Facebook's CEO Mark Zuckerberg, who is surrounded by numerous stories regarding his company's inadequate response to hate speech, misinformation, and violent content, sought to portray an optimistic future for the social network by outlining new efforts to attract young users and build a digital experience immersed in virtual reality. On Monday, after a coalition of media organizations published a series of condemnatory reports based on internal documents revealed by whistleblowers, Zuckerberg urged investors to disregard the current narrative. These revelations included research showing growing concern within the company about the slow growth of users and engagement among youth.
**Prioritizing Youth**
While Facebook has historically focused on expanding its services to attract as many users as possible, the CEO stated that the company will prioritize those aged 18 to 29. During a conference call to discuss quarterly earnings, Zuckerberg added that executives "will make serving young users the company's main mission, rather than optimizing it for a larger number of older adults." He explained, "This likely means that the rest of the Facebook community will grow more slowly than it would have otherwise, but it should also mean that our services become stronger for young adults." The company's shares rose about 2% in after-hours trading, up approximately 20% this year. Facebook also announced a $50 billion increase in its stock buyback program after repurchasing $14.4 billion of its shares in the third quarter.
**Hundreds of Documents**
Zuckerberg's comments come in the wake of the release of hundreds of internal documents by Frances Haugen, a former product manager at Facebook, who went public in early October with allegations that Facebook prioritized profits at the expense of user safety and security. The documents revealed that Facebook has been struggling for years with declining growth metrics for key user groups, such as teenagers and young adults, on the main Facebook app. The company also reaffirmed its commitment to building the "metaverse"—a digital immersive environment accessed using virtual and augmented reality tools. To pursue future growth, Facebook has invested in products supporting virtual and augmented reality, partly due to Zuckerberg's long-standing belief that they will form the foundation for the next main platform for human communication, in which Facebook hopes to outpace competitors. Zuckerberg stated, "I think this work is vital to our mission because it provides a sense of presence, like you are there with someone else... that is the goal and hard-to-reach aim of online social experience."
**Metaverse**
By emphasizing its dedication to the metaverse, the company announced that it will start publishing financial results for "Facebook Reality Labs," which includes the Oculus device division, in the next quarter. This move will enable Facebook to separate its core digital advertising business from its main investments in creating virtual worlds and allow investors to see the costs and revenues associated with these efforts. According to the statement, the company will see a $10 billion reduction in operating profit this year due to investments in Facebook Reality Labs. Facebook is also hosting a conference later this week to explore "the future of augmented and virtual reality." These devices will also make it easier for Facebook to deliver its services directly to consumers rather than relying on mobile phone manufacturers. Some versions of these devices have made their first appearances. Last month, Facebook, in partnership with Ray-Ban, unveiled its long-awaited smart glasses that allow wearers to take photos and videos, listen to music, and answer phone calls. Oculus announced new workplace features for "Facebook Horizon," a virtual reality service where people can interact with others as digital avatars in August.
**Third Quarter**
For the third quarter, robust user growth across app categories, including Facebook, Instagram, and WhatsApp, overshadowed some lackluster aspects of the company's earnings report. Sales in the last quarter and revenue forecasts during this period missed analysts' estimates, as the social network stated it faces headwinds from Apple’s restrictions on consumer data collection for apps and uncertainty regarding economic recovery post-pandemic. Chief Operating Officer Sheryl Sandberg stated that without changes to "Apple iOS 14," the company would have seen positive revenue growth in the September quarter. Analyst Mandeep Singh from Bloomberg Intelligence noted, "When you look at it from a technical perspective, they believe that Apple and Google can make changes to their operating systems, which affects Facebook's business," adding that by creating the metaverse, "they can control their destiny."
**Company's Future**
Zuckerberg also sees attracting younger users to the crowded social media market, which includes Snap Inc.'s Snapchat and TikTok, as essential for Facebook's future. Internal documents show that the number of young people on Facebook in the U.S. has declined by 2% since 2019, with further declines expected at 4% over the next two years. These young users are also sharing less than they did on Facebook a year ago and sending fewer messages, according to documents collected by former employee Frances Haugen. Singh commented, "It's clear they are losing engagement with the younger age group," although he added, "This doesn’t hurt them in terms of their ad revenues because they have a more mature business."
**Facebook Papers**
Zuckerberg also fervently defended his company’s efforts to combat issues on its platform that were exposed by a wave of news reports based on documents gathered by Haugen. The documents, dubbed the "Facebook Papers," were submitted to the U.S. Securities and Exchange Commission and presented by Haugen's legal advisor to Congress in redacted form. The Facebook Papers serve as the basis for a series of reports published by The Wall Street Journal starting last month. The White House is demanding Facebook reform to protect user privacy. The company is fighting against accusations that it misled investors and the public about its efforts to tackle hate speech and misinformation, as well as how it handled the organization of the January 6 attack on the U.S. Capitol. Zuckerberg affirmed that the media coverage of the Facebook Papers was part of a "coordinated effort" to paint a negative and unbalanced picture of Facebook's operation of its platform, which he described as better than that of competitors. He stated, "Any fair report should make clear that these issues are not primarily about social media... this means that no matter what Facebook does, we will never be able to solve them on our own."
