What's going on?
Facebook may have dodged a bullet on Wednesday as it reported first-quarter earnings that didn’t appear too deeply affected by the recent Cambridge Analytica scandal, and investors appeared to shrug off the potential fallout as the good numbers rolled in…
What does this mean?
Admittedly, the dodgy data story only broke in mid-March – two weeks before the end of the first quarter – meaning that any meaningful impact on Facebook’s financials might not show up until the next batch of quarterly earnings.
Either way, most of Facebook’s business metrics looked good in the first months of 2018, despite concerns about the costs of a new focus on “meaningful interactions” over viral content: the number of daily users in North America increased again after falling off a bit at the end of 2017, while advertising revenues increased by 50% versus last year to just shy of $12 billion [tweet this]. But Facebook’s profits may soon take a hit, thanks to an expensive overhaul of data privacy and audits of third-party applications.
Why should I care?
The bigger picture: “Senator, we run ads.”
Facebook has acknowledged that many users are concerned about how it collects and distributes their data. Nevertheless, the company’s executives have pointed out that its status as a free service depends on it monetizing that personal data for advertisers that are willing to pay. So, while it’s offered users a bit more control over what information the platform can collect, delicious personalized data delicacies will likely remain on the menu at Facebook (and other free platforms) for the long haul.
For markets: Twitter is finally spreading its wings.
In another, arguably more chaotic corner of the internet, Twitter reported its second quarter of profitability on Wednesday, with its shares duly springing up to levels not seen since spring 2015. Twitter appears to be benefiting from the general shift in advertising spend away from traditional media and into social, while simultaneously drawing in more users worldwide to interact with those ads.