SOCIAL
Facebook User Growth Back on Track, Revenue Declines in Q1

Facebook has managed to get its user growth back on track, lessening market concern, though revenue growth has slowed in Q1 2022, partly due to the war in Ukraine, among other issues.
In its first performance update of the year, Meta has once again underlined its enduring performance capacity, even as it focuses on the next stage of digital connection, after a decline in usage last report had some questioning whether it had plateaued, and was now on the decline in the eyes of users.
First off, on daily actives – Facebook DAUs came in at 1.96 billion on average for March 2022, an increase of 4% year-over-year
The majority of Facebook usage growth came, once again, from the Asia Pacific region, where the app is still branching into developing markets, and seeing steady take-up.
Though you will also note that Facebook’s daily usage rates declined by 2 million in Europe, and only saw a slight increase in the US. Facebook usage has fluctuated in both markets for some time, and it may well be that Facebook has indeed reached its optimal take-up in these regions.
Though at the same time, a huge amount of people are still logging into Facebook in these markets every single day. That likely speaks to the key connective role that the app now plays on the modern interactive process – though I would still like to see just how long people are actually spending in the app, and how many are simply logging on to check their notifications, before spending the majority of their online time elsewhere.
In terms of monthly actives, Facebook rose to 2.94 billion, an increase of 3% year-over-year.

The decline in European usage is much more pronounced here (-9 million), which does seem to point to declining popularity of the app in some markets.
Though that also likely relates to Russian bans. Facebook reportedly had over 70 million users in Russia as of February 2022, before Russia’s communications regulator moved to block Facebook access entirely in early March, in response to Meta’s restriction of Russian state media outlets.
In which case, Facebook likely lost a lot more active users than what’s shown here – but that’s not Meta’s fault, nor is it reflective of a trend away from the app.
But it could make Meta’s user numbers look a lot worse in Europe in Q2, depending on how things progress.
Overall, however, the numbers show that Facebook remains hugely popular, while Meta’s ‘Family of Apps’ chart, which includes unique users across Facebook, Messenger, Instagram and WhatsApp, has also continued to inch up.

The variance between this chart and Facebook usage in isolation suggests that there are around 700 million users not on Facebook that are logging into these other apps each month.
Meta doesn’t break down the usage figures for its other platforms, but considering that WhatsApp has over 2 billion users, in a broad range of markets, it does seem to point to there being a big crossover between Facebook and Instagram usage. Instagram reportedly has over 2 billion users in its own right, though Meta has not officially confirmed this stat.
But again, the more interesting consideration here is how long people are spending in Meta’s apps – because while most people will log on to see what their friends and family have shared each day, I suspect that many are now spending a lot more time in TikTok and YouTube instead.
This seems like the much more informative stat, and Meta hasn’t provided anything official on this front for some time.
In terms of revenue, Meta brought in $27 billion for the quarter, up 7% year-over-year:

The decline in revenue in its biggest two ad markets will be a concern, though Meta does note that ad impressions delivered across its apps increased by 15% year-over-year.
Meta’s still grappling with Apple’s ATT update, which has limited its data collection capacity, which it’s previously noted would drag its results down by around $10 billion in 2022 alone. Meta also says that revenue ‘softness in the back half of the first quarter’ was exacerbated by the war in Ukraine, while at the same time, it continues to invest in emerging technologies, driving increased spend.

That’s an inevitable impact of its focus on the future, but that focus is also, in Meta’s view, what will secure its ongoing performance, and there’s much to come on this front.
In many ways, the company is in a transition period, which Meta itself has explained to the market within its recent statements. As it looks towards the next stage of connection, that, inevitably, will impact on current day performance. Increased R&D cost is the most obvious hit, but it also means that virtually every project, within each of its apps, now has to build with an eye toward the future, which means longer development cycles, increased complexity, and more labor time as a result.
The Metaverse may well be the future, but shareholders are essentially betting on Zuck’s nous here, in the hopes that he’s right – because as we’ve seen, Meta’s core apps are already feeling the pinch, and it doesn’t seem like it’s shifting its approach, with costs continuing to rise, and more resources being directed towards increasingly expensive hardware releases.
If Meta truly believes in the Metaverse shift, that will likely also see it take another hit on the retail costs of its VR headsets, and eventually its AR glasses, because the real money is in mass adoption, and expanding Metaverse engagement.
In essence, while the market probably isn’t overly excited Meta’s results now, it’s not likely to look a lot better for some time yet. And if the Metaverse ends up taking a decade to become the next plain of digital existence, as Meta has predicted, that’ll definitely stretch the patience of $FB holders.
For users, Meta will stay the path with increased eCommerce integrations, and more opportunities for creators to make money in its apps. The latter could also feed into the Metaverse as well, with a new fund already set up to support VR creators, and more education programs to guide artists and influencers into the next space, in the hopes that they’ll bring their audiences with them.
Instagram remains focused on beating TikTok at its own game, while WhatsApp is still working on business tools, which could major potential in developing markets.
But really, it’s all about the Metaverse, and setting the foundation for the next stage. There are exciting developments here, but they’re not coming soon – it’s not just a matter of flicking a switch and ushering in the next stage.
Which means that a level of patience is required, something that the market is not renowned for.
SOCIAL
Walmart says it has stopped advertising on Elon Musk’s X platform

Walmart said Friday that it is scaling back its advertising on X, the social media company formerly known as Twitter, because “we’ve found some other platforms better for reaching our customers.”
Walmart’s decision has been in the works for a while, according to a person familiar with the move. Yet it comes as X faces an advertiser exodus following billionaire owner Elon Musk’s support for an antisemitic post on the platform.
The retailer spends about $2.7 billion on advertising each year, according to MarketingDive. In an email to CBS MoneyWatch, X’s head of operations, Joe Benarroch, said Walmart still has a large presence on X. He added that the company stopped advertising on X in October, “so this is not a recent pausing.”
“Walmart has a wonderful community of more than a million people on X, and with a half a billion people on X, every year the platform experiences 15 billion impressions about the holidays alone with more than 50% of X users doing most or all of their shopping online,” Benarroch said.
Musk struck a defiant pose earlier this week at the New York Times’ Dealbook Summit, where he cursed out advertisers that had distanced themselves from X, telling them to “go f— yourself.” He also complained that companies are trying to “blackmail me with advertising” by cutting off their spending with the platform, and cautioned that the loss of big advertisers could “kill” X.
“And the whole world will know that those advertisers killed the company,” Musk added.
Dozens of advertisers — including players such as Apple, Coca Cola and Disney — have bailed on X since Musk tweeted that a post on the platform that claimed Jews fomented hatred against White people, echoing antisemitic stereotypes, was “the actual truth.”
Advertisers generally shy away from placing their brands and marketing messages next to controversial material, for fear that their image with consumers could get tarnished by incendiary content.
The loss of major advertisers could deprive X of up to $75 million in revenue, according to a New York Times report.
Musk said Wednesday his support of the antisemitic post was “one of the most foolish” he’d ever posted on X.
“I am quite sorry,” he said, adding “I should in retrospect not have replied to that particular post.”
SOCIAL
US Judge Blocks Montana’s Effort to Ban TikTok

TikTok has won another reprieve in the U.S., with a district judge blocking Montana’s effort to ban the app for all users in the state.
Back in May, Montana Governor Greg Gianforte signed legislation to ban TikTok outright from operating in the state, in order to protect residents from alleged intelligence gathering by China. There’s no definitive evidence that TikTok is, or has participated in such, but Gianforte opted to move to a full ban, going further than the government device bans issued in other regions.
As explained by Gianforte at the time:
“The Chinese Communist Party using TikTok to spy on Americans, violate their privacy, and collect their personal, private, and sensitive information is well-documented. Today, Montana takes the most decisive action of any state to protect Montanans’ private data and sensitive personal information from being harvested by the Chinese Communist Party.”
In response, a collection of TikTok users challenged the proposed ban, arguing that it violated their first amendment rights, which led to this latest court challenge, and District Court Judge Donald Molloy’s decision to stop Montana’s ban effort.
Montana’s TikTok ban had been set to go into effect on Jan. 1, 2024.
In issuing a preliminary injunction to stop Montana from imposing a full ban on the app, Molloy said that Montana’s legislation does indeed violate the Constitution and “oversteps state power.”
Molloy’s judgment is primarily centered on the fact that Montana has essentially sought to exercise foreign policy authority in enacting a TikTok ban, which is only enforceable by federal authorities. Molloy also noted that there was a “pervasive undertone of anti-Chinese sentiment” within Montana’s proposed legislation.
TikTok has welcomed the ruling, issuing a brief statement in response:
We are pleased the judge rejected this unconstitutional law and hundreds of thousands of Montanans can continue to express themselves, earn a living, and find community on TikTok.
— TikTok Policy (@TikTokPolicy) December 1, 2023
Montana attorney general, meanwhile, has said that it’s considering next steps to advance its proposed TikTok ban.
The news is a win for TikTok, though the Biden Administration is still weighing a full TikTok ban in the U.S., which may still happen, even though the process has been delayed by legal and legislative challenges.
As I’ve noted previously, my sense here would be that TikTok won’t be banned in the U.S. unless there’s a significant shift in U.S.-China relations, and that relationship is always somewhat tense, and volatile to a degree.
If the U.S. government has new reason to be concerned, it may well move to ban the app. But doing so would be a significant step, and would prompt further response from the C.C.P.
Which is why I suspect that the U.S. government won’t act, unless it feels that it has to. And right now, there’s no clear impetus to implement a ban, and stop a Chinese-owned company from operating in the region, purely because of its origin.
Which is the real crux of the issue here. A TikTok ban is not just banning a social media company, it’s blocking cross-border commerce, because the company is owned by China, which will remain the logic unless clear evidence arises that TikTok has been used as a vector for gathering information on U.S. citizens.
Banning a Chinese-owned app because it is Chinese-owned is a statement, beyond concerns about a social app, and the U.S. is right to tread carefully in considering how such a move might impact other industries.
So right now, TikTok is not going to be banned, in Montana, or anywhere else in the U.S. But that could still change, very quickly.
SOCIAL
EU wants to know how Meta tackles child sex abuse

The investigation is the first step in procedures launched under the EU’s new online content law known as the Digital Services Act – Copyright AFP Kirill KUDRYAVTSEV
The EU on Friday demanded Instagram-owner Meta provide more information about measures taken by the company to address child sexual abuse online.
The request for information focuses on Meta’s risk assessment and mitigation measures “linked to the protection of minors, including regarding the circulation of self-generated child sexual abuse material (SG-CSAM) on Instagram”, the European Commission said.
Meta must also give information about “Instagram’s recommender system and amplification of potentially harmful content”, it added.
The investigation is the first step in procedures launched under the EU’s Digital Services Act (DSA), but does not itself constitute an indication of legal violations or a move towards punishment.
Meta must respond by December 22.
A report by Stanford University and the Wall Street Journal in June this year said Instagram is the main platform used by paedophile networks to promote and sell content showing child sexual abuse.
Meta at the time said it worked “aggressively” to fight child exploitation.
The commission has already started a series of investigations against large digital platforms seeking information about how they are complying with the DSA.
It has sought more information from Meta in October about the spread of disinformation as well as a request for information last month about how the company protects children online.
The DSA is part of the European Union’s powerful regulatory armoury to bring big tech to heel, and requires digital giants take more aggressive action to counter the spread of illegal and harmful content as well as disinformation.
Platforms face fines that can go up to six percent of global turnover for violations.
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