Misinformation campaigns, distrust in WhatsApp and worries about children on Instagram – Facebook’s reputation has suffered tremendously in recent months. But boss Mark Zuckerberg doesn’t really have to worry: The company is almost never doing.
Whether in relation to false reports such as Covid or the US election, criticism of the treatment of minors on Instagram or the massive exodus on Whatsapp as part of the new terms of use: If Facebook made headlines in recent months, these were rarely positive. Most recently, for example, the book “An Ugly Truth” about the company’s internal operations caused a stir. But that didn’t damage business – on the contrary. Facebook is growing even faster than rapidly booming competitors like Apple or Microsoft.
Rich growth
This is shown by the quarterly figures that the group presented yesterday. In the spring quarter, the group was able to increase its sales by an unbelievable 56 percent, and the group took in 24.5 billion euros. What boss Mark Zuckerberg and the investors should like even better is the profit generated: The company made a total of 8.75 billion euros in three months – twice as much as a year ago. The champagne corks must have popped at the headquarters in Menlo Park.
The group was also able to increase the number of users, with its three largest services Facebook, Instagram and Whatsapp now reaching 2.76 billion people every day, a growth of 12 percent. The hardware division, which is best known for the virtual reality glasses from the Oculus series, is somewhat less successful. Here Facebook still grew by 36 percent, which only has little effect in direct comparison with the overall growth.
Warning of the fall
The fact that Facebook’s share closed yesterday with a loss of 3.5 percent despite the strong numbers was due to a warning from CFO David Wehner. A “noticeable slowdown” in growth is expected in the coming quarters, he said. The group named increasing vaccination rates and less time at home as the reason, but another one should be just as important: Apple’s campaign against automatic advertising tracking.
With the update to iOS 14.5, the iPhone manufacturer reversed the logic of consent to advertising tracking: If users were previously able to switch off the fact that apps are allowed to track them across multiple services, they now have to activate the option actively. But hardly anyone does that: It is estimated that only around 4 percent of iPhone users agree to the tracking. Facebook suffers from this in several ways: On the one hand, the group can no longer track its users as effectively itself, on the other hand, the step reduces the accuracy of the targeted advertising for the more valuable iPhone users of all things and thus also the price for playing the advertising is paid.
More revenue and more video
Apple only introduced the update in the middle of the quarter, so the consequences should be more noticeable in the coming quarters. So far, however, Facebook has more than made up for the failure: Because the advertising business of large corporations such as Facebook and Google was booming, the two groups were also able to increase the prices per displayed advertisement: Facebook charges an average of 47 percent compared to the same quarter of the previous year. And there could be even more: Wehner names rising advertising costs as the most important growth driver for the next few months.
One of the reasons for the higher income is likely to be the shift within the network in terms of content. Watching videos now makes up almost half of the time spent on Facebook, explained Zuckerberg. The main growth drivers are the short clips called Reels, which Facebook copied from its competitor Tiktok and first introduced it on Instagram and then on Facebook itself.
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