Facebook’s earnings grow despite ad boycott and coronavirus pandemic
Facebook’s third-quarter earnings and revenue exceeded Wall Street’s expectations, despite advertisers boycotting the social network to pressure the company to do more against hate speech.
Big brands, including The North Face, Verizon, and Unilever, said they would pull ads from Facebook. Civil rights groups urged companies to pause Facebook ad spending in July, the beginning of the quarter, as part of a campaign called Stop Hate for Profit. Some companies said they would pull ads from Facebook and other social networks for the rest of the year.
Thursday’s earnings report came a day after Facebook chief Mark Zuckerberg was harassed by US senators over the content Facebook is giving up or pulling down. Jack Dorsey, CEO of Twitter, and Sundar Pichai, CEO of Google, also testified before the Senate Commerce Committee, which was holding a hearing on a federal law protecting Internet platforms for user-generated content.
The subject of content moderation has taken on a new meaning as more and more people are turning to social networks to keep in touch with friends and family during the coronavirus pandemic. The increase in usage has led to criticism that Facebook and its colleagues are not breaking down enough misinformation, especially ahead of next week’s controversial presidential election.
Zuckerberg explained the work Facebook is doing to secure the elections, including removing fake accounts, assisting with registering to vote and blocking new ads a week before election day. The social network also bans political ads in the US after the polls were closed indefinitely.
“I worry that given our nation is so divided and the election results may take days or weeks to be finalized, there is a risk of unrest across the country,” he said on a conference call with analysts.
Despite scrutiny, Facebook said small businesses continued to use their products during the coronavirus pandemic and overall user growth skyrocketed.
2.74 billion people signed up for Facebook every month in the third quarter, up 12% over the same period last year.
Still, Facebook said it was still facing “uncertainty” as it looked into 2021. People could turn away from online shopping, lawmakers obey regulations, and Apple has made changes to its operating system. The company said users in the US and Canada decreased slightly from the second quarter when usage increased due to the pandemic. Monthly active users in the US and Canada decreased from 256 million in the second quarter to 255 million in the third quarter. Facebook stock initially fell more than 2% in after-hours trading to $ 280.83 per share.
“In the fourth quarter of 2020, we expect this trend to continue and that the number of [daily active users] and [monthly active users] in the US and Canada will be flat or slightly declining compared to the third quarter of 2020, “Facebook said on Thursday.
Facebook had third-quarter revenue of $ 21.47 billion, beating expectations of $ 19.8 billion. The company earned $ 2.71 per share, up on $ 1.90 per share expected by analysts polled by Thomson Reuters. The company said the demand for advertising increased due to the surge in online shopping during the pandemic.
“Facebook has recovered well from both early pandemic advertisers when marketers ran ads across all media to repeat messaging or save money, and from the ad boycott in July,” said Debra Aho Williamson, an analyst at eMarketer, in a statement . “Despite the challenges of the election campaign and content moderation, it remains a point of contact for advertisers who want to address a broad customer base.”
Looking for new products
Facebook is still looking for ways to grow while fending off competitors like the short-form video app TikTok.
In August, Facebook’s own Instagram introduced a feature called Reels, which allows users to post videos with music and other effects like slowing down or speeding up a video. However, the new feature doesn’t seem like a major threat to TikTok’s growth.
Zuckerberg said the results from Reels are “encouraging,” but it’s early days and there is still much work to be done.
The social network is also looking for new products, including possible smart glasses. Zuckerberg said last month that Facebook partnered with EssilorLuxottica, which owns eyewear brands like Ray-Ban. Connected glasses could hit the market next year.
Facebook also plans to integrate Messenger, Instagram Direct Messaging, and WhatsApp, a messaging service owned by the social network. Facebook users can now send messages to Instagram users without having to download them or switch to another app.
According to Zuckerberg, people in the US use multiple messaging apps, which can make the experience “confusing”.
“Our goal is so that users can easily … choose one of our apps that they love to use for messaging and reach anyone they want to reach across all of our different apps,” he said.