Facebook had a turbulent 2020 in the last quarter with rising earnings, but the company predicts challenges in 2021, which include an upcoming privacy update by Apple that could limit the social network’s advertising targeting capabilities.
The Apple move yielded a rare public reprimand from Facebook CEO Mark Zuckerberg, who accused Apple during a conference of favoring its own interests and not those of users.
Facebook said it had already grown huge user base in the fourth quarter when people stayed home during the pandemic and reported that revenue was driven by a shift to digital advertising amid economic uncertainty associated with coronavirus.
But the company predicted uncertainty for 2021, saying its revenue in the latter half of the year could face significant pressure. Because revenue grew so rapidly in the second half of 2020, the social network may be having trouble keeping pace.
“Clearly, the pandemic has also continued to help Facebook’s monthly growth of active users stay strong in many regions, including the US and Canada, where the benefit of pre – pandemic users has dwindled to a crawl,” said eMarketer analyst Debra Aho Williamson. But she noted that the number of daily users in this region has declined, suggesting that people in the US and Canada are moving elsewhere – probably TikTok, which grew rapidly in 2020.
In the phone conversation with analysts, Zuckerberg swung forward, saying that Apple is fast becoming one of Facebook’s “biggest competitors”, in part because of its dominance in the messages on the iPhone. Apple, he said, “has all the incentives” to use its own mobile platform to interfere with how competitive apps work.
Apple will soon require apps to ask users for permission to collect data about which devices they use and to track advertisements on the internet. Facebook has opposed the changes, saying these rules could reduce what apps can earn by advertising via Facebook’s audience network.
Of course, the Apple move also threatens Facebook’s own advertising revenue. However, Zuckerberg focused on what he sees as Apple’s motives.
“Apple may say it’s doing it to help people, but the movements are clearly keeping an eye on their competing interests,” Zuckerberg said.
Apple, meanwhile, says people need to be able to have more control over their data. Managers have dismissed arguments from advertisers and companies like Facebook saying the anti-detection feature would harm the online advertising industry.
“If your business model is closely monitored, you tend not to welcome transparency and customer choice,” Apple chief software officer Craig Federighi said in December.
Facebook earned $ 11.22 billion, or $ 3.88 per share, in October-December, well above the $ 3.19 analysts had expected, up 53% from a year earlier. Revenue grew 22% to $ 28.07 billion, higher than analysts had forecast at $ 26.36 billion, according to a FactSet poll.
Its monthly user base has grown by 12% to 2.8 billion. Facebook will end 2020 with 58,604 employees, a 30% increase over a year earlier.
While Facebook does not break out how much it earns from Instagram, which it owns, eMarketer estimates that the app accounts for 36% of Facebook’s total advertising revenue and nearly half of its U.S. advertising revenue.
Shares of Menlo Park, California, climbed $ 1.23 to $ 273.37 in the aftermarket trade. The share price rose by 33% in 2020.