Facebook’s long streak of revenue growth has come to an end. Facebook reported its first yearly decline in secondquarter revenue, announcing a 1 percent drop to $28.8 billion, and also predicted thirdquarter growth could fall further. Meta’s parent company’s total profit fell 36% to $6.7 billion. Reality Labs, the division responsible for creating Mark Zuckerberg’s metaverse, lost a whopping $2.8 billion in the quarter.
This was expected on Wall Street ahead of Wednesday’s earnings report and shows just how complex Meta’s business has become. After all, Apple’s “Ask app not to be tracked” prompt on the iPhone made its ads far less effective, and it ended up costing Meta $10 billion in ad revenue last year. And now the slowing economy has forced advertisers to cut their spending to boot.
And to compete with TikTok, Meta is restructuring Facebook and Instagram to focus more on the short videos and posts its system recommends. Zuckerberg said the percentage of content people see on Facebook and Instagram that comes from accounts they don’t follow will more than double next year in hopes of rectifying the situation. After all, creating the necessary AI for this is an expensive investment.
The drop in income had to happen at some point.
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