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Facebook doubles profit, but sees cooling growth

AFP/San Francisco
Filed on July 29, 2021 | Last updated on July 29, 2021 at 12.37 am
AFP

Company's profit jumped $10.4 billion on revenue of $29 billion.


Facebook on Wednesday reported its profit doubled in the recently ended quarter as digital advertising surged, but warned of cooler growth in the months ahead.

Profit jumped $10.4 billion on revenue of $29 billion, with the number of people using the social network monthly climbing to 2.9 billion, Facebook said in a second quarter update that sparked an after-hours selloff.

"We had a strong quarter as we continue to help businesses grow and people stay connected," Facebook chief executive Mark Zuckerberg said in an earnings release.

The earnings trounced market expectations, causing shares to jump nearly five percent in after-market trades.

The leading social network and its "family" of services including Instagram, WhatsApp, and Messenger ended March with 3.45 billion monthly users overall in a 15 percent increase from a year earlier.

Facebook's stellar earnings came as regulators in the United States and abroad threaten to crack down on Internet giants they fear have become too powerful.

Facebook, Google, Amazon, and Apple are among tech titans that have thrived as the pandemic accelerated a shift to working, learning, shopping and socializing online.

Ad revenue in the quarter was driven by a 30 percent rise in price along with a 12 percent increase in the number of ads, according to Facebook.

Online ads are typically fired off by automated platforms that conduct real-time auctions, meaning competition to get marketing messages in front of Facebook users likely bid up prices.

"We expect that advertising revenue growth will continue to be primarily driven by price during the rest of 2021," Facebook said in an earnings release.

However, Facebook warned that it expects "increased ad targeting headwinds" this year from regulation as well as privacy changes made in the latest version of operating system running Apple mobile devices.

Enhanced iOS privacy

An update to iOS software powering some billion iPhones around the world kicked in this week with an enhanced privacy feature critics fear will roil the internet advertising world.

Apple began requiring app makers to tell users what tracking information they want to gather and get permission to do so, displaying what have been referred to as "privacy nutrition labels."

The move by Apple, which has been in the works for months, has sparked a major rift with Facebook and other tech rivals and could have major implications for data privacy and the mobile ecosystem.

Digital ads are the lifeblood of internet giants such as Google and Facebook, and are credited with paying for the cornucopia of free online content and services.

An update to the iOS software that powers iPhone, iPad, and iPod devices brings with it an "App Tracking Transparency framework" that stops apps from tracking users or accessing device identifying information without permission.

With more than a billion iOS powered devices in active use around the world, a change to the mobile operating system that potentially hampers the effectiveness of digital ads could be significant.

Platforms such as Facebook or Google that rely on advertising typically get paid only when someone takes an action such as clicking on a marketing message.

Ads made irrelevant because less is known about users could mean fewer clicks and, by extension, less revenue.





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