Facebook warns regulators and Apple – TechCrunch of “headwinds” in their advertising business

Facebook on Wednesday posted its second-quarter earnings, surpassing expectations with $ 29 billion in revenue.

The world’s largest social media company was expected to report revenue of $ 27.8 billion for the quarter, 50% more than the same period in 2020. Facebook reported earnings per share of $ 3.61, which also exceeded expectations. The company’s revenue was $ 18.6 billion in the same quarter last year.

In the first financial period that really reflected the return to near-economic normalcy after a year of online pandemic, Facebook met the growth expectations of users. At the end of March, Facebook had 2.85 billion monthly active users across its entire app network. At the end of its second quarter, Facebook reported 2.9 billion monthly active users, roughly what was expected.

Shares of the company opened Wednesday morning at $ 375 and dropped to $ 360 after the earnings report.

Despite a strong quarter, Facebook warns of changes ahead, that is, impacts on its large advertising business, which generated $ 28.5 billion of the company’s $ 29 billion this quarter. The company specifically named privacy-focused Apple’s mobile operating system updates as a threat to its business.

“We continue to expect an increase in ad targeting in 2021 due to regulatory and platform changes, particularly recent iOS updates, which we expect will have a greater impact in the third quarter compared to the second quarter “, the company stated its investment report.

In a call to the company’s investors, Facebook CEO Mark Zuckerberg noted Facebook’s plans to reduce its reliance on advertising revenue, noting the company’s efforts to attract and support content creators and your e-commerce plans in particular. “We want our platforms to be the best place for creators to make a living,” said Zuckerberg, who added that the company plans to monetize the creators ’tools starting in 2023.

Zuckerberg also emphasized Facebook’s great aspirations for social experiences in virtual reality. “Virtual reality will be a social platform, which is why we are so focused on building it,” Zuckerberg said.

In the call, Zuckerberg also pointed to Facebook’s prospects for revenue from digital products such as clothing and avatars on social media based on virtual reality. Facebook refers to its conception of an interconnected network of virtual social networks as the “metaverse,” a corporate gesture in Neal Stephenson’s 1992 futuristic science fiction novel “Snow Crash.”

No matter what Facebook plans to report Wednesday, the company is a financial beast. The bad press and distrust of users in the West have not done much harm to its results and the company’s advertising business seems as dominant as ever. In the absence of significant antitrust reform in the United States or an expanding competitor, there is little to get in Facebook’s way. The former could continue to be a partisan mess in Congress, even with the White House involved, but Facebook is finally facing the threat of the latter.

For years, it has been difficult to imagine a social media platform emerging as a suitable rival for the company, given Facebook’s dominance of the market and the unpleasant habit of acquiring competitors or blatantly copying its innovations, but it’s obvious that TikTok is becoming that. YouTube is huge, but the platforms matured in parallel and coexist, offering complementary experiences.

TikTok reached 700 million monthly active users in July 2020 and surpassed three billion global downloads earlier this month, making it the only non-Facebook app, according to Sensor Tower data . If the famous addictive short video app can successfully eliminate some of the long hours young users spend on Instagram and other Facebook platforms and become a cozy home for brands in process, the big blue giant of Menlo Park could finally have something to lose sleep.

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