Facebook’s long streak of revenue growth has now come to end. Facebook reported its first-ever yearly decline in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion, and also predicted that growth in the third quarter could fall even further. The overall profit for its parent company, Meta, fell 36 percent to $6.7 billion. The Reality Labs division that is responsible for building Mark Zuckerberg’s metaverse lost a hefty $2.8 billion in the quarter.
This was expected on Wall Street going into Wednesday’s earnings report, it illustrates how challenging Meta’s business has become. After all, Apple’s “Ask app not to track” prompt on iPhones has made its ads a lot less effective, and this ended up costing Meta $10 billion in ad revenue last year. And now a slowing economy has caused advertisers to pull back on their spending to boot.
And to compete with TikTok, Meta is restructuring Facebook and Instagram to place more of an emphasis on short videos and posts that its system recommends. Zuckerberg said that the percentage of content people see on Facebook and Instagram that comes from accounts they don’t follow will more than double next year in hopes of correcting things. Building the AI needed for this is an expensive investment after all
A drop in revenue had to come at some point.
Source The Verge
Image Credit Pexels
Filed Under: Technology News
