Meta Faces Scrutiny Over Ad Fraud Tolerance and Stock Performance

Meta is currently facing scrutiny over its tolerance of ad fraud, particularly from China, which has raised concerns about the integrity of its advertising revenue. According to reports from Reuters, internal documents reveal that Meta has recognized China as the origin of roughly a quarter of all ads for scams and banned products on its platforms.

In response, Meta established an anti-fraud team that succeeded in reducing problematic ads from 19% to 9% of total advertising revenue from China. However, after CEO Mark Zuckerberg's intervention, the team was disbanded and further anti-fraud measures were shelved, leading to a resurgence of banned ads, which climbed back to 16% of Meta's China revenue by mid-2025.

Former product management director Rob Leathern criticized the situation, stating that the scale of predatory advertising represents a significant breakdown of consumer protections at Meta. This ongoing issue may impact investor confidence and, subsequently, Meta's stock performance.