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Facebook is done apologising

Shira Ovide
Shira Ovide • 4 min read
Facebook is done apologising
SINGAPORE (Feb 11): For a moment during Facebook’s earnings call on Jan 30, I closed my eyes and swore it was the glory days of 2015.
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SINGAPORE (Feb 11): For a moment during Facebook’s earnings call on Jan 30, I closed my eyes and swore it was the glory days of 2015.

The company has spent the past six months delivering scary news to its investors. Revenue growth would slow sharply. Rising spending would pinch profit margins. The main social network was reaching saturation in the developed world and the company had not figured out how to make money from newer forms of internet behaviour. It was a litany of downbeat messages that collectively shaved US$250 billion ($337 billion) off Facebook’s market value from late July to end-2018.

The facts about Facebook have not changed much, but its attitude sure has. It was as if the company declared an end to a year of bummers.

I was struck by the tone of Mark Zuckerberg and Sheryl Sandberg in their quarterly conference call with stock analysts. Zuckerberg said on Jan 30 that Facebook had “fundamentally changed how we run this company” and “made real progress” on thorny problems such as protecting people’s personal information and stemming the spread of extremism on its internet hangouts. (Not everyone would agree with Zuckerberg’s assessment, and he conceded there would be no “mission accomplished” moment.)

Zuckerberg talked less about user growth troubles and revenue growth hurdles than he did three months ago and focused on 2019 as a year of investing in new features and functions — incorporating shopping into Instagram, rolling out payments in WhatsApp in more places and working towards making Facebook’s “family” of apps work more seamlessly together.

He expects Watch — the company’s TV-like video hub that definitely has not found its footing — to become more mainstream this year. Sandberg crowed that Facebook had proved it could invest to protect its platforms from abuse and still grow the business. Facebook’s chief financial officer had to play the role of buzzkill and interjected a couple of times to sound notes of caution.

This is more optimism from Facebook’s executives than I have heard in some time. Again, not much has changed since the last earnings report in October. Yes, revenue growth and profit were better than expected in the fourth quarter, and the company’s average daily users increased (by a hair) in North America and Europe — its most important advertising markets. Facebook is still helping businesses effectively find customers, and that is the formula for internet success. The company’s stock shot up, although shares remain about 20% below where they were at a July peak.

There were familiar warnings, too. The company reiterated that growth will continue to slow this year. Costs are increasing faster than revenue. There is lots of work to do to make as much money from messaging apps and Facebook’s video-and-photo diaries called stories. To keep revenue growing, Facebook is shoving ads in more places and leaning on countries and products where ad prices are relatively low.

Facebook did not sugarcoat those realities, but executives were more optimistic that it can figure out its challenges and stay relevant with internet users and the businesses that want to reach them. “I’m confident we’re going to get there,” Zuckerberg said about generating a similar level of ad sales from its stories format as from its established news feed. That phrase encapsulated Facebook’s new tone.

Maybe Zuck & Co believe the company has found traction with some of its business challenges and are talking to investors with more brio now. Maybe Facebook’s bosses just grew tired of being on the defensive. Or perhaps the company’s goal last year was to set expectations low and it worked.

Facebook cannot go back to the carefree days of 2015 when revenue growth came easily and the company and the public were largely ignoring the company’s vulnerabilities to propaganda, social harm and privacy abuses. Facebook did, however, recapture some of the optimism of a time when it and the rest of the world were more upbeat — or naive — about the opportunities for Facebook and tech companies at large. — Bloomberg LP

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