Snap said its loss more than doubled in the recently ended quarter despite rising use of Snapchat – Copyright AFP/File INA FASSBENDER
Snapchat’s owner plans to “substantially” slow recruitment after bleak results Thursday wiped 25 percent off the stock price of the tech firm, which is facing difficulties on several fronts.
Snap reported that its loss in the recently ended quarter nearly tripled to $422 million despite revenue increasing 13 percent under conditions “more challenging” than expected.
A hit with young internet users in its early days, ephemeral messaging app Snapchat has remained a small player in the social networking space as competition has grown ever more intense.
“We are not satisfied with the results we are delivering, regardless of the current headwinds,” California-based Snap said in a letter to investors.
The firm pointed to a punishing confluence of increased competition, slowing growth of its revenue, “upended” advertising industry standards and macroeconomic woes.
Snap share price was around $12 in after-hours trading in the wake of the earnings report.
“Competition — whether it’s with TikTok or any of the other very large, sophisticated players in the space — has only intensified,” Snap chief financial officer Derek Andersen said on an earnings call.
“So it’s hard to disentangle the numerous factors here impacting what’s clearly a headwind-driven deceleration in our business,” he added.
The number of people using Snapchat daily grew 18 percent to 347 million from the same quarter a year ago, Snap reported.
Snap last month launched a subscription version of Snapchat as it looks to generate more money from the image-centric, ephemeral messaging app.
– Trouble on multiple fronts –
Snapchat+ is priced at $4 a month and will provide access to exclusive features. It said that these would include priority tech support and early access to experimental features.
The subscription version of the service made its debut in Australia, Britain, Canada, France, Germany, New Zealand, Saudi Arabia, the United Arab Emirates, and the United States, Snap said.
Snap in February reported its first quarterly profit, but two months later warned that it saw the economic outlook as having darkened considerably.
“It’s clear that the challenging economic environment continues to put pressure on Snap’s business,” said Insider Intelligence principal analyst Jasmine Enberg.
“Snap is also still reeling from the impact of Apple’s privacy changes, which have disproportionately impacted performance advertisers, creating a one-two-punch to its entire ad business.”
Apple rocked the digital advertising landscape by tightening privacy controls in the software powering its iPhones, letting users curb the tracking data used to target ads.
Snap is a small player in the online ad market, accounting for less than one percent of the money spent worldwide, which makes it more susceptible to such changes and challenges than internet giants such as Facebook-parent Meta, Eng said.
“It can be difficult to attribute deceleration to any one factor,” Andersen said. “But in order to keep growing, we’ve got to stay focused on the inputs that we control.”
Snap a while back recast itself as a “camera company,” fielding offerings such as picture-taking glasses called Spectacles.
“Long-term the most exciting opportunity is (augmented reality) and we’re investing heavily around the future of AR,” Andersen said.
Meanwhile, the battle for people’s attention online grows increasingly fierce as established titans such as Meta and Google adapt offerings to changing trends and relative newcomers such as TikTok grab the spotlight.
Anderson added that Snap intends to effectively pause hiring and look at reining in other expenses, joining a growing number of tech firms throttling back costs.
“We intend to substantially slow our rate of hiring to effectively pause growth in our headcount, which is a significant portion of our office,” he added.
Fresh fears after Facebook’s role in US abortion case
Facebook’s role in an abortion prosecution has raised fresh worries from advocates – Copyright AFP/File Javed TANVEER
Facebook sparked outrage by complying with US police probing an abortion case, boosting simmering fears the platform will be a tool for clamping down on the procedure.
Criticism built after media reports revealed the social networking giant had turned over messages key to a mother being criminally charged with an abortion for her daughter.
Advocates had warned of exactly this kind of thing after America’s top court revoked the national right to abortion in late June, as big tech companies hold a trove of data on users locations and behavior.
Jessica Burgess, 41, was accused of helping her 17-year-old daughter to terminate a pregnancy in the midwestern US state of Nebraska.
She faces five charges — including one under a 2010 law which only allows abortion up to 20 weeks after fertilization.
The daughter faces three charges, including one of concealing or abandoning a corpse.
Yet Facebook owner Meta defended itself Tuesday by noting the Nebraska court order “didn’t mention abortion at all”, and came before the Supreme Court’s highly divisive decision in June to overturn Roe v Wade, the case which conferred right to abortion in the United States.
“That sentence would seem to imply that *if* the search warrants mentioned abortion, there would be a different result. But of course that’s not true,” tweeted Logan Koepke, who researches on how technology impacts issues like criminal justice.
When queried about handing over the data, the Silicon Valley giant pointed AFP to its policy of complying with government requests when “the law requires us to do so.”
Nebraska’s restrictions were adopted years before Roe was overturned. Some 16 states have outright bans or limits in the early weeks of pregnancy in their jurisdictions.
– ‘Can’t release encrypted chats’ –
For tech world watchers, the Nebraska case surely won’t be the last.
“This is going to keep happening to companies that have vast amounts of data about people across the country and around the world,” said Alexandra Givens, CEO of the non-profit Center for Democracy & Technology.
She went on to note that if companies receive a duly-issued legal request, under a valid law, there are strong incentives for them to want to comply with that request.
“The companies at a minimum have to make sure that they’re insisting on a full legal process, that warrants are specific and not a fishing expedition, searches are very narrowly construed and that they notify users so that users can try to push back,” Givens added.
Meta did not provide AFP the Nebraska court’s order. The police filing asked the judge to order the company not to tell Burgess’s daughter about the search warrant for her Facebook messages.
“I have reason to believe that notifying the subscriber or customer of the issuance of this search warrant may result in the destruction of or tampering with evidence,” police detective Ben McBride wrote.
He told the court he began investigating “concerns” in late April that Burgess’s daughter had given birth prematurely to a “stillborn child”, which they allegedly buried together.
Advocates noted that apart from not using Meta’s products, one sure way to keep users’ communications out of government hands would be for them to be automatically encrypted.
Meta-owned WhatsApp has end-to-end encryption, which means the company does not have access to the information, but that level of privacy protection is not the default setting on Facebook messenger.
“The company has never said it would not comply with a request from law enforcement in a situation related to abortions,” said Caitlin Seeley George, a campaign director at advocacy group Fight for the Future.
“If users could rely on encrypted messaging, Meta wouldn’t even be in a position where they could share conversations,” she added.
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