60 Business The EconomistNovember 28th 2020
21I
t was aspectacularbitoftiming.On
November 16th Baidu, a Chinese on-
line-search giant, said it would buy yy
Live, a China-focused video-streaming
service with 40m monthly users, for
$3.6bn. Two days later Muddy Waters, an
American short-seller, published a re-
port claiming yyLive was “an ecosystem
of mirages” and “almost entirely fake”.
The share price of joyy, yy Live’s parent
company, slid by 26%.
Muddy Waters alleges that joyy’s
platforms, including yyLive, are infested
with “bots”—computers that log on to
“watch” streams, pretending to be hu-
man. Many, it says, appear to sit in joyy’s
internal networks. The upshot, it alleges,
is that somewhere between 73% and 84%
of joyy’s revenue is suspect.
joyy responded by saying the report
contained “numerous errors, unsubstan-
tiated statements and misleading con-
clusions and interpretations”. It said it
would be open to “cash verification and
diligence” conducted by “competent
third-party advisers”. (joyy and Baidu did
not respond to requests for comment.)
The allegations are unusual in accus-
ing the platform of creating its own fake
users. Technological complexity and
minimal human oversight means the“attentioneconomy”isfullofvirtual
eyeballs. But such mischief tends to be
the work of outsiders. Last year America’s
Federal Trade Commission fined the boss
of a firm called Devumi $2.5m for selling
fake YouTube views, the first time such a
complaint had been brought. Digital
advertisers pay to have their ads shown
to users. It is an open secret that many
end up served to fake viewers, generated
by computers infected with malware
written for this purpose.
A new report by the University of
Baltimore and cheq, an anti-fraud firm,
estimates that $35bn is lost annually to
such scams, from a total market worth
$333bn. South-East Asian fraudsters
employ humans to scoot between racks
of smartphones, tapping ads and in-
stalling apps, says Gary Danks of Mach-
ine, a firm that offers ad-fraud detection.
Those in places with higher labour costs
simulate phones on computers.
Companies are fighting back. Last
year Uber sued more than 100 ad agen-
cies, accusing them of buying fake views
on its behalf. Facebook launched a law-
suit against firms it says create malware
that hijacks users phones, forcing them
to generate fake ad clicks. Neither suit is
likely to stem the fraudsters’ rise.You’vebeenbotted
TheattentioneconomyAre online ads being viewed by virtual eyeballs?ed below 19% throughout most of the past
decade, from 20.2% in 1992 (see chart). On-
line shopping offers perpetually low
prices, making one-off discounts some-
what less exciting.
In this light, Black Friday’s in-store
stampedes no longer look that appealing.
The day’s internet sales have been rising
(though Cyber Monday has digitally out-
shone it since at least 2016). Last year athird of the day’s $23bn trade happened on-
line. Now the share could be closer to a half.
In any case, the idea of squeezing all
your bargain-hunting into a day is falling
out of fashion. Since 2019 Amazon Prime
Day, the e-empire’s signature shopping
event, has lasted 48 hours. And this year
Singles’ Day, a Chinese extravaganza which
normally falls on November 11th, lasted a
full 11 days. 7Lower contrast
United StatesSources:CensusBureau;NRF;AdobeAnalytics *Nov 1st-Dec31st †Excludingmotorvehicleandpartsdealers ‡Forecast22
21
20
19
18
17
16191510052000951992Holiday* retail sales
As % of annual total†
12
10
8
6
4
2
0
2016 1817 19 20‡E-commerce sales
$bnCyberMondayBlack FridayA
s protests against police violence
and racism convulsed America’s
streets this summer after the killing by a
policeman of George Floyd, a black man,
the heat could be felt in the air-conditioned
corner offices above. America Inc rushed to
announce plans to tackle racial inequality.
Walmart said it would set up a $100m ini-
tiative to fight racism. Pepsi vowed to dou-
ble spending with black-owned suppliers.
Facebook and Estée Lauder pledged to hire
more non-white candidates. JPMorgan
Chase promised to extend $30bn in loans
over five years to minority households and
businesses. Even nascar, which runs a
motor-racing series for a mostly rural and
white fan base, prohibited the display of
confederate flags at its events. Diversity,
many said, is not just the right thing to do.
It is good for business.
For one breed of firms it has been very
good indeed. Consultancies and recruiters
are enjoying a mini-boom as companies
look for advice on how to become more in-
clusive. The newly created diversity, equity
and inclusion (dei) practice at Bain, a con-
sultancy, now has two dozen staff, and an-
other two dozen want to be part of it at least
some of the time, says Julie Coffman, who
heads it. She calls diversity “the next digi-
tal”. A partner at another consultancy says
dei is the “fastest growing business line we
have right now”. Lyndon Taylor, who leads
dei at Heidrick and Struggles, an execu-
tive-search firm, discerns a “quantum”
jump in demand for such services.
Lots of companies promised to do
things during the protests. Now, Mr Taylor
says, they must work out what those are
and how they are going to do them. The pri-
ority is hiring black senior executives or
board members. Before 2020 diversity
meant women, Latino, Asian and lgbtq,
says Dale Jones, boss of the Diversified
Search Group, a 46-year-old recruitment
firm originally set up to promote women.
Now Mr Jones sees “a hyper focus around
black leadership”, with board placements
up by half and c-suite recruiting by around
a third over the past year.
Julie Hembrock Daum, who recruits
board members at Spencer Stuart, another
search firm, says she has to temper clients’
expectations about what is possible. She
tells them to think long and hard about
what qualities they need on their board
rather than “a knee-jerk reaction like ‘we
need a ceo who is black’”.BOSTON
Social unrest in America has fuelled a
boom for a new kind of adviceDiversity consultingAll inclusive