Home High Tech Meta (Facebook) suffers the first drop in income in its history

Meta (Facebook) suffers the first drop in income in its history

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During the last decade, the business of Facebook It grew steadily year after year, dodging multiple scandals for disinformation, violation of privacy or its impact on the mental health of minors. That streak ended yesterday. Goalname with which the parent company that dominates the market for social networksannounced yesterday a 1% decrease in revenue for the second quarter of the year, which is its first drop since the company went public in 2012.

From April to June, Meta’s revenue was $28.82 billion. On the other hand, profits stood at 690 million, 36% less than during the same period a year earlier. Both results have been below what was forecast by Wall Street analysts, who already contemplated the first decline of the company in its history. Although the company’s shares have fallen 6.09% in the last five days, this Thursday they have recovered 6.55%.

The poor results of the owner of Facebook, Instagram Y WhatsApp, among others, has multiple explanations. On the one hand, the slowdown in the economy due to the uncertainty caused in the markets by the war in Ukraine has led advertisers to reduce their spending. This problem has also hit Google, Twitter and Snapchat, other giants of Silicon Valley whose business, like Meta, depends on the advertising. “It seems we have entered a economic recession which will have a broad impact on the digital advertising business”, acknowledged the company’s co-founder and boss, mark zuckerberg.

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On the other hand, the change in the policies of privacy of iPhones that allow the user to tell apps not to track their activity has made their ads less effective. That setback caused Meta to reduce advertising revenue by $10 billion last year.

key challenges

Another fundamental challenge facing Meta is TikTok, a social phenomenon of Chinese origin that has not stopped growing until it has become the sixth most used platform on the planet. Seeing this as a threat, Facebook and Instagram have announced redesigns of their apps to increasingly prioritize vertical videos, thus mimicking a model popularized by their young competitor. Both networks will also boost their algorithms to duplicate recommended content to users from accounts they don’t follow, a costly system that is spending a lot of money on.

Meta’s revenue has fallen for the first time since 2012, yet the number of Facebook users continues to rise. During the second quarter of the year these grew by 3% to 1,970 million, a figure that maintains it as the first social network on the planet. Its combined apps have 2.88 billion daily users, an increase of 4% compared to last year.

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Problems in the ‘metaverse’

Although Mark Zuckerberg’s digital empire has spent years investigating the virtual realityit was not until last October that he announced that he was going to focus his business on the so-called ‘metaverse‘, an immersive internet more similar to the world of video game which has raised a lot of expectations. During the second quarter, the Reality Labs division, responsible for the construction of that space, suffered losses of 2,800 million dollars.

The bad news does not end here. And it is that just this Wednesday the Federal Trade Commission, which depends on the United States Government, filed an antitrust lawsuit against Meta to block the purchase of the virtual reality company Within, a blow that, if it materializes, will fully affect the company plans to create the metaverse.

Meta now faces a period of cutbacks to reorganize its business and try to overcome all open fronts. “I hope we do more with fewer resources,” Zuckerberg said. It will not be easy.

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