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By Sheera Frenkel The New York Times
Wed, 25 July 2018
SAN FRANCISCO – For nearly two years, Facebook has appeared foolproof despite a series of scandals over the past decade. Abuse of its social giant But the Silicon Valley series ended Wednesday when it said that the buildup of problems was starting to hurt its multi-billion dollar business – and that costs should continue to increase for months.
Facebook reported Wednesday that the growth in digital advertising sales and the number of its users had decelerated in the second quarter. The company's executives, including its managing director, Mark Zuckerberg, added that the trajectory is not expected to improve anytime soon, especially as Facebook is dedicated to improving its business. the privacy and security of users
of the platform in the 2016 US presidential campaign and the collection of data from its users through the Cambridge Analytica policy consulting firm. The results were among the first signs that the problems pierced the company's image and would have a lasting effect on its money-making machine.
In response, Facebook's stock dropped by more than 23% in market value in less than two hours. If these losses hold up on Thursday, the decline of a day will be the biggest story in Facebook.
"It's a difficult situation for Facebook," said Daniel Ives, director of strategy. and head of technology research for GBH Insights, a marketing research firm. He said the challenges were to regain public trust and increase the number of people joining Facebook and the time spent on the platform.
Facebook reported a 42% increase in revenue and a 31% jump from a year earlier. But revenues of $ 13.2 billion missed Wall Street's estimates of $ 13.4 billion. In addition, Facebook said that its daily active users grew 11% over the previous year to 1.47 billion, compared with 13% in the previous quarter.
During a conference call to discuss profits, Zuckerberg said hit because the company was planning to spend more on security. And Chief Financial Officer David Wehner said that revenue growth would decline substantially for the rest of the year, in part because Facebook planned to offer people more options with their payout settings. confidentiality, including limiting the type of ads that they saw. Facebook has also announced plans to hire 20,000 people by the end of 2018 to help review content posted on the site and work on its security team. The company's turnover has already increased 47% since last year, to 30,275.
"For the future, we will continue to invest heavily in security and confidentiality because we have the responsibility to protect people, "said Zuckerberg.
Other factors have also hurt the number of Facebook users, according to Zuckerberg, including the strict European rules that came into effect in May to protect people's online data. The legislation, known as the General Data Protection Regulation, has cost Facebook about 1 million users in Europe, he said.
The change in Facebook's business follows a series of crises that began in late 2016 with the revelations. first distributor of misinformation. This has been exacerbated by questions about the role of the company in securing private data, its effect on the democratic process and its commitment to stem misinformation on the site.
Zuckerberg had to appear before lawmakers, apologized After these events, several senior executives left Facebook, including a director of the board of directors, his chief security officer. information, and its Vice President of Communications, Marketing and Public Policy. This week, Colin Stretch, who led Facebook 's investigation into Russian election interferences and who testified before Congress last year on Facebook' s behalf, said he would leave the polls. company by the end of the year
. His biggest tests so far: make sure no one gets involved in the 2018 elections through the social network.
Zuckerberg said Wednesday that he hoped Facebook would be able to limit misinformation and fake accounts. Thus, in this year's elections in France, Mexico and Germany.
"We are much more confident that the 2018 elections will go well," he said, adding that the company had begun proactively looking for fake accounts.
Facebook has other positives. Even with its loss of market value after the release of its financial results, it may not lose its place as the fifth largest publicly traded company in the United States. The company held a nearly $ 140 billion advance on Berkshire Hathaway, the sixth largest, at the end of trading on Wednesday. And at the close of Wednesday's market, Facebook's headline had gained 43 percent of its lows as a result of the Cambridge Analytica scandal in March.
Yet the challenge will be how to stem further losses. Given all the questions about misuse of the platform, "explain that there are a few million people who chose not to continue using Facebook is not surprising" said Brian Wieser, badyst at Pivotal Research
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