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Facebook Reports Record Revenue and Warns of Apple’s Privacy Changes

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facebook reports record revenue and warns of apples privacy changes

Facebook reported record revenue as marketers boosted ad spending during the holidays, while also warning about the possible negative effects on ad targeting from Apple’s stricter privacy measures. CEO Mark Zuckerberg said in a Wednesday earnings call that his company increasingly sees Apple “as one of our biggest competitors.”

In Q4 of 2020, Facebook’s profit climbed 53% to a record $11.2 billion as revenue increased 33% to about $28.1 billion, per its quarterly earnings report. The company ended the year with a 22% gain to $86 billion in revenue, including a 21% rise in ad sales to $84.2 billion.

Screen Shot 2021 01 28 at 9.29.38 AM

Facebook. (2020). “Facebook Reports Fourth Quarter and Full Year 2020 Results”. Retrieved from Facebook Quarterly Earnings Report.

The user base for its family of apps, including Instagram, WhatsApp, Messenger and its main social network, grew 10% to 2.6 billion for the period, per its earnings presentation. The strong results may indicate that companies like Amazon, Google, Pinterest, Snap and Twitter also will report significant gains in digital advertising for the holiday quarter.

Facebook’s strong revenue growth suggests marketers ramped up their ad spending on its social network and Instagram to reach consumers during the holiday shopping season. The company’s earnings confirm Socialbakers’ platform data that found worldwide spending on social media advertising continued a “meteoric rise” in Q4 as marketers targeted homebound consumers during an uncertain holiday season. Along with the rise in ad revenue, Facebook’s strongest growth was from its “other” category that includes its Oculus virtual reality unit and Facebook Marketplace for classified ads, with revenue surging 156% year-over-year to $885 million during the quarter.

However, the company also warned that Apple, which also reported record revenue on strong iPhone sales, is becoming a bigger competitive threat. David Wehner, CFO of Facebook, said the company expects Apple to update its software with stricter privacy controls this quarter.

Apple hasn’t backed down from its plan to update the software that runs its devices with new privacy protections. After the update, Apple customers will see a pop-up warning when an app asks for permission to access the Identifier for Advertisers (IDFA) that the company puts on its devices. The identifier helps to track online activities of Apple users and improve ad targeting. Apple CEO Tim Cook today will speak about data privacy at the Computers, Privacy and Data Protection virtual conference.

“Many small businesses will no longer be able to reach their customers with targeted ads,” Zuckerberg said Wednesday’s call. “Apple may say that they’re doing this to help people, but the moves clearly track their competitive interests.”

Facebook last year warned that Apple’s updated privacy settings would trigger a 50% drop in revenue for its Audience Network that lets developers use the social network’s detailed consumer data for in-app ad targeting. Apple has countered Facebook’s argument, asserting that the changes to its privacy settings still allow consumers to grant permission to be tracked. Apple’s plan has faced opposition from advertising community, with more than half (56%) of marketers saying they expect to see a negative effect from Apple’s planned privacy changes, an October survey by AppsFlyer found.

Facebook also is among the companies that have criticized Apple for its dominance in app distribution with its App Store, which charges a variety of fees on paid downloads and subscriptions. Epic Games, the maker of “Fortnite,” online dating company Match and streaming app Spotify have lined up against Apple over its fee structure. During Wednesday’s call, Zuckerberg singled out Apple’s messaging app iMessage as a key competitive threat.

“iMessage is a key linchpin of their ecosystem. It comes pre-installed on every iPhone and they’ve preferenced it with private APIs and permissions, which is why iMessage is the most used messaging service in the U.S.,” he said. “And now, we’re also seeing Apple’s business depend more and more on gaining share in apps and services against us and other developers. Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own.”

While the daily active user (DAU) base for Facebook’s main social network grew from the prior quarter by 25 million users to 1.85 billion worldwide, it lost 1 million users in the U.S. and Canada. The decline may have been the result of greater competition from rivals like TikTok, eMarketer analyst Debra Aho Williamson told the Associated Press.

Socialmediatoday.com

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Josh Brolin Summarizes Dune 2 in Greatest Instagram Caption of All Time

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Josh Brolin Summarizes Dune 2 in Greatest Instagram Caption of All Time

The Dune: Part Two star took a unique approach to marketing the movie. Dune: Part Two is so close to hitting theaters, and no one is more excited than …

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Reddit’s Exclusive Data Sharing Deal with an Unnamed AI Company Could Mark a Key Industry Shift

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Reddit’s Exclusive Data Sharing Deal with an Unnamed AI Company Could Mark a Key Industry Shift

Is Reddit’s actually data worth $60 million per year?

That’s reportedly how much an as-yet-unnamed AI development company has paid to gain exclusive access to Reddit’s full data set, which will see said AI company incorporate Reddit user responses into its large language model (LLM), with a view to the system providing more human-like answers and insight, and becoming a bigger challenger in online search.

As reported by Bloomberg, after working to restrict access to its data over the last year, in order to stop AI companies from profiting off its content, Reddit has now signed an exclusive contract with “an unnamed large AI company”, which will see that company integrate Reddit insights into its models.

Which is a high price tag, considering that the top tier of X’s API access (200 million posts per month) costs around $2.5 million per year.

So could Reddit’s data be worth significantly more than that, and if it is, does it then make sense for Reddit to provide such on an exclusive basis?

The value of Reddit data is that it provides actual, human usage insight, which can often be of more value than online reviews that can be gamed and skewed by paid responses. That’s getting even worse in the age of generative AI, with some companies now employing AI tools to create human-sounding reviews online, in order to boost their product ratings.

As a result, more and more people have been turning to Reddit to get honest product reviews and performance insight. They’re still using Google, but more people are using the “site:reddit.com” qualifier to glean more specific insights from Reddit communities.

For example, if you were looking for a new hair dryer, you can look up “best hair dryer” on Google to get this:

Or you can add “best hair dryer site:reddit.com” for this:

Google example

The Reddit forum links connect through to actual people’s experiences, and include solid, functional insight from those who’ve used each device. The Reddit responses are also up and downvoted, making it easier to find the best response to guide your search process.

The more specific, personal insight can add significant value to the answers provided, and many people have found that this is now a better, more valuable discovery process than trusting Google results within themselves.

And now, one AI company will get all of this insight exclusively to itself.

That could be a big boost to its business ambitions, with a view to making AI chatbots more of a rival for traditional search behavior. Already, more people are turning to conversational chatbots for online discovery, and with this, whichever LLM can access Reddit data will have an exclusive trove of valuable consumer insights, which it can repackage within its responses.

For example, using the same hair dryer prompt in ChatGPT, the system currently gives me a listing of technical considerations and recommendations based on top sellers. But with added Reddit commentary, it could also provide a more personalized addendum:

“According to users, the best hair dryer for curly hair is the Ella Bella Ionic hair dryer, while those with straight hair tend to prefer the Dyson Supersonic.”

The system could then provide more specific answers based on your requirements, by sourcing that info from subreddit communities.

It’s a significant value-add, which will make whichever company gets this info a far more viable option as a search consideration, though the $60 million per year ongoing price tag is high, and is also at least somewhat reliant on Reddit continuing to grow, in order to maximize its value and utility.

And Reddit is growing. Reddit’s added 20 million more users over the past three years, and it continues to see strong engagement in over 100,000 active communities. The company’s been working to highlight its business value, ahead of a planned IPO, which could come next month, and this deal will now be factored into the valuation of the platform moving forward.

In some ways, it’s possible that Reddit could be limiting its opportunities by signing an exclusive data contract. But that’s why the price tag is so high, and it’ll be interesting to see which chatbot comes out with “Reddit exclusive insights” as a value add sometime soon.

I mean, it seems likely that it’ll be OpenAI, with the backing of Microsoft, as it looks to take on Google’s Search dominance. With the rise of conversational searches, that does seem like a logical investment, and with another data source taken out of the mix, that could also lead to more differentiation in the market.

It could also point to similar exclusivity deals in future, as each company tries to differentiate and dominate with their chatbot tools. Current AI chatbots have been able to scrape vast amounts of data from across the web, which means that their initial models will all be relatively similar as a result, but in future, as information evolves, and new data is required to match search intent, fresh sources will also be required to maintain relevance, and audience interest.

Meta claims to have an advantage in this respect, because it has all of the insights published to Facebook and Instagram to work with, while Elon Musk will view xAI as holding a lead, due to his platform being the leading real-time news discussion app.

But maybe, considering broader trends, Reddit insight is actually the real leader in terms of refining search queries.

And maybe, that will prove to be more important than most think.  



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EU launches probe into TikTok over child protection

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The European Commission said it launched formal infringement proceedings against TikTok over the protection of minors online

The European Commission said it launched formal infringement proceedings against TikTok over the protection of minors online – Copyright AFP KARIM JAAFAR

Raziye Akkoc

The EU on Monday announced a formal investigation into TikTok over alleged breaches of its obligations to protect minors online, under a landmark new law on policing digital content.

It is the second probe into a major online platform since Brussels introduced the Digital Services Act (DSA), after targeting tech billionaire Elon Musk’s X in December.

Brussels is particularly concerned that the video-sharing app owned by China’s ByteDance may not be doing enough to address negative impacts on young people.

A key worry is the so-called “rabbit hole” effect — which occurs when users are fed related content based on an algorithm, in some cases leading to more dangerous content.

The European Commission’s concerns also include TikTok’s age verification tools, which it said “may not be reasonable, proportionate and effective”.

The commission opened “formal proceedings to assess whether TikTok may have breached” the DSA in other areas including “advertising transparency” and “data access for researchers”.

The action comes after analysing a risk assessment report by TikTok and its replies to Brussels’ requests for more information about what measures the video-sharing platform has taken against illegal content, the protection of minors and access to data.

– ‘Spare no effort’ –

Regulators will continue to gather evidence, the commission said, adding that the move empowered it to take further enforcement steps if necessary.

“As a platform that reaches millions of children and teenagers, TikTok must fully comply with the DSA and has a particular role to play in the protection of minors online,” said the EU’s internal market commissioner, Thierry Breton.

“We are launching this formal infringement proceeding today to ensure that proportionate action is taken to protect the physical and emotional well-being of young Europeans. We must spare no effort to protect our children,” Breton added.

TikTok has over 142 million monthly users across the EU, up from 125 million last year.

“TikTok needs to take a close look at the services they offer and carefully consider the risks that they pose to their users — young as well as old,” commission executive vice president Margrethe Vestager said.

The formal probe will focus on four areas: how TikTok assesses and mitigates systemic risks; how the company is complying with protecting minors’ privacy and safety; TikTok’s measures on providing a “reliable” advertisement repository and the steps taken to increase transparency.

TikTok said it was working to protect minors online.

“TikTok has pioneered features and settings to protect teens and keep under 13s off the platform, issues the whole industry is grappling with,” a TikTok spokesperson said.

“We’ll continue to work with experts and industry to keep young people on TikTok safe, and look forward to now having the opportunity to explain this work in detail to the Commission.”

– Risk of fines –

There is no deadline for the completion of the proceedings.

The DSA gives Brussels the power to levy heavy fines, with penalties for violations that can include fines going up to six percent of a digital firm’s global revenues.

The commission can even block platforms in the 27-nation bloc for serious and repeated violations.

The EU law came into effect last year for the world’s biggest online platforms including TikTok and X as well as Facebook and Instagram.

The new rules demand companies do more to police content online, but also expect digital retailers to act swiftly and effectively to protect shoppers online.

The DSA law has applied to all platforms since February 17.

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