Tech Industry

Facebook is still raking it in, even as people spend less time on the service

The world’s biggest social network is almost minting money, but people are spending 50 million fewer hours on Facebook every day because of changes to the news feed.

Facebook CEO Mark Zuckerberg announced the social network's fourth quarter financial results. 
James Martin/CNET

There are lots of uncertainties about Facebook's future, but one thing is for sure: CEO Mark Zuckerberg has been busy making big changes.

Earlier this month, he announced a drastic overhaul of the social network's vaunted news feed. Facebook will soon put more focus on posts from family and friends and less emphasis on content from brands and media outlets. He's also asking the site's users to decide what Facebook should consider trusted news sources. Those tweaks, he said, might lead people to spend less time on the site.

Zuckerberg said Wednesday that changes made in the last quarter have already caused many of the service's 2.13 billion users to spend less time on the platform. All told, users are spending roughly 50 million fewer hours daily on Facebook, he said.

"Let me be clear: Helping people connect is more important than maximizing the time they spend on Facebook," Zuckerberg told analysts on a conference call.

We won't know the full effect of the changes on Facebook's business for a while, but in the meantime, revenue is booming. Facebook on Wednesday reported $12.97 billion in sales during the last three months of the year. That beat Wall Street's estimates of $12.55 billion. Facebook's user base jumped 14 percent from the 1.86 billion users it had the same time last year.

Profit was $1.44 per share, missing estimates of $1.95 per share, which Facebook said was because of taxes. If you add that back in, profit would have been $2.21 per share. 

Zuckerberg said he's shifted Facebook's goal away from showing people meaningful content, and now wants to encourage more meaningful interactions. 

"We've seen abuse on our platform -- including interference from nation states, the spread of news that is false, sensational and polarizing -- and debate about the utility of social media," he said on the call. "We have a responsibility to fully understand how our services are used and to do everything we can to amplify the good and prevent the harm."

Facebook's shares initially fell more than 4 percent in after-hours trading, but they recovered after the company's CEO explained how the changes will be better for Facebook in the long term. 

"If people interact more, that should lead to a stronger community," Zuckerberg said. "When you care about something, you're willing to see ads to experience it. But if you just come across a viral video, then you're more likely to skip over it if you see an ad."

A hard year

The earnings results cap off what Zuckerberg called a "hard" year for Facebook. The social network is being blamed for creating "filter bubbles" that warp people's sense of reality because the site's influential and mysterious algorithms tend to show Facebook members content they already agree with.

Facebook was also battered by critics for its role in the 2016 US presidential election, in which Russian agents misused Facebook, along with rival platforms Google and Twitter, to push misinformation and sow discord among Americans.

After first dismissing claims that Facebook was part of the "fake news" problem, Zuckerberg said in January that his primary goal for 2018 is "fixing" the site's biggest problems, including misinformation, harassment and undermining election integrity.

Part of that plan has been to perform a makeover on the news feed, which is essentially the soul of Facebook and its main financial engine. That includes de-emphasizing news stories and viral videos, which Zuckerberg said could trigger a drop off in time people spend on Facebook. The world's biggest social network often touts the statistic that people on mobile devices spend 20 percent of their time on Facebook.

Earlier this week, Zuckerberg said Facebook would now push stories from local news outlets because national news tends to be more polarizing.

"Now, I want to be clear: By making these changes, I expect the time people spend on Facebook and some measures of engagement will go down," he wrote Jan. 12 in a Facebook post outlining the shift toward content from family and friends. "But I also expect the time you do spend on Facebook will be more valuable. And if we do the right thing, I believe that will be good for our community and our business over the long term too." 

On Wednesday, Zuckerberg said that changes to the news feed are only the beginning. To encourage more "meaningful interaction," the rest of Facebook will change too. "Over time, there are going to be new products that we build, new interfaces that the team has designed for that goal of emerging interaction with people."

First published Jan. 31, 1:35 p.m. PT. 
Update, 4 p.m.: Adds more information from Facebook's conference call. 

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