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Facebook slows sales growth with Apple’s privacy policy

Facebook Ltd

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Blame

Apple Of a corporation

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We warned about privacy rules for posting slowing sales growth and further uncertainty in the important advertising business of social media giants.

Facebook’s advertising sales, a major source of revenue, have slowed in the first quarter since Apple in April. I started to need an app Ask the user if they want to track it. This change makes it harder for advertisers to target their ads to their audience and get information about their performance.

Facebook also announced on Monday that it will change its reporting structure to split a unit called “Facebook Reality Labs” that contains augmented reality and virtual reality products and services. This move separates the unit’s results from its core business segment, which includes its flagship Facebook platform and other apps such as Instagram. The company said its investment in Facebook Reality Labs is expected to reduce overall operating profit in 2021 by about $ 10 billion.

Revenue reports are coming in a wave of extraordinary Facebook turmoil, even for companies that have overcome many controversies and business challenges in recent years.

In addition to the turmoil in the digital advertising industry due to Apple’s change to the iOS mobile operating system, Facebook faces a storm of criticism from legislators, scholars, and users about the Wall Street Journal exposure. “Facebook file” series, This shows that the company knows that there are many flaws that can harm its platform.Those articles Spurred a parliamentary inquiryPrompted rebuke from Facebook’s own surveillance committee, And led the company Quit the jobK in the version of Instagram app for kids.

Last Monday, Frances Haugen, a former Facebook employee who collected documents from companies that inform a series of journals, spoke to the British Parliamentary Commission. She urged lawmakers Facebook is there to pass legislation to curb social media platforms, saying it’s struggling to curb false information and hate speech in many languages ​​and dialects, including British English.

Facebook CEO Mark Zuckerberg opposed recent criticisms of the company at the behest of analysts.

“I’m proud of our record of navigating the complex trade-offs associated with operating services on a global scale,” he said. “It’s good to say that we don’t solve these impossible trade-offs because we’re focused on making money, but in reality these questions are mostly about our business. It’s not about the difficult balance of social values. ”

Revenues in the third quarter reached $ 29.01 billion, up 35% from the year-ago quarter, but below the $ 29.56 billion expected by FactSet polled analysts. This is the smallest increase since the fourth quarter of last year, well below the 52% in the first half of this year.

Advertising revenue fell slightly from the second quarter, including the largest complex market segments, the United States and Canada. European sales also declined from the previous quarter.

Zuckerberg also mentioned Facebook’s intensifying competition for young adult users from Apple’s iMessage app and the rise of ByteDance Ltd.’s TikTok, and maintaining and adding members of this demographic segment is the company’s ability to retain and add members. Said that it is essential for the long-term success of.

“We are rebuilding our team to make it a North Star to serve younger adults, rather than optimizing for more older people,” he said.

Facebook Chief Operating Officer Sheryl Sandberg said sales will grow from the second quarter if Apple’s privacy doesn’t change. “We and our advertisers will continue to feel the impact of these changes in the coming quarters,” she said.

Sandberg also said online commerce isn’t growing at the pace of the pandemic’s heyday, and the global supply chain crisis is also focusing on ad sales. The new Covid-19 outbreak in Southeast Asia also slowed economic activity, she said.

Facebook had previously warned that changes in privacy for Apple’s iOS operating system could compromise ad targeting capabilities in the third quarter as more people update their iPhones and iPads.last week

snap Ltd

Condemned Apple’s policy that earnings growth is expected to slow this quarter, Stock price falls by more than 20%..

Facebook’s third-quarter profit was $ 9.19 billion, up 17%. According to the company, Facebook, Instagram and other services as a whole had 3.58 billion monthly users, up 12% year-on-year.

Congressmen liken Facebook and Instagram tactics to tobacco industry tactics. Joanna Stern of the WSJ will review both hearings to find out what tobacco regulation can tell us about what’s coming to Big Tech.Photo Illustration: Adele Morgan / Wall Street Journal

Facebook’s share price rose more than 3% in after-hours trading on Monday after the end of a regular session. The company’s stock fell 5% last week after Snap reported an advertising issue related to Apple’s changes.

Michael Nathanson, an analyst at Moffett Nathanson, said:

Social media companies start a busy week of earnings for tech giants.

Microsoft Ltd

And Google parents

alphabet Ltd

Google 0.11%

After the bell on Tuesday, with Apple

Amazon.com Ltd

Numbers scheduled for Thursday. We expect everything to deliver healthy revenue growth as we continue to embrace the digital products and services offered by consumers and businesses.

Facebook said it expects revenue to grow from $ 31.5 billion to $ 34 billion this quarter, reflecting factors such as “Apple’s iOS 14 changes continue to headwind.”

Share your thoughts

What do you think about the current state of Facebook’s business? Join the conversation below.

Zuckerberg has recently promoted his vision For the metaverseBroadly defined, it is a vast future online world where people exist and interact in a shared virtual space via digital avatars.

he Recently, I explained Metaverse as the next generation. In the next chapter of the internet and his company. Facebook said it last week Plan to create 10,000 jobs in Europe Over the next five years, we will work on Metaverse-related initiatives.

Zuckerberg reinforces the message in the company’s earnings announcement, warning that it will take time and effort to bring financial benefits to the company. “This is not an investment that will always benefit us in the near future,” he said. “The second half of the last decade is the time we expect this to be a more realistic business story.”

Facebook said it expects to increase its investment over the next few years. The company added that next year’s costs will be $ 97 billion, including costs for technical staff, product staff, and infrastructure-related costs.

Write in Sara E. Needleman sarah.needleman@wsj.com

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Facebook slows sales growth with Apple’s privacy policy

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