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Earnings

Facebook earnings: 3 billion users and counting

Facebook earnings: 3 billion users and counting
  • Q1 revenue: $17.7 billion (+18% YoY, -16% QoQ vs. $17.5 billion expected)
  • Q1 earnings: $4.9 billion (+102% YoY, -33% QoQ)
  • Q2 guidance: Facebook didn't provide second quarter guidance due to uncertainty related to COVID-19. But the company said it's "seen signs of stability" during the first three weeks of April, with advertising revenue "approximately flat" compared to the same period last year.

The big number: As expected, the coronavirus crisis increased usage across Facebook's family of apps. For the first time ever, Facebook reported more than 3 billion monthly active users across Facebook, Instagram, WhatsApp and Messenger. At the same time, advertising revenue and revenue per user fell sharply. Facebook lost more than $3 billion in advertising revenue and went from making an average of $7.38 per user across its apps last quarter to $6.03 this quarter.

People are talking: "The impact on our business has been significant. And I remain very concerned that this health emergency, and therefore the economic fallout, will last longer than people are currently anticipating." — Facebook CEO Mark Zuckerberg said on Wednesday's earnings call.

Opportunities: While advertising revenue declined, Facebook's chief operating officer Sheryl Sandberg noted some ad categories, including gaming, grew, while categories like technology and ecommerce remained stable.

Zuckerberg also noted that while he doesn't expect the spike in user engagement on Facebook's apps to last, he does anticipate the growth in "private social communication" to continue well into the future.

Facebook is investing substantially in ecommerce, particularly in India, where Facebook recently invested $5.7 billion in Jio Platforms, a telecom giant whose JioMart product enables small businesses to set up online storefronts.

One other bright spot: Facebook's non-advertising revenue, which still constitutes a tiny slice of overall revenue, increased by 80% year-over-year, driven largely by the success of Oculus virtual reality products.

Threats: Facebook's biggest threat is the uncertainty in the advertising industry. As long as vast swaths of the economy are shut down, the ad industry will continue to suffer, and Facebook, which derives 98% of its revenue from advertising, will continue to feel the pinch.

The power struggle: Facebook's push into ecommerce undoubtedly sets the company on a collision course with Amazon. That's especially true in India, where Facebook is already piloting a WhatsApp integration with JioMart.

Internally, there may also be power struggles between different business units. Facebook intends to hire 10,000 more people in product and engineering roles this year. "I've always believed that in times of economic downturn, the right thing to do is to keep investing and building the future," Zuckerberg said. But it's clear that hiring won't be spread equally across the company. Right now, Facebook needs engineers both to manage the excess demand on its apps and build new tools to respond to the crisis. But Zuckerberg warned that the company will likely "moderate" its expenses in other business functions, including ad sales.

Microsoft wants to replace artists with AI

Better Zoom calls, simpler email attachments, smart iPhone cases and other patents from Big Tech.

Turning your stories into images.

Image: USPTO/Microsoft

Hello and welcome to 2021! The Big Tech patent roundup is back, after a short vacation and … all the things … that happened between the start of the year and now. It seems the tradition of tech companies filing weird and wonderful patents has carried into the new year; there are some real gems from the last few weeks. Microsoft is trying to outsource all creative endeavors to AI; Apple wants to make seat belts less annoying; and Amazon wants to cut down on some of the recyclable waste that its own success has inevitably created.

And remember: The big tech companies file all kinds of crazy patents for things, and though most never amount to anything, some end up defining the future.

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Mike Murphy

Mike Murphy ( @mcwm) is the director of special projects at Protocol, focusing on the industries being rapidly upended by technology and the companies disrupting incumbents. Previously, Mike was the technology editor at Quartz, where he frequently wrote on robotics, artificial intelligence, and consumer electronics.

Politics

Facebook’s Oversight Board won’t save it from the Trump ban backlash

The Board's decision on whether to reinstate Trump could set a new precedent for Facebook. But does the average user care what the Board has to say?

A person holds a sign during a Free Speech Rally against tech companies, on Jan. 20 in California.

Photo: Valerie Macon/Getty Images

Two weeks after Facebook suspended former President Donald Trump's account indefinitely, Facebook answered a chorus of calls and referred the case to its newly created Oversight Board for review. Now, the board has 90 days to make a call as to whether Trump stays or goes permanently. The board's decision — and more specifically, how and why it arrives at that decision — could have consequences not only for other global leaders on Facebook, but for the future of the Board itself.

Facebook created its Oversight Board for such a time as this — a time when it would face a controversial content moderation decision and might need a gut check. Or a fall guy. There could be no decision more controversial than the one Facebook made on Jan. 7, when it decided to muzzle one of the most powerful people in the world with weeks remaining in his presidency. It stands to reason, then, that Facebook would tap in its newly anointed refs on the Oversight Board both to earnestly review the call and to put a little distance between Facebook and the decision.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Politics

This is the future of the FTC

President Joe Biden has named Becca Slaughter acting chair of the FTC. In conversation with Protocol, she laid out her priorities for the next four years.

FTC commissioner Becca Slaughter may be President Biden's pick for FTC chair.

Photo: David Becker/Getty Images

Becca Slaughter made a name for herself last year when, as a commissioner for the Federal Trade Commission, she breastfed her newborn baby during video testimony before the Senate, raising awareness about the plight of working parents during the pandemic.

But on Thursday, Slaughter's name began circulating for other reasons: She was just named as President Joe Biden's pick for acting chair of the FTC, an appointment that puts Slaughter at the head of antitrust investigations into tech giants, including Facebook.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Politics

The other reason Facebook silenced Trump? Republicans lost power.

Yes, the president's acts were unprecedented. But Facebook is also preparing for a new Washington, controlled by Democrats.

Mark Zuckerberg and Facebook's head of public policy Joel Kaplan have spent four years bending to conservatives' demands. Now, Facebook is bending in a new direction.

Photo: Samuel Corum/Getty Images

In his post announcing that President Trump would be blocked from posting on Facebook until at least Inauguration Day, Mark Zuckerberg wrote that the president's incitement of the violent mob that stormed the U.S. Capitol building Wednesday was "fundamentally different" than any of the offenses he's committed on Facebook before. "The risks of allowing the President to continue to use our service during this period are simply too great," he wrote on Thursday.

That may be true. But there's another reason why — after four years spent insisting that a tech company has no business shutting up the president of the United States, no matter how much he threatens to shoot protesters or engages in voter suppression — Zuckerberg finally had a change of heart: Republicans just lost power.

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
Power

Pressure mounts on tech giants to ban Trump, as rioters storm Capitol

Facebook, Twitter and YouTube removed a video in which Trump expressed love for the rioters, but none of the companies have banned him outright — yet.

Twitter locked President Trump's account.

Image: Twitter

Twitter, Facebook and YouTube took action against several of President Trump's posts Wednesday, labeling the posts, limiting reshares and removing a video in which President Trump expressed his love for rioters who stormed the U.S. Capitol building, leading to the evacuation of the Senate, the deployment of the National Guard and to one person being shot and killed. Twitter locked President Trump's account, requiring him to remove three tweets and saying that his account would remain locked for 12 hours after those tweets were removed. Twitter also warned that any future violations would get him banned. Facebook also locked his account for 24 hours, citing "two policy violations." These actions followed a day of calls from tech investors, academics and others to kick Trump off of their platforms once and for all.

In an early tweet, University of Virginia law professor Danielle Citron implored Twitter CEO Jack Dorsey to take action. "As someone who has served on your Trust and Safety Board since its inception and counseled you since 2009, time is now to suspend President Trump's account," Citron wrote. "He has deliberately incited violence, causing mayhem with his lies and threats."

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Issie Lapowsky
Issie Lapowsky (@issielapowsky) is a senior reporter at Protocol, covering the intersection of technology, politics, and national affairs. Previously, she was a senior writer at Wired, where she covered the 2016 election and the Facebook beat in its aftermath. Prior to that, Issie worked as a staff writer for Inc. magazine, writing about small business and entrepreneurship. She has also worked as an on-air contributor for CBS News and taught a graduate-level course at New York University’s Center for Publishing on how tech giants have affected publishing. Email Issie.
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