Part of the Twinmark scheme involved paying existing social media pages to post, share, like or comment Twinmark ‘material.’ 
Culture Spotlight

What Twinmark should teach us about tsismis, taxes, and social media

Twinmark’s owners made hundreds of millions of pesos by manipulating content so it could go more viral. Facebook found them out and banned them, and the BIR audit is on its merry way.
Warren de Guzman | Mar 08 2019

Some of the reactions to ABS-CBN’s exclusive on Twinmark Media Enterprises have been funny. In the exclusive, it was revealed the company owned by three brothers, last name Hicban, earned at least P250M in just 5 years. They earned the money by gaming Facebook and Google, abusing a clicks-for-cash scheme by fraudulently creating artificial traffic on various social media pages, including over 300 Facebook and Instagram accounts.  Twinmark insiders said they earned P250M in 5 years spreading viral ‘tsismis’ or gossip, (also known as ‘Fake News’) on social media before Facebook banned the company for misrepresentation, spamming, and coordinated inauthentic behavior. When people heard the story their reactions were, ‘Ganon kasimple lang!?!’ or ‘Kaya ko yan! Sana ako na lang!” Of course some of the reactions were in jest, but a deeper look into social media based businesses reveals an underground economy and a thriving enterprise, thanks to ill-equipped government regulators.

Part of the Twinmark scheme involved paying existing social media pages to post, share, like or comment Twinmark ‘material.’ These pages helped make the material viral, generating more clicks and more revenue for Twinmark. Jason Cabañes, professor of communications at DLSU and co-author of ‘Architects of Networked Disinformation’ believes the number of these pages-for-profit is growing. It isn’t illegal, but the sources of revenue is where it gets sketchy. Based on Twinmark documents, the company paid out as much as P70M in just two years to page administrators or digital influencers. According to Cabañes there is another source of revenue: architects.  These architects create campaigns for either corporate brands or politicians, launched on social media to compliment more traditional publicity campaigns. Cabañes believes the architects are professionals from PR and Advertising. However, Cabañes says getting hired by these architects may not be as lucrative as working for Twinmark. “One of the chief architects that we talked to said that for a particular three-month campaign for a particular issue, this person got paid around P30M, and the bulk of that goes to the chief architect. Very, very little goes to the anonymous digital influencers and the community fake account operators (trolls).” Cabañes also noted there is a clear distinction between Twinmark and the architects. “I think what’s interesting is that—what we found in our study—is that in many ways it is a top down approach. It was the chief architects leading the campaign, even though it was networked. But what I think in your finding, in this particular instance, it is much more bottom up. Much more people online being entrepreneurial about the capacities of social media, the vulnerabilities of social media,” Cabañes said.

The Hicban brothers. Photograph from their Facebook account

Another part of social media-based businesses involves growing an online following. Cabañes and Co-author Jonathan Ong of the University of Massachusetts Amherst say this is the most common part of this underground economy. Cabañes explains one way of gaining followers, “a lot of these accounts are what we call quote accounts. They are not really accounts that are geared explicitly toward advertising campaigns or political campaigns. They are accounts that share with you funny quotes or funny memes or even prayers or nice poetry.  That’s the kind of base level of these accounts. That is how they generate a lot of following.” Twinmark insiders meanwhile revealed their operations involved something simple, they buy existing accounts with large followings.  Twinmark targeted quote accounts, fan pages, and pages claiming to represent actual personalities from entertainment, politics, and media. That’s how they amassed over 300 social media accounts in Facebook and Instagram alone. The number of followers is important because this determines how much money a page can earn. Twinmark’s list of paid influencers were compensated based on number of followers and number of posts made over a particular period. Cabañes also noted that pages had to reach a certain number of followers before their owners could get paid.  “We did research between 2016 and 2017, at the time we talked to people who had a reach of around 50k to 2M followers. These chief architects would approach these people online and ask whether or not these people would be happy to have their avatar accounts used for political campaigns.”

We’ve talked about the revenue source and some of the mechanics and requirements, now let’s talk about the bottom line. Cabañes believes these ‘entrepreneurs’ don’t pay taxes. “A lot of these are not really reported. Even though these influencers do other kinds of work. It might be that work that they pay taxes for, but not necessarily this, because this is more underground.” BIR Consultant and private tax practitioner, CPA Mon Abrea says this shouldn’t be the case. Abrea said “Our tax code is very clear, all sources of income are taxable unless otherwise provided to be exempted.” However, Abrea admits it isn’t hard for these social media businessmen to evade taxes. “Honestly, the Philippines as a country, and the BIR as a collection agency, we have adopted a voluntary system. It means whether it is online or traditional way of doing business, it is really upon the declaration of the taxpayer how much they earn and how much they will pay. Its up to BIR, through their audit and investigation, to check whether we have really paid the right taxes or not.” No taxes mean bigger profits, but it also means the whole operation is criminal.

A portion of Twinmark Media's corporate registration paper obtained from the Securities and Exchange Commission

This is all pretty straight forward and Cabañes believes the architects, and the influencers, will likely be doing even more business with the mid-term elections on the horizon. Abrea and Cabañes also believe this underground economy won’t be regulated effectively any time soon. Cabañes says “It is hard to advocate for state regulation for this because that is a slippery slope into censorship and censoring freedom of expression. That is why we advocate for self-regulation, that they themselves should be responsible for what is put up on their pages.” Abrea on the other hand believes there is one thing government can and should do to effectively police the internet, lift the bank secrecy law. Abrea says “It’s really a challenge for BIR now, specially that they don’t have access to bank accounts or remittances, to know if all of us are really paying the right taxes.”

Earning extra cash on the side is all well and good. Leveraging technology like social media to make money is also perfectly legal. But these things need to be done a certain way. Twinmark Media was caught artificially inflating web traffic on its pages to fraudulently boost revenues from Facebook and Google. It was also using ANY content to achieve the same effect. It wasn’t vetting sources, it wasn’t fact checking, and worse of all, it was manipulating content it ripped off from other web sources just to make the material more viral. Twinmark’s owners made millions of dollars, or hundreds of millions of pesos doing this. But they are also the first ever on record to be punished, banned by Facebook, with a BIR audit on the way.