Facebook’s Profit Margin is Shrinking
By MYBRANDBOOK
Major Data companies reporting recently that prime profits of Facebook Inc. goes for Systems to verify the identities of people buying political messages on the network and data security.
For Facebook Mark Zuckerberg has repeatedly told investors and Congress that Facebook Inc. will spend so much to safeguard its social network against foreign propaganda, hate speech, and data thieves that it will seriously hurt its bottom line. The message: The company will do the right thing, no matter the pain it causes.
It would be nice to believe that Facebook would give up a touch of profit to repair the damage it’s done to the world. But reality isn’t so simple. The company’s profits are squeezed because it’s spending more on everything, and many of those costs are unrelated to dragging social networking out of its cesspool. Mostly, it’s the cost of being Facebook that’s driving up expenses and hurting the profit margin.
Facebook says it has consistently cited multiple factors for the increase in spending, which has grown by $7 billion, or 47 percent, this year through Sept. 30. The biggest reason is a category called cost of revenue. That includes operating the company’s computer equipment and undersea cables to push data between continents, plus money for web video programs that air on Facebook’s television like digital hubs. Cost of revenue does not include hiring contractors to flag hate speech in Myanmar or developing artificial intelligence to spot accounts trying to manipulate elections.
Yes, Facebook is spending more on its nobler missions, such as creating a system to verify the identities of people buying political messages on the network. But it’s also spending on marketing and engineering. The causes of its rising expenses are more complicated than the feel-good tale that Zuckerberg’s company is selflessly digging into its profit pile to protect the world.
● Smooth Sales Pitch
“I want to be clear about what our priority is: Protecting our community is more important than maximizing our profits.” That’s what Zuckerberg told the House of Representatives in April.
● Spending Spree
Cost of revenue contributed $2.7 billion to Facebook’s expense growth in 2018 through Sept. 30. That’s up 71 percent from 2017.
● Spread the Wealth
Facebook’s spending is up this year across the board. The next-biggest growth areas were marketing and sales (up 60 percent) and general administrative costs (up 35 percent).
● Leaner Times
The social network’s profit margin has increased steadily in the last few years. That’s likely to end in 2018, and next year could see a further squeeze. Stock investors are anxious about the hit to Facebook’s margin, which has been among the plumpest in technology.
BREAKING NEWS
TECHNO TRENDS
Nazara and ONDC set to transform in-game monetization with ‘
Nazara Technologies has teamed up with the Open Network for Digital Comme...
Jio Platforms and NICSI to offer cloud services to government
In a collaborative initiative, the National Informatics Centre Services In...
BSNL awards ₹5,000 Cr Project to RVNL-Led Consortium
A syndicate led by Rail Vikas Nigam Limited (abbreviated as RVNL), along wi...
Pinterest tracks users without consent, alleges complaint
A recent complaint alleges that Pinterest, the popular image-sharing platf...
E-Magazine
TECHNOTAINMENT
Netflix adds 'Moments' feature for saving, sharing scenes from
Netflix has introduced a new “Moments” feature on its mobile app, whic
Jacqueline Fernandez come together with YouTuber Mr. Beast for
Jacqueline Fernandez has partnered with American YouTuber Mr. Beast to b
MOVERS & SHAKERS
Visa elevates Rishi Chhabra as new Country Manager for India
Rishi holds a Master’s in Industrial Engineering from The Ohio State Univ
Genesys welcomes Albert Nel as Senior VP and Regional Sales Le
Genesys continues to deepen its investment in the APAC region. Earlier this
OPEN YOUR EYES
INTERVIEWS
Autodesk continually pushing the boundaries in the Design and
Autodesk’s vision is of a better world designed and made for all. It inte
AMD Pensando driving innovation in the DPU architecture space
AMD Pensando stands out in the DPU (Data Processing Unit) market with its u
HOT PICK
SonicWall Launches TZ80: A Powerful Solution for Remote Office
SonicWall announced today the launch of the TZ80, a groundbreaking securit
Gigabyte X3D Turbo: A Gaming Revolution
GIGABYTE X3D Turbo Mode is a cutting-edge feature that unifies cores distr
MAKE IN INDIA BRANDS
TEJAS NETWORKS INDIA PVT. LTD.
SAFE SECURITY SERVICES PVT. LTD.
CENTRE FOR DEVELOPMENT OF TELEMATICS (C-DOT)
SAMRIDDHI AUTOMATIONS PVT. LTD.
EMINENT CIO'S OF INDIA
ICONS OF INDIA
Icons Of India : NANDAN NILEKANI
Nandan Nilekani is the Co-Founder and Chairman of Infosys Technologies...
ICONS OF INDIA : RAJESH NAMBIAR
Rajesh leads the company’s India associates and enhances relationshi...
SHAKTIKANTA DAS
Shaktikanta Das is serving as the current & 25th governor of the Reser...
PARTNER SPEAKERS
PSU
LIC - Life Insurance Corporation of India
LIC is the largest state-owned life insurance company in India...
C-DOT - Center of Development of Telematics
India’s premier research and development center focused on telecommu...
NPCI - National Payments Corporation of India
NPCI is an umbrella organization for operating retail payments and set...
VIDEOS
Top 25 Brands
Global Indian industry
Indian Tech Talent Excelling The Tech World - Aneel Bhusri, CEO, Workday
Aneel Bhusri, Co-Founder and Executive Chair at Workday, has been a le...
Indian Tech Talent Excelling The Tech World - Anirudh Devgan , President, Cadence Design
Anirudh Devgan, the Global President and CEO of Cadence Design Systems...
Indian Tech Talent Excelling The Tech World - Thomas Kurian, CEO- Google Cloud
Thomas Kurian, the CEO of Google Cloud, has been instrumental in expan...
STARNITE AWARDS 2024
ITFORUM 2024
CMO of the Year
WOMEN LEADERSHIP
IMAGE GALLERY
TRENDS IN TECHNOLOGY
MORE VIDEOS
ADVERTISEMENTS
TECHNOLOGY DISRUPTION
UNICORNS REVOLUTIONISING
