Internal Meta documents project that 10% of the company's total annual revenue, or $16 billion, comes from advertising for scams and banned goods. This reframes fraud not as a peripheral problem but as a significant, core component of Meta's advertising business model.
Rather than simply failing to police fraud, Meta perversely profits from it by charging higher rates for ads its systems suspect are fraudulent. This 'scam tax' creates a direct financial incentive to allow illicit ads, turning a blind eye into a lucrative revenue stream.
The executive order, aimed at creating a single, certain federal AI framework, will achieve the opposite in the short term. By sparking immediate and protracted court battles with states like California and New York, it introduces profound legal uncertainty, undermining its stated pro-innovation goal.
The executive order preempting state AI laws makes a specific exception for child safety protections. This is a calculated political concession, acknowledging that opposing 'protecting children' is an unwinnable battle, even when it runs counter to the order's main goal of federal consolidation.
A former White House policy official, Dean Ball, gave the administration's executive order only a 30-35% chance of succeeding in court. This insider skepticism suggests the order may function more as a deterrent to states and a political statement than a legally sound strategy.
Internal Meta documents show the company knowingly accepts that its scam-related ad revenue will lead to regulatory fines. However, it calculated that the profits from this fraud ($3.5B every six months from high-risk ads alone) 'almost certainly exceeds the cost of any regulatory settlement'.
President Trump's executive order establishes a Department of Justice task force with the sole purpose of challenging state AI laws deemed 'overly burdensome'. This moves beyond policy guidance to creating a dedicated legal strike team to enforce federal preemption through lawsuits against states.
After an internal team successfully slashed problematic ad revenue from China by 50%, Meta CEO Mark Zuckerberg personally intervened. Following his input, the effective anti-scam team was disbanded, as its success was negatively impacting the company's $18 billion in Chinese ad sales.
While 10% of Meta's revenue comes from fraud, the company's anti-fraud team was blocked from taking any action that would impact more than 0.15% of total revenue. This minuscule 'revenue guardrail' was an explicit internal directive to ensure anti-fraud efforts would not succeed.