Facebook, already dealing with criticism about misinformation and protection of user privacy, has a new problem to worry about: slipping profits. The social media giant, which makes most of its money from selling ads, on Wednesday beat Wall Street’s expectations for earnings and revenue in the fourth quarter. But for the full year, the company’s profit shrank due to rising expenses, sending its stock lower in after-hours trading.
In the quarter that ended Dec. 31, Facebook raked in $21.08 billion in revenue, above the $20.89 billion in revenue estimated by analysts surveyed by Thomson Reuters.
The social network earned $2.56 per share, beating estimates of $2.52 per share. It posted a profit of $7.35 billion, up 7% from the fourth quarter last year.
Facebook’s monthly active users grew to 2.5 billion in the fourth quarter, an uptick of 8% compared to the same period last year.
But it’s the weak full-year performance that’s compounding Facebook’s problems. The company finds itself in the crosshairs of numerous antitrust investigations at both the federal and state level. Politicians and advocacy groups complain that the company isn’t doing enough to combat misinformation on the platform, a problem that takes on urgency as the 2020 US presidential campaign ramps up. Facebook’s image, damaged by the Cambridge Analytica data privacy scandal two years ago, hasn’t been helped by CEO Mark Zuckerberg’s decision to allow lies in advertisements placed by politicians, arguing that members of the public can assess the candidates’ words for themselves.
Facebook’s role in our lives grows larger despite its issues. During the fourth quarter, the company announced it’s testing a place for news stories on the Facebook app and rolled out a tool to remind users to get their preventive health care screenings and checkups.
At the same time, Facebook is trying to show it takes concerns about privacy and misinformation seriously. The company is moving forward with plans to create an independent board to oversee content moderation decisions, banned misinformation about when and how to participate in the US census and updated its privacy checkup.
That hasn’t been enough to appease critics, including lawmakers andto change its controversial stance on political ads. On Wednesday, US presidential candidate said the efforts by tech companies to combat disinformation “no more than nibbles around the edges” and called for civil and criminal penalties for knowingly disseminating about when and how to vote in US elections.
In after-hours trading, Facebook shares were down more than 6% to around $208.90.