Facebook saw revenue jump 33% in the fourth quarter as businesses relied on social networks to attract customers stuck at home because of the . The company warned, however, that privacy changes to Apple’s popular iOS mobile operating system could weigh on its ad business in the future.
“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 fell in the middle of the quarter. Facebook temporarily stopped running US political ads after polls closed on Nov. 3, though those ads make up only 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 crimp its business. 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.
In its earnings release, Facebook didn’t comment on its controversial ban of President Donald Trump, which took place after his supporters stormed the US Capitol in a deadly insurrection on Jan. 6. The ban, which took place after the fourth quarter had ended, is being reviewed by Facebook’s independent oversight board.
Heightened scrutiny of Facebook hasn’t discouraged people from using the social network, 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. The social network, though, saw a drop in the number of people in the US and Canada who logged onto the platform daily. Facebook had 195 million daily active users in that region, which was a million less than the number of US and Canadian users it had in the third quarter.
Debra Aho Williamson, an analyst with eMarketer, said US and Canadian users might be spending more time on other social media apps. “One logical destination is TikTok, which has grown rapidly in 2020 and has some of the strongest user engagement, in terms of time spent, among all the social platforms we follow,” she said.
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.
iOS privacy challenge ahead
Facebook said it expects the company’s ad targeting to be impacted by Apple’s upcoming privacy changes 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 in after-hours trading but is now slightly up less than 1% at $273.81 per share.
In December,claiming that Apple’s change would harm consumers and small businesses. Apple plans to release a new feature called App Tracking Transparency that would require people to opt in to apps collecting their data rather than needing them to opt out. Announced last June and originally expected later in the year, the . Apple has pushed back against Facebook’s characterization of the changes, stating that it is just giving users more control over their data.
“Facebook can continue to track users across apps and websites as before, App Tracking Transparency in iOS 14 will just require that they ask for your permission first,” Apple CEO Tim Cook tweeted in December.
Facebook also anticipates “uncertainty around the viability of transatlantic data transfers” because of regulation in Europe.