November 1, 2019
Facebook chief executive Mark Zuckerberg predicted a “tough year” ahead with the lead-up to the 2020 presidential elections, but the company showed strong Q3 earnings. FactSet said Facebook enjoyed $17.7 billion in total sales and $6.1 billion profit, exceeding Wall Street expectations. In after hours trading, shares rose 5 percent, having already risen more than 43 percent to date. Facebook also agreed to pay U.K.’s privacy regulator a £500,000 ($643,000) fine for its role in the Cambridge Analytica scandal.
The Wall Street Journal reports that Zuckerberg “defended how Facebook has handled political advertising,” even after Twitter chief executive Jack Dorsey announced his company would stop running political ads. “I’ve considered whether we should not carry these ads in the past, and I’ll continue to do so,” he said. “On balance, so far, I’ve thought that we should continue.” He noted that, “ads directly from political candidates themselves account for only 0.5 percent of the company’s revenue.”
The company’s strong Q3 earnings “reflected strong user growth.” It currently has “1.62 billion daily active users of its platform, up 9 percent from just under 1.5 billion a year ago, with most of the new users outside the U.S., Canada and Europe.” Reporting an operating margin of 41 percent, “down slightly from last year but well above the mid-30s level Facebook had predicted last year,” Facebook also stated that “average revenue per user rose to $7.26, up 19 percent from $6.09 a year earlier.”
In comparison, “Twitter stock fell sharply last week … [and] Alphabet’s profits fell short of forecasts amid higher cost.”
Elsewhere, WSJ reports that, “Facebook reached a settlement with the U.K.’s privacy regulator to pay a contested $643,000 fine for allowing political-data firm Cambridge Analytica to improperly access users’ data, but stopped short of admitting wrongdoing.” The fine, notes WSJ, is “chump change” for the tech behemoth, “but it was the first regulatory penalty against Facebook in a scandal that swelled into a reputational nightmare” for Zuckerberg.
The U.K.’s Information Commissioner’s Office “said its investigation confirmed that Cambridge Analytica got access to data on tens of millions of Facebook users from the developer of a third-party app that plugged into the social network.” Among those impacted were one million U.K. residents.
Facebook “still faces antitrust inquiries in the U.S. and 11 more privacy investigations in Ireland, which could lead to major fines.” WSJ states that, “the most advanced case in Ireland involves whether Facebook’s WhatsApp chat service gives adequate notice to users for how it shares their data.”