Facebook profits soar but its success might be short-lived
Facebook’s success is rapidly taking flight; however, it’s about to face serious challenges on multiple fronts.
The company’s revenue grew 56 percent year-on-year (YoY) in the second quarter, amounting to $29 billion, according to a statement published on Wednesday.
Facebook’s savvy marketing strategy and technological advancement managed to double its quarterly profit to almost $10.4 billion, $8.7 billion more than what analysts estimated.
If this isn’t impressive enough, then take a look at the platform’s number of users. From the same time last year, users across Facebook, Instagram, and WhatsApp increased 12 percent to 2.76 billion.
Yet, its success might witness a myriad of threats that can potentially shift the company’s future, as indicated by chief financial officer David Wehner.
You don’t have to be an expert in tech to know that platforms in this industry that make a fortune can fickle. Facebook’s financial officer has explicitly stated that growth in revenues might be put on pause due to “regulatory and platform changes, notably the recent iOS updates” from Apple.
The changes honed by Apple went into effect back in April, but the implications might just be on the way.
Now, Apple’s 14.5 software update requires users to give direct permission for apps to track their behavior and profit off their personal data, such as age, location, spending habits and health information, by selling all the information advertisers.
The notorious App Tracking Transparency (ATT) update.
Given that Facebook makes almost all its money based on advertisements, the company has been negotiating with Apple against the privacy update, as it could majorly hit its success if users refuse to give away their entire sense of privacy.
However, this hurdle is just a drop in the ocean to what Facebook must face.
The tech giant has been under scrutiny for letting misinformation and disinformation roam the site freely. Facebook founder and head Mark Zuckerberg barely showed interest in fighting conspiracy theories and vaccine falsehoods, citing that it falls under “freedom of speech.”
An argument which has led Congress and trustbusters within the Biden Administration to reexamine the basis of Section 230 of the Communications Decency Act.
Instead, Facebook users have been the company’s best weapon in fighting misinformation. That’s a lot of responsibility to put on the shoulders of the users, and U.S. president Joe Biden agrees.
During the height of the COVID-19 pandemic, Facebook was going back and forth with the White House after Biden claimed Facebook was “killing people” due to the mass of health misinformation on the platform.
On Wednesday, several protestors gathered in front of Facebook’s Washington D.C. office to demand the company take stronger action against sharing false information. The protestors held body bags that read “disinformation kills.”
This is a crucial time for Facebook, as the company can dominate the market or end up on the scrapheap of history. As users become more aware of how their privacy is at risk, opting out of targeted advertisement will surely hit Facebook’s profit margins. It’s up to Zuckerberg’s so-called “metaverse” to change the platform’s business model to one that will ensure millions in revenue.