Facebook's earnings grow despite ad boycott and coronavirus pandemic

The social network says it still faces a "significant amount of uncertainty" looking ahead to 2021.

Queenie Wong Former Senior Writer
Queenie Wong was a senior writer for CNET News, focusing on social media companies including Facebook's parent company Meta, Twitter and TikTok. Before joining CNET, she worked for The Mercury News in San Jose and the Statesman Journal in Salem, Oregon. A native of Southern California, she took her first journalism class in middle school.
Expertise I've been writing about social media since 2015 but have previously covered politics, crime and education. I also have a degree in studio art. Credentials
  • 2022 Eddie award for consumer analysis
Queenie Wong
4 min read

Facebook reported its third-quarter earnings on Thursday.

Angela Lang/CNET

Facebook's third-quarter earnings and revenue beat Wall Street's expectations even as advertisers boycotted the social network to put pressure on the company to do more to combat hate speech.

Major brands, including The North Face, Verizon and Unilever, said they would pull advertising from Facebook. Civil rights groups called on businesses to pause spending on Facebook ads in July, the start of quarter, as part of a campaign called Stop Hate for Profit. Some businesses said they would pull ads from Facebook and other social networks for the rest of the year.

The earnings report on Thursday came a day after Facebook CEO Mark Zuckerberg was grilled by US senators about the content Facebook leaves up or pulls down. Twitter CEO Jack Dorsey and Google CEO Sundar Pichai also testified before the Senate Commerce Committee, which held a hearing about a federal law that shields internet platforms for user-generated content.

The issue of content moderation has taken on new significance as more people turn to social networks to stay in touch with friends and family during the coronavirus pandemic. The increase in use has prompted criticism that Facebook and its peers aren't taking down enough misinformation, particularly ahead of next week's contentious presidential election.

Zuckerberg outlined the work Facebook is doing to safeguard the election, including removing fake accounts, helping people to register to vote and blocking new ads a week ahead of Election Day. The social network is also banning political ads in the US after the polls close indefinitely.

"I'm worried that with our nation so divided, and election results potentially taking days or weeks to be finalized, there is a risk of civil unrest across the country," he said in a conference call with analysts.

See also: Facebook pulled down your post. Here's how to challenge that decision

Despite greater scrutiny, Facebook said small businesses continue to turn to their products during the coronavirus pandemic and user growth overall jumped. 

In the third quarter, 2.74 billion people logged into Facebook each month, a rise of 12% compared with the same period last year. 

Still, Facebook said it's still facing "uncertainty" looking ahead to 2021. People might start shifting away from online shopping, lawmakers are eyeing regulation and Apple has made changes to its operating system. The company said that it saw users in the US and Canada decline slightly from the second quarter when usage was rose because of the pandemic. Monthly active users in the US and Canada fell from 256 million in the second quarter to 255 million in the third quarter. Facebook's stock was initially down more than 2% to $280.83 per share in after-hours trading.

"In the fourth quarter of 2020, we expect this trend to continue and that the number of [daily active users] and [monthly active users] in the US & Canada will be flat or slightly down compared to the third quarter of 2020," Facebook said Thursday. 

Facebook posted revenue of $21.47 billion in the third quarter, beating expectations of $19.8 billion. The company earned $2.71 per share, above the $1.90 per share expected by analysts surveyed by Thomson Reuters. The company said it saw an increase in demand for advertising because of the rise of online shopping during the pandemic.

"Facebook has rebounded nicely from both the early-pandemic advertiser pullout, when marketers pulled ads across all media to redo messaging or conserve funds, and from the July ad boycott," Debra Aho Williamson, an analyst for eMarketer, said in a statement. "Despite its challenges with election turmoil and content moderation, it remains a go-to for advertisers seeking to engage a broad base of consumers."

Looking for new products

Facebook is still looking for ways to grow while fending off competitors such as short-form video app TikTok.

In August, Facebook-owned Instagram introduced a feature called Reels that lets users post videos with music and other effects such as slowing or speeding up a video. The new feature, though, doesn't appear to be a big threat to TikTok's growth.

Zuckerberg said that the results from Reels are "encouraging," but it's still early and there's still a lot of work to do.

The social network is also looking for new products to sell, including possible smart glasses. Zuckerberg said last month Facebook had partnered with EssilorLuxottica, which owns eyewear brands including Ray-Ban. Connected glasses could hit the market next year.

Watch this: Facebook, Twitter and Google face Congress over free speech

Facebook is also moving forward with plans to integrate Messenger, Instagram direct messaging and WhatsApp, a messaging service the social network owns. Facebook users can now send messages to Instagram user without having to download or switch to another app.

Zuckerberg said people in the US use multiple messaging apps, which can make the experience "confusing."

"Our goal is to make it so that people can just choose...one of our apps that they prefer using the most for messaging and can reach all the people who they want to reach across all of our different apps," he said.