Menlo Park Facebook’s advertising business is in full swing even in the crisis affecting the online group’s reputation. In the third quarter, advertising revenues rose year-on-year by around a third to $ 28.3 billion, as the company behind the world’s largest online network announced on Monday. In the past few months, Facebook itself had fueled concerns about the business, especially with references to the data protection changes on the iPhone.
In terms of total group sales in the past quarter, Facebook actually missed the analysts’ expectations. They had expected an average of a good 29.5 billion dollars. Facebook managed an increase of 35 percent to 29 billion dollars (around 24.5 billion euros). However, the group exceeded the market forecast for earnings per share. The bottom line was that Facebook earned around $ 9.2 billion – a year-on-year increase of 17 percent.
The stock initially gave way in after-hours trading, but then turned up just under three percent – among other things after Facebook announced a $ 50 billion share buyback.
The number of daily active users on Facebook rose within three months from 1.91 to 1.93 billion. At least one app from the Facebook group – such as Instagram or WhatsApp – recently accessed 2.81 billion users every day. At the end of the second quarter it was 2.76 billion.
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A name change for the group, which is speculated about according to media reports last week, was not announced. There would be another opportunity for this on Thursday at the in-house developer conference Connect.
At the same time, however, the group announced that the previous area around virtual reality – the Facebook Reality Labs – should be shown separately in the balance sheet from the coming quarter.
“Metaverse is the digital future”
Facebook’s founder and boss Mark Zuckerberg sees the future of digital communication in the so-called “Metaverse”, a virtual environment in which physical and digital worlds should come together. On the one hand, Zuckerberg relies on virtual reality (VR), in which users can immerse themselves in digital worlds with special glasses on their heads. The VR company Oculus, part of Reality Labs, also belongs to the Facebook group.
The Facebook founder also sees so-called augmented reality (AR) as a “metaverse” component, in which digital content is faded into the real environment for the viewer on displays or with the help of projector glasses.
The Reality Labs are likely to be the part of the company in which the “Metaverse” will primarily be developed in the coming years. In the current quarterly report, it was said that the investment in the Reality Labs would depress Facebook’s operating profit by around ten billion dollars.
The redesign comes in the midst of the worst PR crisis for Facebook since the Cambridge Analytica data protection scandal. The group has come under massive pressure in the past few weeks from internal documents that were made public by a former employee. Frances Haugen appears as a whistleblower and accuses Facebook of putting profits above the well-being of its users.
Apple’s new rules for more privacy on the iPhone, meanwhile, could have been one reason for missing the sales forecast. Since the summer, all app developers have had to explicitly ask users for their permission if they want to track their activities across different applications and services for advertising purposes. According to surveys, most users reject this. Accordingly, many previous business models in the advertising industry are getting mixed up.
The photo app Snapchat therefore missed the sales forecast in the past quarter and expects further turbulence, even if it considers Apple’s approach to be correct. Facebook has already warned its advertisers that the changes have given them incorrect data on the success of their advertising campaigns from the online network. Zuckerberg accused Apple of unfair competition. On Monday it was said that further “headwinds” were expected from the Apple rules.
More: New company name and a metaverse: Facebook wants to score with a new strategy