Facebook is approaching the end of the year with one eye smiling and one eye crying. While negative and disturbing statements from former employees are becoming increasingly common, things are looking really good for the social network from an economic point of view. Thus, CEO Mark Zuckerberg can be pleased about a revenue increase of more than one third.
Major part through advertising revenue
It sounds almost unreal when you consider Facebook’s revenue figures. Within just one quarter (end of July to end of September), the gigantic social network was able to record almost 29 billion US dollars in sales. Taking a closer look, it becomes increasingly clear that it is primarily advertising that is helping Facebook to gain financial momentum. In this area, the social network was able to record 28.3 billion US dollars in revenue. This is also an increase in revenue of 33 percent. Even if the remaining revenues away from advertising may seem like peanuts, they also tripled with a total of 734 million US dollars.
It’s not just revenue that’s increasing
Facebook is also focusing on growth away from revenue. For example, it now has 20 percent more employees than it did just under a year ago. Despite the accompanying additional expenses, the social network was also able to increase its generated profit. At 10.4 billion US dollars, it is 30 percent higher than a year ago. However, Mark Zuckerberg has to cope with a damper despite all the good news. After all, the tax burden for the gigantic company is now five times as high as it was a year ago. So profits shrink to a still very good 9.2 billion, which ultimately means a 17 percent increase in profits. Of course, the additional revenue in the field of advertising is also due to the fact that the social network was able to attract new users.
According to the published figures, Facebook recorded a total of 1.93 billion active users in September 2021. This includes all those who visit Facebook.com at least once a day. If we take a look at the totality of Facebook’s services (Instagram, WhatsApp & Co.), the numbers are even more impressive. In September 2021, there were a total of 3.58 billion active users who visited at least one of these services at least once a day. After the social network’s encouraging statistics were announced, the company’s shares naturally rose as well. Here one could register 1.8 percent increase.
Exciting future plans
The increase in sales and profits should certainly be more than convenient for CEO Mark Zuckerberg. After all, he is planning big things. The so-called “Metaverse” is the latest project of the IT visionary. It is a kind of virtual reality in the style of Second Life. Users are to be able to come together to spend everyday life together as avatars. Of course, the preparations for the “Metaverse” are not favorable. Zuckerberg revealed that almost 10 billion US dollars will be invested in development as early as 2021. In the following years, the costs are expected to be even higher. The “Metaverse” could create a gigantic second pillar for Facebook. So far, the company has mainly focused on social networks.
But with the purchase of the VR goggles Oculus Rift, Facebook has already paved the way for its second pillar. The so-called “metaverse” will probably hit us in a few years as virtual reality. Ready Player One sends its regards. In view of the obvious dichotomy of its strategic orientation, Facebook has now also revealed two different segments in its financial reporting. While under the so-called “Family of Apps” the social networks and messengers such as Facebook, Instagram, WhatsApp & Co. fall, the so-called “Reality Labs” is to apply in the future for everything around the future topics of augmented and virtual reality.
Data protection as a growth damper
What may sound like a rich growth for us as Otto normal consumers, Facebook itself would have liked to see in even higher growth rates. The company’s management makes no secret of the fact that it would have liked to earn even more money from advertising. A major problem in this regard, however, was the corona virus. With the onset of the pandemic situation and the almost global lockdown, advertising partners also became less generous. Another problem is the increasing data protection, which can now be regulated more and more easily. Apple users in particular can now easily set whether an app is allowed to “monitor” them or not. Facebook’s advertising partners and of course the social network itself do not like this at all. But it’s not just hardware manufacturers like Apple that are putting a stop to increasing surveillance by apps.
Not least in the European Union, the opinion is increasingly growing that an overly active exchange of data with Facebook should not take place without further ado. In particular, the fact that user data is sent across the Atlantic is anything but unobjectionable from a data protection perspective. However, it is precisely these millions and millions of data that provide Facebook with so much advertising revenue. So we can expect a slow but steady deceleration of advertising revenues if the encouraging trend toward data protection continues. By the way, while we as members of the European Union can look forward to comprehensive data protection through the General Data Protection Regulation, the situation is quite different in the USA. There is still no generally applicable data protection law in force there.