Facebook reported its fourth-quarter earnings on Wednesday.
Image by Pixabay/Illustration by CNET
Facebook saw revenue jump 33% in the fourth quarter as businesses relied on social networks to attract more customers who were stuck at home because of the coronavirus pandemic. The company warned, however, that it faced headwinds because of a dispute with Apple over privacy changes to its popular operating system.
“We had a strong end to the year as people and businesses continued to use our services during these challenging times,” Facebook CEO and co-founder Mark Zuckerberg said in a statement.
The strong performance came as the world’s largest social network ramped up efforts to combat election misinformation in the run-up to the US presidential election, which runs from October to December. Facebook temporarily stopped running US political ads after the polls closed on Nov. 3, though those ads make up a small part of the company’s overall revenue.
Facebook’s growth comes as the social network faces the threat of new regulation, which could create headwinds for its business in the future. Democrats and Republicans have proposed making changes to Section 230, a federal law that shields internet companies from lawsuits for content their users post. Republicans complain that Facebook censors conservative speech, while Democrats say it doesn’t do enough to combat hate speech. The company has denied claims of political bias and has been improving its AI to detect hate speech before a user reports the post to the company..
In its earnings release, Facebook didn’t comment on its controversial ban of now-former Donald Trump, which took place after his supporters stormed the US Capitol in a deadly insurrection on Jan. 6. The ban is being reviewed by Facebook’s independent oversight board.
The heightened scrutiny hasn’t discouraged people from using Facebook, which has become a mainstay for keeping in touch with family and friends stuck at home because of the pandemic. The captive audience has made the social network an attractive place for advertisers. Roughly 2.8 billion people logged into Facebook every month during the quarter, a 12% jump compared to the same period last year.
Revenue jumped to $28 billion, beating expectations of $26.4 billion. The company earned $3.88 per share, better than the $3.21 per share analysts surveyed by Thomson Reuters anticipated.
Facebook, though, said it expects the company’s ad targeting to be impacted by Apple’s upcoming privacy changes and other factors in the first quarter of 2021.
“While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter,” Facebook CFO David Wehner said in a statement. Facebook’s stock slightly dipped by less than 1 percent to $272 per share in after-hours trading.
