Facebook Group Meta With The First Drop In Sales – The Economy

Over the years, Facebook’s business has seemed immune to data scandals and economic weakness. Now, instead of spikes in sales, there is a decline for which Meta also blames consumers.

Menlo Park (dpa) – Facebook’s Meta group saw its first drop in sales and blames it for economic concerns. The meta is also not expecting an improvement in the coming months.

The development is synonymous with the end of an era: the situation has been developing very rapidly since the stock exchange debut in 2012. Founder and CEO Mark Zuckerberg announced that the group now wants to focus on long-term investments.

Meta revenue fell approximately 1 percent year-on-year to $ 28.8 billion in the second quarter. All in all, profits had decreased by 27 percent to almost $ 6.7 billion (around € 6.6 billion). Chief Executive Sheryl Sandberg also noted the strong dollar leading to an unfavorable translation of foreign profits in the balance sheet. Without the increase in the dollar, there would be a three percent increase in sales – she emphasized during a conference call with analysts.

The sales forecast for the current quarter was lower than analysts expected, ranging from $ 26 to $ 28.5 billion. Financial director Dave Wehner cited the weakening of the internet advertising market already visible in the second quarter due to economic uncertainty. I would say the situation is worse than it was fifteen minutes ago, admitted Zuckerberg. Investors lost 4.65 percent in overtime trading on Wednesday.

Previously, Meta was immune to weak spells

So far, Facebook and Meta have proved resilient to any economic downturn. Because by knowing the interests and social connections of billions of users, the platform offered advertisers the opportunity to target their ads specifically to their desired target groups.

However, the first cracks in the system came last year after Apple introduced new privacy policies. Developers like Facebook now have to ask iPhone users for permission if they want to track their behavior across apps and services. Many users rejected this – and thus torpedoed, among others Facebook ad models.

Even so, Facebook and its influence are still huge. The number of users accessing at least one application in the group every day increased from 2.87 billion to 2.88 billion in three months. Facebook saw an increase from 1.96 to 1.97 billion daily users. The group also includes Instagram and WhatsApp.

Matching to the metaverse

Among Zuckerberg’s long-term initiatives is the company’s focus on the Metaverse – a virtual world in which he imagines an increasingly changing business and social life. Facebook is a traffic leader thanks to its virtual reality (VR) activities, in which users wearing special glasses immerse themselves in the digital world. Reality Labs, which combines Metaverse development and VR business, reported an operating loss of $ 2.8 billion in the last quarter alone. A few days ago, Meta announced a price increase for its VR glasses.

There was also a clear signal from Washington on Wednesday that the US Metas competition authorities are following the Metaverse. The FTC went to court to bar the company from acquiring Within Unlimited, which is developing a VR fitness app. Meta wants to dominate the entire Metaverse, the lawsuit says among other things.

In today’s core business, Meta faces competition from the Chinese Tiktok app, which mainly attracts young users with an endless stream of short videos. Clips are suggested by a software algorithm that adapts to the interests of users. A short copy of the Meta video, dubbed Reels, is now widely posted on Facebook and Instagram.

Facebook: Falling From the Roots

For the platform, this means a fundamental departure from its roots: after all, the original idea is that as a user, you can connect with friends, family and acquaintances as well as organizations or businesses and then view their posts. But now 15 percent of the content on users’ feeds on Facebook – and a bit more on Instagram – comes from someone they don’t follow, Zuckerberg said. This proportion should double by the end of 2023.

It’s also clear that criticism from Instagram users, including celebrities like Kim Kardashian, that the photo service becomes the second Tiktok should go without consequence. Drum progress isn’t good even for business at first. Because Meta earns less on ads near the clips than on feed ads or the daily changing so-called user stories. As a result, the more short films circulated, the more they displaced formats that were more lucrative for the meta, admitted Zuckerberg.

They will still be used because they increase user activity on the platform and over time bring in money similar to other formats, he emphasized. The meta admits, however, that it could take years. Right now, Reels’ ad is well on its way to fetching $ 1 billion a year.

Meta also announced changes in leadership on Wednesday. Outgoing CFO Wehner is expected to take over the newly created position of head of strategy in November. Susan Li will be appointed the new CFO. There was a gap in the executive floor as Sandberg announced her retirement. She was considered the right hand of Zuckerberg and the architect of Facebook’s business model.

dpa-infocom, dpa: 220728-99-182855 / 2

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