User habits save Facebook’s bacon as it sets aside up to $5bn for FTC settlement

25 Apr 2019164 Views

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Despite the litany of privacy debacles, Facebook is profiting from being part of the daily habit of most internet users.

Social media giant Facebook has reported Q1 revenues of $15bn, up 26pc year on year, in spite of a never-ending spiral of regulatory and privacy concerns about the company.

Perhaps recognising its bittersweet plight, the company has set aside between $3bn and $5bn ahead of a possible settlement for an ongoing privacy investigation by the US Federal Trade Commission (FTC).

‘We are focused on building out our privacy-focused vision for the future of social networking’
– MARK ZUCKERBERG

“The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome,” the company said tersely.

Users, advertisers and shareholders still believe in Facebook

The company said that it reached 2.38bn monthly users, up 2.5pc from 2.32bn users in Q4 2018 and up 8pc year on year.

It claims to have 1.56bn daily active users, up 2.6pc from 1.52bn in the last quarter and up 8pc year over year.

The $15bn revenues were ahead of Wall Street expectations of $14.95bn.

‘It comes as no surprise that despite the headlines and privacy questions, brands continue to pour their ad dollars into Facebook services in order to reach their audiences at scale’
– YUVAL BEN-ITZHAK

Setting aside between $3bn and $5bn will hurt Facebook’s shareholders because it means recorded earnings per share of $0.85 compared to what would have been $1.89 per share.

Just like the social network’s users, it seems its shareholders are a forgiving lot and the company’s share price rose 8.3pc to $197.84 after the market closed.

What will a privacy-focused Facebook look like?

Setting aside a monster sum of up to $5bn is a salutary lesson for Facebook that it cannot put profits ahead of people and it is clear something is changing at the social media giant.

Perhaps a line is being drawn and going forward Facebook will be a privacy-first champion for the world, as CEO and founder Mark Zuckerberg suggests.

“We had a good quarter and our business and community continue to grow,” said Zuckerberg. “We are focused on building out our privacy-focused vision for the future of social networking, and working collaboratively to address important issues around the internet.”

In many ways you could argue that Facebook is too big now to fail, in spite of its privacy issues. But that does not mean that the company does not have heart, and the lamentable litany of policy news is not remotely what Zuckerberg and his colleagues had in mind for the social network.

Only time will tell what Facebook’s “privacy-focused” future will look like. Either way, it is a money-making machine, a veritable mobile monster.

“As marketers continue to look for ways to engage with their audiences in the digital world, it comes as no surprise that despite the headlines and privacy questions, brands continue to pour their ad dollars into Facebook services in order to reach their audiences at scale,” said Yuval Ben-Itzhak, CEO of Socialbakers.

“At the same time, users are also not abandoning their use of the app. Social media has become a habit with consumers. As such, they are asking Facebook to improve its platform in regards to privacy versus changing their own habits.

“Our data shows that marketers looking to drive value for their businesses via digital marketing find more value in terms of scale and audience engagement from Facebook and its suite of services than from competing platforms. With 2.7bn monthly active users, Facebook’s family of apps is still where most consumer-to-brand engagement happens online.”

John Kennedy is an award-winning technology journalist who served as editor of Siliconrepublic.com for 17 years.

editorial@siliconrepublic.com