for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up
Breakingviews

Breakingviews - Facebook nears moment when world is not enough

A 3D-printed Facebook logo is seen placed on a keyboard in this illustration taken March 25, 2020. REUTERS/Dado Ruvic/Illustration

SAN FRANCISCO (Reuters Breakingviews) - It turns out Facebook really might be too big to push around. This summer’s ad boycott made no dent on the social network’s third-quarter revenue, which grew 22% year-on-year. And monthly active users for its family of apps hit 3.2 billion. With world domination within reach, what’s next? Perhaps getting more money from Facebook’s existing fans.

Mark Zuckerberg’s firm emerged financially unscathed from a pause in advertising by 1,000 big companies from Coca-Cola to Ford Motor, protesting its policies on hate speech and inflammatory content. And users were mostly unperturbed. About 55% of the nearly 6 billion people in the world who are at least 15 years old use one or more of Facebook’s services.

At some point, Facebook will hit a ceiling as the world runs out of humans who aren’t already using its products. The next order of business will then be increasing revenue from the people it has. It helps that the ad market has recovered after the initial shock of Covid-19. At the same time as Facebook published its earnings, Google parent Alphabet also reported 14% revenue growth during the quarter.

Greater potential comes from Facebook’s “family” connections – the word it uses for its other non-Facebook branded apps. It doesn’t break out top line figures for photo-sharing app Instagram and messaging service WhatsApp, but the average revenue the company gets from its eponymous core product is $7.89, higher than the $6.76 for its combined brands.

The $763 billion tech giant is already looking to new ways to squeeze the lemon. Instagram recently enhanced its shopping service so users can purchase a product they’ve seen on video. Similar features will be added to its new TikTok competitor, Reels. Then there’s messaging service WhatsApp, which Facebook has barely monetized, beyond forays in India and Brazil.

Try too brazenly to make money and users may be turned off, of course. As Facebook’s services move more into e-commerce and payments, cybersecurity concerns also rise. The company already has several black eyes when it comes to misuse of data and privacy violations. If it manages to maintain quality as it increases revenue, though, Facebook needn’t be worried that there are only a finite number of eyeballs to be hooked.

Breakingviews

Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.


Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

for-phone-onlyfor-tablet-portrait-upfor-tablet-landscape-upfor-desktop-upfor-wide-desktop-up