It is now well documented that this election harms Donald Trump’s luxury brand, with charities to abandon its properties and new flagship hotel in Washington DC would have desperate for paying customers. Now the damage appears to extend beyond Trump’s name. It is also starting to stick to its supporters.
Recently, Peter Thiel, the internet billionaire who made his fortune by founding PayPal and investing in companies like Facebook, donate $ 1.25 million to the Trump campaign. His outspoken support for the deeply polarizing Republican candidate is rare among the generally young Silicon Valley ensemble, and the news of Thiel’s donation sparked a rapid reaction online, including numerous calls for consumers to boycott PayPal, in especially on social networks.
Spreading on Twitter, in particular, the hashtag #boycottpaypal quickly gained traction. The posts range from sarcastic memes-focused posts …
… to screenshots of the PayPal account cancellation confirmation:
For some, it’s as simple as a message saying “I just closed my PayPal”.
The catch is that Thiel no longer owns PayPal.
While Thiel co-founded the online payment company in 1998, he sold the company to eBay in 2002 for $ 1.5 billion. Last year PayPal officially split from eBay become his own business again… but always without Thiel’s involvement or investment.
For many protesters, current ownership is irrelevant. Thiel’s story as the founder of the company is enough to taint it with a brand they consider toxic. The backlash intensified enough, in fact, that some posters for #boycottpaypal began to target Venmo as well, an electronic payment service owned by PayPal.
Beyond the Twitterverse, Thiel’s colleagues in Silicon Valley have also responded to his decision to support Trump publicly and financially. In an article on Medium, Ellen Pao, former CEO of Reddit, ad that its Project Include will separate from Y Combinator, a business incubator that Thiel advises.
Pao wrote, in part:
“We are struggling to rationalize the power and influence of Peter Thiel as he travels further and further there… But we are completely outraged to read that Thiel has donated $ 1.25 million to Trump, apparently unfazed by the storm surrounding the candidate last week after obscene conversations aired. “
The backlash became intense enough to request the resignation of Y Combinator chairman Sam Altman for keeping the company away from Thiel.
Others have pointed out that while Thiel may no longer own PayPal, he currently sits on Facebook’s board and owns around $ 40 million in shares.
“Ironically,” writtenThe Huffington Post, “Peter Thiel owns a stake in several companies, including Facebook, one of the social media behind the boycott calls… Interestingly, there was no call to boycott Facebook.”
This is not PayPal’s first exposure to political controversy or boycott calls; however, in past news cycles it has drawn anger primarily from the right. Earlier this year, the company announced plans to cancel an expansion in North Carolina due to the state’s discriminatory treatment of LGBT citizens. In a public statement at the time, the company wrote this:
“[L]Legislation was abruptly enacted by the state of North Carolina that invalidates the rights protections of lesbian, gay, bisexual and transgender citizens and denies these members of our community equal rights under the law. The new law perpetuates discrimination and violates the values and principles that are at the heart of PayPal’s mission and culture. “
In response, conservative outlets such as Breitbart have articles with tips for launching boycotts, including advice on electronic payment alternatives for those who are angry with PayPal’s support for the LGBT community and its related decision to cancel a planned expansion.
Yet other conservatives have called for boycotts on PayPal’s refusal to process transactions involving firearms of any kind.
While Thiel will likely remain a deeply controversial figure, including not only his support for the Trump campaign but also his role in Gawker’s bankruptcy through litigation, severing ties with him is likely a difficult task for the average consumer. As recent Fast businessitem As pointed out, the Silicon Valley investor touched or owned elements of a huge number of now mainstream technology products and services, including:
- And, in a way, the fbi
However, PayPal remains Thiel’s flagship creation, despite the years that have passed since its involvement. For now, this is where the demonstrators have decided to release their rage.
Do these boycotts even work?
Boycotts have long been a preferred way for consumers to protest against a company’s social or political decisions. From divestment moves across college campuses to Chik-Fil-A’s stalemate with social liberals, fear of lost sales is one of the main reasons many companies are trying to avoid controversy. .
This strategy can be very effective when it comes to forcing a business to change behavior, but the watchword is organized. As Professor Maurice Schweitzer of the Wharton School of Business explained, for a boycott to make a difference it has to have the kind of grip power that social media isn’t often known for.
“For boycotts to be effective, they must be supported,” Schweitzer said. “They need coordinated leadership and they need to have significant economic consequences, and the vast majority of cases never reach that.”
PayPal isn’t the first company in recent years to face organized resistance over social or political issues (indeed, as noted earlier in this article, it’s not even the first time this year that PayPal itself is the target of a boycott attempt). Other companies have included BP in the aftermath of its 2010 oil spill, Kentucky Fried Chicken on the treatment of animals, the 2003 rally to boycott French wines, and many more.
“The list goes on,” said Schweitzer. “There are a lot of boycotts and they tend not to be very effective. The few exceptions are where there has been a substantial and coordinated sustained movement, and I am quite sure that the PayPal boycott movement won’t be one of them. “
“Particularly,” he added, “because Thiel is no longer with PayPal.”
Part of the reason boycotts struggle is that they demand a lot of grassroots protesters. A successful boycott requires that a large number of consumers change their established habits, abandoning or suspending the brand loyalty often accumulated over the years and because a given product is the cheapest or most convenient option.
For a brief period, buyers may be willing to incur additional expense, but once the news gets over that initial outburst of anger often dies down … and with it the incentive to continue a boycott.
“Boycotting PayPal because of its connection to Thiel does not appear to be a textbook case of a successful boycott,” said Gregory Egorov, professor at Northwestern’s Kellogg School of Business. “Typically, about half of organized boycotts are successful. Organization means resources and perseverance; there has to be a group – say, activists – that takes responsibility for raising awareness, [and] tell customers how to boycott. ”
“The reason they fail,” he added, “is either the inability to organize properly or the company’s determination to rebuild its reputation for being tough. This makes a lot of sense to high-level companies who know that otherwise they would always be a target of any self-respecting activist. “
While the sustainability of a Twitter campaign is a serious question, there is a more important reason why a PayPal boycott is unlikely to be successful: Boycotts depend on their ability to influence the results of a PayPal campaign. business, and that’s very difficult in a market where PayPal is the dominant force.
Although modern businesses are often very protective of their image, history shows that few boycotts succeed solely through damage to public relations. See, for example, the annual plight of Starbucks, which faces enormous pressure from the American right-wing to adopt a more explicit celebration of Christmas. While the issue could hardly be more widely publicized each December, it has little impact on company policy.
“Companies rarely notice it unless there is an impact on earnings or the share price, which is a signal for future earnings,” Egorov said. “Rarely does negative publicity in itself cause a company to change its behavior. “
In this case, while the PayPal boycott has garnered considerable media attention, it also remains focused on a small handful of users. Other consumers, even if they sympathize with the token cause, would likely be reluctant to cancel their PayPal accounts due to concerns about other options.
There aren’t that many.
According to an analysis, PayPal has an approximate value 80% digital payment market share.
With 184 million users and 14 million participating merchants, there are few viable alternatives to PayPal in today’s market.
It would be potentially impossible for consumers to find an alternative to PayPal without sacrificing ease of use and convenience.
For a boycott without articulated demands, and therefore without real
end date, it would be difficult to convince many consumers to ditch one of the few widely accepted electronic payment platforms.
“Paypal is a platform that has few good substitutes for such transactions,” Egorov said, “if at all. Social media activity would therefore likely come from a few dozen, maybe hundreds, of outraged individuals who are not particularly profitable for PayPal either. Unless there is a group of activists who are taking this matter up and trying to clarify the claims, then they may have some success. “
However, for now, in the absence of an organization, articulable goals, or a meaningful alternative, chances are the PayPal boycott is little more than a chance for consumers to express. their anger on social media.
After all, as Schweitzer noted, the protesters gathered more than 20,000
signatures on a boycott of BP gas stations after its oil spill in the Gulf. Today, their gas stations remain open and are doing very well.
“We have habits,” he said. “On the whole, most people try to get on with their lives. For people to change the way they shop in the long term, the way they refuel, it is difficult.”
“Like dieting, we can do it for a little while, but we have to be motivated enough to maintain sustained change,” he added.