Facebook growth slows but "it is starting to rise again"

DataIQ News

The fall-out from privacy scandals and the impact of GDPR are being blamed for a slowdown in Facebook's growth after the company revealed the loss of one million users in Europe during the three months to the end of September.

However, according to the social media giant's latest results, it still recorded a 33% rise in revenue to $13.7bn (£10.7bn) compared to the same period last year, although this was down from 42% in the three months ending in June, and slightly below Wall Street's expectations.

It reported that the number of daily active users in US and Canada has remained flat at 185 million, while the number of European users has slipped from 279 million to 278 million.

Chief executive Mark Zuckerberg said future growth would come from developing countries.

He also confirmed the company was increasing its investment in data security measures and in tackling online abuse. "I do think we are up against sophisticated adversaries who will continue to evolve so there is a large element of this that is an arms race. These are not problems that you fix. These are problems that you manage over time."

Last week the Information Commissioner's Office issued Facebook with the maximum £500,000 fine for its part in the Cambridge Analytica scandal, but observers believe the company has learned from past mistakes.

Dr Ben Marder, senior lecturer in marketing at University of Edinburgh Business School, said: "This year the ageing social media giant has stumbled and fallen on its knees, but despite a mixed Q3 2018 earnings report, Facebook, for the foreseeable future, is simply 'too big to fail'.

"A miraculous recovery was never on the cards but after eating a huge slice of humble pie, owing to election scandals, privacy breaches and censorship issues, the giant is slowly starting to rise again.

"It is the case of 'whatever doesn't kill you, makes you stronger'. Facebook simply has too many users who have invested too much time in the site to move platforms. As long as social media is here to stay so is Facebook. Yes it is likely that a 'cool' new site might emerge, but Facebook has the financial clout to corner the social media market via acquisitions, as it did with Instagram."

Meanwhile, eMarketer analyst Debra Aho Williamson added: "The 1 million quarter-on-quarter decline in Europe users was likely a continuation of the fallout of GDPR we saw last quarter. Overall, given all the challenges Facebook has faced this year, this is a decent earnings report.”

And Yuval Ben-Itzhak, chief executive of Socialbakers, claimed that no other platform comes close to Facebook and its family of apps in terms of scale and audience engagement.

"With 2.27 billion monthly active users, it is still the platform where most consumer engagement with brands is happening online. With the increased desire for privacy, users are looking more and more towards services like Facebook Messenger and WhatsApp to interact with brands and organisations in a safe and convenient way.

"With Facebook focusing its investment on the biggest opportunities for advertisers, video, communities and messaging, it's hard to imagine that its future as the leading advertising powerhouse looks anything other than bright."