Facebook's Revenue & User Base Grow Amid Privacy Dispute With Apple

Facebook expands as its privacy dispute with Apple heats up.

The social network giant anticipates that a new privacy update from Apple will have an impact on its ad-targeting beginning in the second quarter.

Facebook increased its user base and revenue in the first quarter, but the social media giant warned that a new privacy update released by Apple this week could harm its ad business.

"We continue to expect increased ad targeting headwinds in 2021 from regulatory and platform changes, particularly the recently-launched iOS 14.5 update, which we expect to have an impact in the second quarter," said Facebook CFO Dave Wehner in a statement.

The social network's revenue increased by 48 percent to $26.17 billion, exceeding Wall Street's prediction of $23.7 billion. Facebook earned $3.30 per share, exceeding the $2.34 per share forecasted by Thomson Reuters analysts polled.

Wehner noted that as more businesses went online during the coronavirus pandemic, the company's revenue growth was fueled by an increase in the average price per ad.

In after-hours trading, Facebook's stock rose nearly 5% to $322.04 per share.

According to the company, approximately 2.85 billion people logged in to Facebook each month, a 10% increase over the same period last year.

Facebook's first-quarter earnings come as the company's public feud with Apple heats up.

The social network announced Monday that it has begun rolling out a change mandated by Apple as part of the iOS 14.5 software update.

App developers, including Facebook, will begin displaying a prompt to iPhone and iPad users asking for permission to track them across multiple apps and websites.

Before displaying Apple's required notification, Facebook intends to show its own screen outlining how the company uses the data, including a statement that advertising allows the company to avoid charging a subscription fee to use its various services.

During a conference call, Facebook COO Sheryl Sandberg stated that the company is assisting businesses in navigating the iOS 14.5 changes and is rebuilding "meaningful" parts of its ad technology.

She went on to say that the social network still believes businesses can get "great results" from digital ads. When it comes to protecting user privacy, the world's largest social network has a poor track record.

Its most damaging scandal involved political consulting firm Cambridge Analytica harvesting data that could have influenced the outcome of the 2016 US presidential election.

Facebook, on the other hand, has publicly criticized Apple's privacy change, claiming that it will make it more difficult for small businesses to target ads to attract new customers.

Apple, on the other hand, claims that the new App Tracking Transparency feature will give users more control over their data.

While Facebook believes the change will have a negative impact on its ad business, CEO Mark Zuckerberg has downplayed the potential impact on his company.

In March, he told the social audio app Clubhouse that he was "confident" Facebook would "manage through that situation well."

New Products

At the same time that it is battling Apple, Facebook is developing new products as competition from short-form video app TikTok, social media site Twitter, and other tech companies heats up.

In the coming weeks, Facebook plans to launch several audio tools, including a Clubhouse competitor and a Soundbites feature that will allow users to share short audio clips.

Spotify added a mini player for songs and podcasts to the Facebook app this week, making it easier for users to discover new content through social media.

Facebook has also increased its emphasis on video in the last year, releasing tools such as the videoconferencing feature Messenger Rooms.

In addition, to compete with TikTok, the company launched Reels, a short-form video feature on Facebook and its photo-sharing service Instagram.

From e-commerce to virtual and augmented reality, the social network is looking for ways to make money that aren't solely based on advertisements.

Last year, Oculus, Facebook's virtual reality headset maker, released the Quest 2.

Zuckerberg stated on Wednesday that the headset is selling better than expected, but he did not provide sales figures. 

"I anticipate that virtual and augmented reality will be among the most social platforms that are built," he said. 

Updated on 29th April 2021. Cover image = Picture by Glen Carrie via Unsplash