Amidst New Privacy Scandal, Facebook Releases Bumper Q4 Report
In the midst of a new furore over its use of a paid program to spy on how users use their phones and apps, Facebook has released its Q4 performance results, showing increases in both revenue and usage, and alleviating investor concerns after the previous quarter’s slight decline in active users.
First off, on users – in Q4 ’18, Facebook hit a new high of 2.32 billion monthly active users, up 2.2% on the previous quarter.
Note that Facebook saw a jump of six million users in Europe, after actually declining by a million actives last report.
Daily, Facebook now serves 1.52 billion people, showing that, at least by this measure, there's been no slow down in app use, despite mounting data concerns and controversies.
This numbers pleased the market, which sent Facebook stock up 9% on the announcement. But it was the revenue figures that really sparked analyst interest.
For the quarter, Facebook generated $16.91 billion, beating expectations of $16.39 billion.
It's difficult to even contemplate how much Facebook is earning - for all the reports which have suggested that Facebook is losing touch with the youth, that it's on the way out, the hard data does not reflect those concerns in any meaningful way.
Importantly, Facebook also increased its revenue in every market, particularly in the Asia Pacific, where significant future opportunities exist.
Also relevant - Facebook's Average Revenue Per User (ARPU) is rising in all markets.
As noted, the earnings announcement comes just a day after TechCrunch revealed that Facebook has been using a paid program to monitor selected users, and the entirety of the activity they conduct on their mobile devices.
The program, which included users aged between 13 and 35, offered $20 per month for participants to share their usage data with the company, providing Facebook with a range of in-depth insights. The program largely mirrored Facebook’s “Onavo” app, which was banned by the App Store last year because it was too intrusive. Onavo enabled Facebook to track key app trends, like the fact that people were using WhatsApp more than Messenger (leading to Facebook’s purchase of the app) and that a growing number of people were using Stories (which prompted the launch of Instagram Stories).
Following Apple’s move to stop Onavo, Facebook, according to TechCrunch’s report, switched to this alternative program, which masked the fact that it was a Facebook app, at least in the initial stages, by going through third-party providers.
Apple has since responded to the report by banning Facebook’s app, and also revoking Facebook’s Enterprise Certificate, which will stop Facebook from running all internal app versions, used by thousands of Facebook employees for testing. The expanded move, in addition to the app's removal, is a significant step, and could lead to tension between the two tech giants.
The controversy is just the latest in a long line of challenges that The Social Network has faced in recent months, which have included speculation about increased regulation in response to its data usage, calls for CEO Mark Zuckerberg to step down over mismanagement, and even Facebook’s apps being banned in some nations outright (in addition to pre-existing nation-wide bans) due to pervading concerns about the company’s power.
In almost all cases, it’s been Facebook’s data collection capacity that’s sparked the most concern, with the company able to provide in-depth profiles on its users, leading to potential manipulation and discriminative targeting, and the capability to sway public opinion through algorithm-matched posts and updates.
How Facebook fixes that is hard to say – the platform’s infamous News Feed algorithm, which is designed to show users more of what they’re likely to engage with, is the driving force which has fueled the platform to its massive growth, but it may also be the thing that makes Facebook so disruptive. If people are shown only what they agree with, that leads to division – but if you force users to see content outside of that personal bubble, engagement drops.
Facebook’s more invasive research and data collection tools are another element which has helped the company tap into key trends. Without such measures, how will Facebook be impacted? Can the company maintain its growth trajectory with less influence from these elements?
What is clear is that Facebook is now clearly under the microscope, it’ll no longer be able to simply deflect and play down such concerns in the hope that they’ll blow over. That may see Facebook’s overall growth slow - which is probably not a major concern given the platform’s overall growth and projections. The bigger question, however, is what does Facebook do now? How can the platform turn things around and become a more positive societal influence, and avoid misuse?
Is that even possible?
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