Apple Privacy Policy Slows Facebook Growth Momentum

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kwon Jae-hee] Facebook, the world's largest social media (SNS) platform, which is facing its biggest crisis since its founding due to whistleblower revelations and political pressure, posted increased earnings in the third quarter compared to the same period last year, but its growth rate has slowed. In particular, the growth rate of advertising revenue, its main source of income, has decelerated due to difficulties in providing personalized advertising services caused by Apple's privacy policy.

On the 25th (local time), Facebook announced that its third-quarter revenue reached $29.01 billion (approximately 34 trillion KRW). This fell short of the $29.56 billion expected by analysts surveyed by FactSet.

The Wall Street Journal (WSJ) evaluated, "Although revenue increased by 35% compared to the same period last year, this is the lowest level since the fourth quarter of last year, confirming a clear slowdown in growth."

Net profit for the same period also rose 17% year-on-year to $9.19 billion (approximately 10.7 trillion KRW). Facebook's monthly active users reached 3.58 billion, a 12% increase compared to the previous year.

The slowdown in Facebook's growth is attributed to the impact of Apple's privacy policy implemented last April. In April, Apple allowed users to decide whether to permit specific mobile apps on iPhones to collect their search history or activity data, making personalized targeted advertising difficult. This measure also caused SNS platform Snapchat's stock price to plunge more than 26% on the 22nd.

Despite the slowdown in Facebook's growth, its stock price actually rose. During trading before the earnings announcement, it increased by 1.26% to $328.68, and in after-hours trading following the announcement, it rose 1.71% to $334.30.

Meanwhile, Facebook issued a fourth-quarter guidance lower than Wall Street expectations on the same day. Analysts had predicted fourth-quarter revenue of $34.8 billion, but Facebook's guidance ranged from $31.5 billion to $34 billion.