Facebook announced plans Tuesday to adapt to users sharing more
privately as the leading social network pours money into an ongoing
battle with "bad actors" out to misuse its service.
Facebook reported that its quarterly profit climbed in the recently
ended quarter, but the social network — mired in a spate of
controversies —
gained fewer users than analysts had expected.
Profit beat Wall Street expectations by jumping 9% to $5.14bn on
revenue that leapt 33% to $13.7bn in the quarter that ended September
30.
Facebook shares went for a rollercoaster ride in after-market trades
as executives disclosed quarterly earnings figures along with challenges
and opportunities seen in shifting trends in user behaviour.
Shares jumped, dove and then rose anew before staying on higher
ground, up 3.1% to $150.80, on the Nasdaq early in the evening in New
York.
"Right now, the market is really nervous and it doesn't take much to
move the stock," said analyst Rob Enderle of Enderle Group. "As long as
they are meeting or exceeding on the bottom line (profit) they will be
fine."
The number of people who used Facebook monthly rose 10% to
2.27-billion, but analysts had expected that figure to be slightly
higher.
Facebook has been trying to fend off concerns about how well it
protects user data and defends against use of the site to spread
misinformation aimed at swaying elections.
Controversies that have battered Facebook since the 2016 presidential
election in the US have raised questions over whether co-founder Mark
Zuckerberg should keep his post as CEO.
"Our community and business continue to grow quickly,
and now more than two-billion people use at least one of our services
every day," Zuckerberg said in an earnings call, including WhatsApp,
Instagram and Messenger in the count.
"We're building the best services for private messaging and stories,
and there are huge opportunities ahead in video and commerce as well."
Facebook users are shifting fast to sharing more privately with
messages or a "stories" feature for creating short photo or video
collections, instead of posting in their main feeds, according to
Zuckerberg.
While Facebook has made an art of monetising adverts in newsfeeds, it
has yet to optimise making money from messages and stories.
"This is one of those situations where the community growth we are
seeing is outpacing the progress we made on developing ads in that
space," Zuckerberg said of Stories.
"I think we will get there in time, and the opportunity will be
bigger, but I can't tell you what that time frame will look like."
Facebook is also seeing a rapid rise in viewing videos, which also generate less ad money per minute than newsfeeds.
Big spender
Zuckerberg said he expected 2019 to be "another year of significant
investment" for Facebook, and executives projected revenue growth would
slow.
Facebook finished the quarter with 33,606 employees in a 45% increase over the number of workers it had the same time last year.
Just weeks ago, Facebook activated a "war room" as a nerve centre to
halt misinformation and manipulation of the social network by foreign
actors trying to influence elections. The war room at the company's
Silicon Valley headquarters is part of stepped up security that will
include doubling the security team to 20,000 employees.
"The upcoming election will be a real test of the protections we put
in place," Zuckerberg said on an earnings call. "We will see all the
good and bad humanity can do."
Last week, Facebook said it had taken down accounts linked to an
Iranian effort to influence US and British politics with messages about
charged topics such as immigration and race relations.
The social network identified 82 pages, groups and
accounts that originated in Iran and violated policy on co-ordinated
"inauthentic" behaviour, according to cyber security policy head
Nathaniel Gleicher. He said there was overlap with accounts taken down
earlier in 2018 and linked to Iran state media, but the identity of the
culprits had yet to be determined.
Spending on security and election-related defenses were part of the
reason overall costs and expenses reported in the quarter rose 53% to
$7.95bn from $5.2bn a year earlier.
Zuckerberg said Facebook is up against sophisticated adversaries who
continue to evolve. "These aren't problems you fix, they are problems
you manage," Zuckerberg said of the challenge. "There is no silver
bullet."
In what could wind up costing Facebook more money, British finance
minister Philip Hammond said he planned to introduce a digital services
tax aimed at tech giants from 2020, responding to public outrage over
low tax payments by US tech giants.
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