Facebook profits top $9bn amid whistleblower revelations

Facebook’s profit topped $9bn during its most recent financial quarter, clearing investor predictions even as the company faces an onslaught of negative publicity over a major release of whistleblower documents.

The company revealed in its Monday earnings report that it saw a 6% year-on-year increase in daily active users, reaching an average of 1.93 billion for September 2021. Its revenue grew 35% to $29.01bn, thanks to a boom in online advertising.

Facebook’s financial wins came amid intense scrutiny, after a consortium of news organizations published stories on Monday based on documents leaked by the whistleblower Frances Haugen. Haugen testified on Monday in front of British MPs calling for external regulation of Facebook.

The latest documents have revealed the extent to which Facebook knew about the aggressive spread of misinformation and hate speech on its platform, that it was reluctant to censor rightwing news organizations for fear of angering the Trump administration, and how it struggled to crack down on human trafficking operations advertised on Instagram.

In light of the revelations, six leading racial justice groups including MPower Change, Kairos Action, 18 Million Rising, Media Justice, Action Center on Race and the Economy, and US Campaign for Palestinian Rights have called for Mark Zuckerberg to step down from his role as CEO.

“Facebook’s persistent actions to undermine content moderation are the latest evidence that Mark Zuckerberg and Facebook leadership will continue to sacrifice the safety of our communities to line their pockets,” the groups said in a statement.

In a call with investors on Monday, Zuckerberg addressed the leaked documents but not their contents, saying the issues the company is facing “aren’t primarily about social media” but relating to “polarization [that] started rising in the US before I was born”.

“My view on what we are seeing is a coordinated effort to selectively use leaked documents to create a false picture about our company,” he added.

Zuckerberg defended Facebook, asserting that the company invests “more than any other tech company when adjusted for scale” on safety and security. Facebook spent $5bn on safety and security in 2021 – half of what it said it will spend on the metaverse division and less than 5% of its annual revenue in 2020.

Zuckerberg also said that the company has “pioneered the oversight board as a model of self regulation”, referring to the company’s independent advisory committee, and that it created “a new model for independent academic researchers to safely access data”.

However, Facebook has been targeted with criticism on both those fronts, with the oversight board complaining about the company’s lack of transparency and stating that it holds little power with high profile researchers having been kicked off the platform in recent years.

Executives otherwise avoided commenting on the documents in the call, and have resisted responding publiclyto them in recent days. In forward-looking statements, Zuckerberg said he was optimistic about the company’s ongoing investment in the metaverse – essentially, a digital world built over our own, comprising virtual reality headsets and augmented reality.

In keeping with those goals, Facebook will now report the company’s virtual reality revenue separately. That means it will divide into two categories: its “family of apps” including Facebook, Instagram, Messenger and WhatsApp, and the “reality labs” products including AR and VR as well as any related hardware.

“We made good progress this quarter and our community continues to grow,” he said. “I’m excited about our roadmap, especially around creators, commerce, and helping to build the metaverse.”

Facebook has remained an economic juggernaut in recent years despite growing regulatory headwinds and public criticism, including revelations from Haugen and another unnamed whistleblower outlining the company’s cutthroat internal workings that prioritize profit over potential safety concerns.

The company had also issued dramatic warnings to investors that a new Apple privacy policy enacted in early 2021 would have a negative impact on revenue. Those policies, which require user permission to carry out advertising tracking, ultimately had little effect, the report showed.

“The biggest takeaway here is that the changes to Apple privacy settings have not hurt Facebook in a major way, at least not yet,” said Haris Anwar, senior analyst at Investing.com. “That shows Facebook continues to hold pricing power in the digital ad market, where it remains one of the most significant players and trend setters.”

In the earnings call Monday, Zuckerberg also referenced Facebook’s ongoing issue with teens leaving the platform in droves. Leaked documents have further shown the extent to which the company has struggled to retain younger users.

One graphic included in the documents released by Haugen recently showed “time spent” for US teenagers on Facebook was down 16% year-over-year and that the age group was spending 5% less time on the social network.

Zuckerberg said Facebook is “retooling” to make “serving young adults” the company’s “Northstar” even if that means “the rest of our community will grow more slowly than [it] otherwise would”.

He added that TikTok, which Facebook has attempted to emulate with its Reels feature on Instagram, has been “one of the most effective competitors we have ever seen”. These efforts come despite internal Facebook reports revealing how toxic the platform can be for teens, and young women in particular.

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