Facebook Profits Set to Drop For The First Time Since 2015
After years of high, increasing profits, Facebook is expected to report its first fall in profit in four years with experts attributing it to Mark Zuckerberg’s attempts to reform the platform.
Analysts believe that Facebook’s pre-tax profits will drop from $5 billion to $4.8bn when it reports its first-quarter results tomorrow.
Some believe that this dip is the first sign that the slew of recent scandals are having a financial impact on the company.
Over the past 18 months, Facebook’s reputation has been besmirched by a number of data privacy breaches and clashes with government. Among these data scandals and security lapses, Facebook has also received significant criticism for the content it allows on its site and lack of safeguards.
For example, this month New Zealand’s privacy commissioner labelled the company “morally bankrupt pathological liars” for hosting a live stream of the Christchurch attacks in March, which left 50 dead.
It has also been accused of acting as a platform for the proliferation of hate speech and fake news. Despite this, very few advertisers have indicated they are willing to pull away from the platform.
Facebook CEO Mark Zuckerberg has pledged to reform the company by hiring an army of moderators to monitor the website, and he is investing heavily in artificial intelligence to help combat fake news, violent videos, and to stop suggesting users invite their dead friends to parties.
According to Facebook, the company expects to increase its spending this year by up to 50%, faster than analysts expect its revenue to grow. Possibly this drop can be explained by Facebook’s costly acquisition of WhatsApp. However, experts say this could be the start of a sustained decline and predict that profits will drop in the coming three quarters.
The decline comes despite the company’s revenue increasing as new uses and advertisers continue to flock to the site. Its annual profits are expected to be just below last year’s figure of £22.1bn.
Last month, Facebook’s stock dropped almost 2% after a 17-hour partial outage rendered the platform inaccessible to users worldwide. Zuckerberg has been pressured to breakup his empire by investors who believe he wields too much power and runs the company as a dictatorship.