Facebook released its fourth quarter earnings on Wednesday.
Pixabay image / CNET Illustration
Facebook saw revenue jump 33% in the fourth quarter, as companies depended on social media to attract customers trapped at home because of coronavirus pandemic. The company warned, however, that privacy changes in Apple’s popular iOS mobile operating system could weigh on its advertising business in the future.
“As COVID continued to keep many of us separate and at home, people and businesses continued to rely on our services to stay in touch and create economic opportunities,” said Facebook CEO and co-founder Mark Zuckerberg during a call with analysts on Wednesday.
The strong performance came when the world’s largest social network stepped up efforts to combat electoral misinformation in the run for the US presidential election, which fell in the middle of the quarter. Facebook temporarily stopped serving political ads in the United States after polls closed on November 3, although these ads represent only a small part of the company’s overall revenue.
Facebook’s growth comes at a time when the social network faces the threat of new regulation, which could hurt its business. Democrats and Republicans have proposed changes to Section 230, a federal law that protects Internet companies from lawsuits for content posted by their users. Republicans complain that Facebook censors conservative speech, while Democrats say it does not do enough to combat hate speech. The company has denied allegations of political prejudice and has refined its AI to detect hate speech.
In its earnings release, Facebook did not comment on President Donald Trump’s controversial ban, which occurred after his supporters invaded the U.S. Capitol in a deadly uprising on January 6. The ban, which occurred after the end of the fourth quarter. , is being analyzed by Facebook’s independent supervisory board.
In the meantime, Facebook is trying to reduce the amount of political content that people see in its News Feed because users don’t want the policy to dominate their experience on the social network. The social network also plans to stop recommending civic and political groups to users “in the long term” and expand them to other countries outside the United States, Zuckerberg said.
“We will have to balance this carefully because we have a deep commitment to freedom of expression. So I believe that if people want to be able to discuss these things or join groups there, they should certainly be able to do that,” he said. .
Facebook’s increased scrutiny has not discouraged people from using the social network, which has become a mainstay for keeping in touch with family and friends trapped at home because of the pandemic. Captive audiences have made social media an attractive place for advertisers.
Approximately 2.8 billion people connected to Facebook every month during the quarter, a jump of 12% compared to the same period last year. The social network, however, saw a drop in the number of people in the US and Canada who connected daily to the platform. Facebook had 195 million daily active users in that region, one million less than the number of users in the United States and Canada in the third quarter.
Debra Aho Williamson, an analyst at eMarketer, said users in the United States and Canada may be spending more time on other social media apps. “A logical destination is TikTok, which grew rapidly in 2020 and has one of the strongest user engagements, in terms of time spent, across all the social platforms we follow,” she said.
Facebook’s fourth-quarter revenue jumped to $ 28 billion, exceeding expectations of $ 26.4 billion. The company earned $ 3.88 per share, better than the $ 3.21 per share that analysts surveyed by Thomson Reuters anticipated.
IOS privacy challenge ahead
Facebook said it expects the company’s ad targeting to be impacted by Apple’s upcoming privacy changes in the first quarter of 2021.
“While the timing of the changes on iOS 14 remains uncertain, we expect to see an impact starting at the end of the first quarter,” said Facebook CFO David Wehner in a statement. Facebook shares fell slightly in after-hours trading, but are now up less than 1% at $ 273.81 a share.
During the earnings conference call, Zuckerberg doubled down on the company’s criticism of Apple, which the social network sees as a major rival in messaging. Facebook owns WhatsApp and runs its own Messenger messaging service.
“We have a lot of competitors who make privacy claims that are often misleading,” he said.
Zuckerberg said he thinks WhatsApp “clearly superior” because “iMessage stores end-to-end encrypted backups of your messages by default, unless you disable iCloud.” When messages are encrypted from end to end, they cannot be viewed by anyone outside the sender and recipient. That means the government and Apple have the ability to access people’s messages, said Zuckerberg.
In December, Facebook published several ads claiming that Apple’s move would hurt consumers and small businesses. Apple plans to launch a new feature called App Tracking Transparency, which would require people to choose apps that collect their data, rather than requiring them to give up. Announced last June and originally expected by the end of the year, the the launch of the feature has been postponed to 2021. Apple did not immediately respond to a request for comment, but the smartphone manufacturer resisted Facebook’s characterization of the changes, saying it is only giving users more control over their data.
“Facebook can continue to track users on apps and websites as before, App Tracking Transparency on iOS 14 will only require them to ask for their permission first,” tweeted Apple CEO Tim Cook in December.