Facebook growth slows in aftermath of privacy scandals

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Facebook growth slows in aftermath of privacy scandals

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For years, Facebook has enjoyed astronomical growth, but that’s starting to slow as the company’s moderation controversies and data privacy scandals continue to pile up. Facebook posted earnings for the second quarter of 2018 today, with revenue and user growth coming in under Wall Street estimates. It’s the first time the company’s quarterly sales did not exceed expectations in roughly three years.

Facebook’s numbers were still wildly impressive for the quarter: it saw 42 percent year-over-year growth in ad revenue and 11 percent year-over-year growth in monthly and daily active users. (The social network now counts 1.47 billion daily active users and 2.23 billion monthly ones.) But this is still the slowest quarterly user growth Facebook has seen in its history. And the revenue miss seems to illustrate that the social network and its massive online advertising empire is not, in fact, impervious to bad headlines and an ever-changing and inconsistent approach to policing its platform.

Facebook is not impervious to scandals

CEO Mark Zuckerberg said back in November 2017, long before the Cambridge Analytica scandal broke in March of this year, that fighting abuse from foreign governments in the form of misinformation and fake news would cut into the company’s profits. It’s not immediately clear whether Facebook’s poor performance this quarter is a result of the measures it’s been taking to fight third-party abuse, especially in light of the actions Facebook said it would take to address data privacy after Cambridge Analytica. Nonetheless, it seems as if Facebook is not the untouchable behemoth investors seem to think it is.

The company’s stock is down nearly 8 percent this afternoon in after-hours trading. Prior to this earnings release, Facebook stock hit an all-time high, and the company’s valuation has ballooned over the months since Cambridge Analytica to nearly $620 billion. Its first-quarter earnings of 2018 seemed to be a bright spot for the company back in April, showing that Facebook had shrugged off its US user decline from the fourth quarter of 2017, following a News Feed adjustment that de-prioritized news and Page content.

In other words, the company’s ability to make money has showed no signs of having been negatively affected by the scandal, Zuckerberg’s appearances in front of lawmakers, or the ongoing moderation issues the company has suffered regarding its policing of hate speech and fake news on the platform. But the earnings tell a different story, and this financial stumble may precede more structural issues for Facebook in the months to come.

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via The Verge https://ift.tt/1jLudMg

July 25, 2018 at 03:52PM