Yesterday afternoon, Facebook held its earnings call for the fourth quarter of 2018, putting a bow on the company’s contentious past year. Despite all the unflattering coverage about data leaks, data breaches, poor community moderation, and Facebook–facilitated ethnic cleansing, the company still made a ton of money, bringing in $56 billion in revenue last year — up 37 percent from 2017, and beating Wall Street estimates.
As The Wall Street Journal put it, “Facebook posted record profit, showing resilience even as it battled through a string of crises.” So brave. [Salutes.]
It’s been clear for a while now that the future of Facebook, the company, does not lie in Facebook, the website. The website has significantly reoriented its News Feed to place more emphasis on friends and family instead of brands, and it’s devoting more attention to less public channels, like Groups and its Messenger services. In addition, it’s spent a lot of time building out apps not called Facebook: namely, Instagram and WhatsApp. The original leaderships of both major acquisitions departed last year, bringing them further under Mark Zuckerberg’s control. Instagram in particular continues to expand in form and function as it becomes more important to the Zuckerberg empire. As Facebook (the site) continues to slow in growth, those other two platforms are becoming more and more important to the company’s future.
That brings us to yesterday, when Facebook CFO David Wehner announced on the company’s earnings call:
Around 2.7 billion people worldwide used one of our applications in December, and on average over 2 billion people were active daily. This is our best estimate of our de-duplicated audience across Facebook, Instagram, Messenger, and WhatsApp. We believe these numbers better reflect the size of our community and the fact that many people are using more than one of our services. For the time being, we will continue to disclose both sets of numbers, but over time we expect family metrics will play the primary role in how we talk about our company, and we will eventually phase out Facebook–only community metrics.
That last line is important. Facebook will eventually stop telling investors and the public how healthy its core asset, Facebook the website, is. It will instead compile all of its metrics — the arbitrary ones like monthly and daily active users that investors base decisions on — from its “family” of services. Eventually, it will not be possible to know how many people are using Facebook versus Instagram or WhatsApp.
This change in disclosure policy implies that the core Facebook product, the one that brings in the most revenue, will eventually plateau, or even decline in usage. Facebook has acknowledged this type of trend in the past, noting that it is basically hitting saturation when it comes to the internet-using population of Earth. It’s already hit saturation in North America and Europe — the parts of the world where the majority of its ad money comes from. The company is keenly aware that, eventually, Facebook, the site, will stop raking in users and cash.
This sort of acknowledgment is also why, as some have argued, regulators should have blocked Facebook’s acquisitions of Instagram and WhatsApp. Buying out its nascent competitors was clearly a smart business decision on Facebook’s part, but it also further centralized the tech industry under a few dominant powers, giving Facebook outsized control over the internet. Given the cascading effects of Facebook’s dominance, the past few years have demonstrated that the company has not yet learned to wield its power responsibly.
