public offering contender by its investors, which include ASX-listed Bailador Technology Investments and Rampersand.
What action Facebook had taken remained unclear late last week, even when The Australian Financial Review made contact with Stackla. A local Facebook spokesman confirmed that Stackla had lost its ‘‘official Facebook partner badge’’ due to it violating policies.
"These companies violate our policies, and we’re taking action against them. We’re also working on two efforts to combat this industry-wide problem: developing more proactive data scraping detection methods, and conducting a review of our Facebook Marketing Partners. We know these steps won't catch every violation, but they will help,” the Facebook spokesman said.
It got worse for Stackla over the weekend, however, when co-founder and chief executive Damien Mahoney received a letter from Facebook telling him that its products had been blocked entirely from interacting with Facebook and Instagram.
In echoes of a legal case running since February between Sked Social and Facebook, where Sked is demanding Facebook reinstate its access, Stackla is left appealing to Facebook to change its mind.
The stakes are sky high. A social media content company without access to Facebook, and particularly Instagram, would be diminished to such an extent that its viability would come into question.
Mr Mahoney said on Monday that he applauded Facebook taking a strong stance on privacy and security, but that the ban was a mistake, as Stackla was "totally compliant" with all the terms around Facebook and all the other platforms it worked with.
He is now anxiously waiting for the US Labor Day long weekend to pass, in the hope that he can get hold of someone within Facebook to make his case.
"We are seeking engagement with Facebook to have everything restored and hoping to clear this up quickly. We currently do not have access to the Facebook platform, but we are confident this will only be temporary," he said.
"We help companies find the best posts put out by their fans and, with the poster’s permission, showcase those posts through their website and other marketing material. This is standard practice now for most consumer brands and has been encouraged by the social media platforms.
"We have led the way in doing this in a totally compliant way and have always done so in line with the rules."
But first Stackla has to find a human being at Facebook to talk to and then hope it has more luck than Sked – or mobile advertising start-up Unlockd, which was suddenly banned from Google’s platforms in a move that killed the company on the brink of its IPO.
Facebook is of course correct to be belatedly looking to crack down on the companies that abuse the data posted by its users; there are plenty out there that push the limits. But if Stackla is deemed to be one such offender then there will be plenty of other worried companies around.
It is far from the only firm that packages up social media posts for clients. And, in the words of one social media start-up that spoke on the condition of anonymity: ‘‘If they have done something to get on Facebook’s bad side, that’s bad news for everyone in the industry ... they are pretty reputable.’’
If Stackla's processes are as clean as Mr Mahoney suggests, he must now hope that it hasn't stumbled into a battle with a giant keen to make examples to demonstrate its data privacy credentials.
"Our hope is this clears up quickly. Given we haven’t broken the rules we are confident there will be resolution," he said.