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Facebook business booms despite violent-video backlash

The company is dealing with the consequences of letting people livestream whatever they want to its nearly 2 billion users. Still, business is good.

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CEO Mark Zuckerberg is dealing with controversies over fake news and violence shown on Facebook Live.

James Martin/CNET

Facebook's Mark Zuckerberg is in the hot seat over violent videos posted to his social network. But here's one thing he doesn't have to worry about for now: business, which is booming.

Facebook Live, the video livestreaming service, is getting a lot of attention, but not in the way Zuckerberg and his team intended.

It's become a lightning rod for controversy, which reached a fever pitch after a Cleveland man last month posted a video of him murdering a stranger, then confessing to the crime live on the world's biggest social network. As if that weren't bad enough, last week a father in Thailand killed his baby daughter live on Facebook before taking his own life.

The Cleveland incident got so much attention that Zuckerberg had to address it last month during his keynote at F8, Facebook's all-important developer conference. On Wednesday morning, Zuckerberg said the social network will add 3,000 more people to review the "millions" of reports on Facebook Live videos the company receives every week.

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"We wanted to make sure that we double down on this and make sure that we provide as safe of an experience for the community as we can," Zuckerberg said on a conference call with analysts. "We take that very, very seriously."

Violence in live videos is a real challenge for Facebook that's not likely to go away anytime soon. But in the meantime, the company can at least lean on its strong business performance to divert attention.

To be sure, analysts said the violent-video controversy wouldn't necessarily bring down ad sales in the short term, and Facebook didn't elaborate on the possible effects of that controversy. Still, it's something that's sure to weigh on the minds of Facebook brass.

Facebook on Wednesday reported earnings results for the first quarter. In the three months ended March 31, it had $8.03 billion in sales, surpassing estimates of $7.83 billion. Net income was $3.06 billion, or $1.04 a share. The company also said it now has 1.94 billion monthly users, with about two-thirds visiting every day.

'Rome didn't fall over night'

Facebook is in a tough position as it tries to grapple with its scale and influence over the nearly 2 billion people who sign in every month. Zuckerberg has increasingly had to confront problems that stem from the unintended consequences of new services and tech added to the platform.

Aside from violent videos, the social network is dealing with its role in promoting fake news and accusations that it helps create "filter bubbles." That's the idea that Facebook lulls us into thinking everyone has the same worldview we do, because its algorithms are designed to show us stuff we're already interested in.

"The issue is, Rome didn't fall over night. It falls over a long period of time," said Harry Kargman, CEO of Kargo, a mobile ad company. "Is Facebook's inability to manage and handle violent videos and fake news over time [going to mean] a slow, consistent dilution of the sparkle of the brand?"

Facebook isn't the only tech company struggling with controversy because its tech is being used in unpredictable ways. Google's YouTube is in the middle of a firestorm over the site's automated software tools that place ads alongside extremist and hateful content. In mid-March, angry advertisers, including Pepsi, AT&T and even the British government, started pulling their ads from YouTube in droves.

That's a problem, since, like Facebook, YouTube gets the majority of its revenue from ads.

Still, when Google parent company Alphabet reported its financial results last week, the company handily beat analysts' estimates and its stock rose 4 percent after-hours -- even with the YouTube ad controversy.

Facebook, it seems, is in the same boat.

On the conference call, Zuckerberg also elaborated on the role artificial intelligence tools could play in preventing the spread of violent and objectionable videos on Facebook. But the technology isn't quite ready for prime time.

"Right now, there are certain things that AI can do in terms of understanding text and understanding what's in a photo and what's in a video," he said. "That will get better over time. That will take a period of years though to really reach the quality level that we want."

From 'late' to 'ahead'

Outside of the violent video debacle, Zuckerberg also talked about Facebook's future in augmented reality -- and, indirectly, the company's rivalry with Snapchat.

Earlier this month at F8, Zuckerberg announced a new platform to let outside software developers build digital graphics over real world images through the camera in Facebook's app. The move was widely seen as a response to Snapchat, which has revolutionized how most people use AR camera filters.

"I think we're a little bit late to the trend initially around making cameras the center of how sharing works," Zuckerberg said during the call Wednesday. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building."

Since last summer, Facebook has also cloned Snapchat's most popular feature, Stories, in all four of its main apps -- Facebook, Instagram, WhatsApp and Messenger.

Zuckerberg said WhatsApp Status, that app's version of Stories, has more than 175 million daily users. That means both WhatsApp and Instagram's Stories clones have more users than all of Snapchat itself.

Facebook is also looking ahead to attract the next generation of developers and tech talent. The company offers the highest paying internships in America, with a median pay of $8000 a month, according to Glassdoor. If interns worked a full 12 months, that would put their salaries at around $96,000.

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