Facebook: Privacy scandals take toll on profits

January 29, 2020 by No Comments


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Facebook has recorded its first annual fall in profits in at least five years, as its efforts to respond to privacy and content concerns took a toll on firm’s bottom line.

The tech giant, which owns Instagram and WhatsApp, said profits sank 16% in 2019 to $18.4bn (£14.1bn).

The fall came despite the continued health of its advertising business, which saw revenue rise 27% last year.

Shares in the firm dropped more than 6% in after-hours trade.

Facebook startled investors in 2018, when it warned that its efforts to beef up privacy protections and content moderation on its platform would hit profit.

Shares plummeted following that announcement, but had rebounded this year, despite ongoing investigations as user growth and advertising revenues remained strong.

On Wednesday, Facebook said an average of 2.26 billion people were active on its family of platforms each day in December, up 11% from a year earlier. Facebook alone counted an average of 1.7 billion active users each day during the month, up 9%.

“Despite all of the concerns that have been swirling around the company in the past two years, it beat expectations on revenue, and it demonstrated continued growth in its user base,” said Debra Aho Williamson, analyst at eMarketer.

The firm estimates that Facebook attracted more than 20% of digital advertising spending globally last year.

Facebook reported more than $70bn in revenue for 2019, up from $55.8bn the prior year. However, expenses rose faster, increasing 51% year-on-year $46.7bn.

In July, US regulators announced a record $5bn fine against Facebook to settle privacy concerns. The social network also recently pledged $130m to fund a board that will hear concerns about its content moderation.