Daily Management Review

Facebook Growth Slows As It Looses More Users In Europe


Facebook Growth Slows As It Looses More Users In Europe
Challenges posed by new privacy laws, reduced user numbers and a global trend of users shifting on to private messaging were cited to be the reasons for Facebook to warn investors of lower revenue growth in the foreseeable future.
Following the year for Facebook that was mired by scandals, falling share prices and resignation of executive, CEO Mark Zuckerberg was very candid, while announcing the third quarter results of the company, in highlighting the serious future challenges that the company would be facing in the foreseeable future.
For the third quarter ending September, Facebook reported revenue growth of 33 per cent year-on-year compared to a growth of 42 per cent year-on-year in the previous quarter. The revenues slightly missed Wall Street's expectations.
The company said the new General Data Protection Regulation of the European Union continued to eat into its user base, the largest social media platform in the world reportedly lost out on one million daily active users in Europe for the quarter while gaining only a few hundred new daily active users in the USA and Canada. 
The number of users for Facebook in North America w3as "pretty close to saturation", said Zuckerberg and added that developing countries would account for growth of daily active users. The company also said that those countries already account for more users than Facebook had from the countries than ever before.
The comments and challenges identified by Zuckerberg resulted in the shares of the company see-sawing in after-hours trading. But that was not like the erosion that the company had faced last July when Facebook saw about $123 billion being eroded in just one day following disappointing results which missed targets.
The current strategy of Facebook was to shift away from the news feed, Zuckerberg said, the news feed is at the center of the social media’s product. Instead Facebook is nopw wants ot focus on private messaging and "ephemeral" messages which disappear after a short while
they are sent or posted.
New Stories product and a similar feature on Instagram have been pushed Facebook. Instagram, the photo-sharing platform, was bought by Facebook in 2012 for $1 billion. It now has more daily users than Snapchat which is a rival app.
"I just think this is the future," Mr Zuckerberg said. "People feel more comfortable being themselves when they know their content will be seen by a smaller group, and when they know it won't stick around forever." 
That essentially means that the revenue growth for Facebook would be slower while the company finds out different ways to monetize Stories which currently doe snot yield as much as does advertisements on Facebook’s news feed.
The company had been "quite behind where [it] needed to be" in 2016, when the p[latform was blamed for allegedly influencing the US presidential elections with fake news and gate speeches, said Zuckerberg when asked about Facebook's continuing investments in "safety and security," such as building new AI systems in identification of harmful content and employing more human moderators.
"We are up against sophisticated adversaries which will continue to evolve," he said. "There's no silver bullet where you do the thing and then you're done."