Facebook Chief Tries to Soothe Wall Street Over Changes to Site’s News Feed
Posted January 31, 2018 8:42 p.m. EST
SAN FRANCISCO — Mark Zuckerberg, Facebook’s chief executive, has embarked on an overhaul of what people see and consume on the social network. The changes have left investors wondering whether people will still spend as much time on the site and whether brands will continue placing as many digital ads there.
On Wednesday, Facebook sought to soothe Wall Street’s worries over those questions. No, people will not spend as much time on the site, the company said as it reported quarterly financial results. But don’t worry, Facebook added, because the changes will ultimately benefit its business.
With the adjustments to what it shows on its site, “I believe that the time spent on Facebook will be more valuable,” Zuckerberg said in a conference call with analysts. “If people interact more, it should lead to stronger community. When you care about something, you’re willing to see ads to experience it.”
The scrutiny followed changes that Facebook announced in January to its News Feed, the scrolling screen of content that the social network’s more than 2 billion members see when they log in to the site. After months of criticism over the harmful effects of the social network, Zuckerberg said Facebook wanted to emphasize more “meaningful” content, such as photos and posts that friends and family have interacted with, and would play down articles from publishers. At the time, Zuckerberg acknowledged that the shift might cause people to spend less time on Facebook, at least in the short run.
That has already proven to be true in some instances, Facebook revealed on Wednesday. The shift to more meaningful content has just started rolling out, but the company made other changes last year as a precursor to the latest moves, including cutting down on viral videos. In response, Facebook users overall reduced the time they spent on the platform by roughly 50 million hours a day, Zuckerberg said, which translates to about two minutes a day for each of the company’s 1.4 billion daily users.
Other measures of engagement also fell. The company said the number of people in the United States and Canada who use Facebook on a daily basis fell for the first time ever in last year’s fourth quarter, dropping to 184 million from 185 million a year earlier.
Zuckerberg said these declines were just fluctuations as Facebook made changes to its platform. Overall, the total number of people who use Facebook monthly jumped 14 percent in the fourth quarter to 2.13 billion users, which is a rate of growth that is far higher than that of many other social media companies.
“We have a responsibility to fully understand how our services are used and amplify the good,” Zuckerberg said.
His comments came as Facebook reported another set of blockbuster financial results. The company said its revenue surged by 47 percent to nearly $13 billion in the fourth quarter from a year earlier, while profit rose 56 percent to $4.3 billion. The social network also said it had taken a $2.3 billion charge to cover the repatriation of foreign earnings under the new tax code that was signed into law last month.
Facebook also continued to spend ferociously over the fourth quarter, with capital expenditures reaching $2.3 billion. The company said its number of employees increased 47 percent from a year ago to 25,105 people. Facebook spent much of last year grappling with questions about whether it had become a force for ill. The company disclosed that it been manipulated by Russian agents who were trying to sway the result of the 2016 elections; Facebook faced a grilling by lawmakers on Capitol Hill over the situation.
Other social media companies were also exploited for the same purpose, including Twitter, which said on Wednesday that it had informed 1.4 million people in the United States that they had interacted with Russian propaganda on the service, up from a previous number of 677,775 people.
“Facebook has taken a conciliatory tone in terms of coming to terms with its power over advertising and how people interact and engage with each other,” said Debra Williamson, an analyst with research firm eMarketer. She said that the changes to the News Feed showed that Facebook was not afraid to experiment with their core products.
Even with the changes to the News Feed, Facebook’s robust revenue is a salve for investors, said Brian Wieser, an analyst at Pivotal Research.
“Those concerns haven’t shown up in the numbers, at least not yet,” he said, adding that most investors were focusing on how Facebook was raising revenue “at a remarkable pace.”