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Facebook today reported earnings that handily beat expectations, but shares slumped as it outlined changes expected to curb the amount of time people spend on the world’s biggest social network. Facebook said that profit in the three months of last year climbed 20 per cent to USD 4.26 billion as ad revenue and ranks of members grew.
Revenue in the quarter leapt 47 per cent to nearly USD 13 billion, but expenses also rose as its ranks of employees growing by the same percentage to finish the year at 25,105 workers. Facebook said the number of monthly active users hit 2.13 billion in the past quarter, up 14 per cent from a year ago. Facebook shares fell more than four percent to USD 177.92 in after-market trades that followed release of the earnings figures.
Analysts have been cautious about Facebook as it revamps its News Feed as part of an effort to curb misinformation and refocus on updates from friends and family. “2017 was a strong year for Facebook, but it was also a hard one,” Facebook co-founder and chief executive Mark Zuckerberg said in the earnings release. “In 2018, we’re focused on making sure Facebook isn’t just fun to use, but also good for people’s well-being and for society.”
Facebook intends to encourage meaningful real-world connections instead of promoting passive consumption of online content, according to Zuckerberg. “We made changes to show fewer viral videos to make sure people’s time is well spent,” Zuckerberg said. “In total, we made changes that reduced time spent on Facebook by roughly 50 million hours every day.”
Facebook said it set aside an additional USD 2.27 billion for taxes on profits to be repatriated from overseas, taking advantage of a lower rate in a recently approved US fiscal overhaul. A freshly introduced update highlights what friends and family share on the network, over advertisements, celebrity and media posts.
Change in priorities
The company cast the changes as part of a refocus on “community” -- prioritising social interactions and relationships, even if it means people spend less time on the platform. Facebook this week announced it will deliver more local news to US users, in its latest effort to manage the flow of information on the enormously-influential social network.
Earlier this month, Facebook announced it will ask its two billion users to rank their trust in news sources as part of an effort to combat the spread of misinformation. The changes come as the online giant seeks to address charges that it has failed -- along with Google and Twitter - to prevent the spread of false news, especially ahead of the 2016 US presidential election.
Recent changes at Facebook include a new “trusted sources” ranking intended to “make sure the news you see is high quality” and to foster “a sense of common ground” rather than sow division, Zuckerberg said in a previous post.
Known for annual personal goals ranging from killing his own food to learning Chinese, Zuckerberg’s stated mission for this year is to “fix” the social network. He plans to target abuse and hate, as well as interference by nation states.
Facebook has also been moving to expand from its core social network to grow the image-sharing service Instagram, while ramping up the capabilities of its Messenger and WhatsApp services. It is also steeping up its efforts in virtual reality with its Oculus hardware unit.
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