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
BHIM to join e-commerce, competing with PhonePe and Google Pay
The government-supported payment software BHIM is getting ready to join t...
The latest version of X helps prevent deepfakes on social medi
To combat deepfakes and shallowfakes, Elon Musk revealed a new update t...
India and Namibia collaborate on a payment system similar to U
Once operational, the platform will enable digital transactions in Namibia,...
Sebi issues show-cause notices to six Adani group firms
Sebi issued show-cause notices to six Adani Group firms, including Adani ...
E-Magazine
TECHNOTAINMENT
Airtel Xstream Play strengthens regional content library, part
Bharti Airtel (“Airtel”), one of India’s leading telecommunications
ED attaches Raj Kundra, Shilpa Shetty’s Rs 97 crore worth as
The Enforcement Directorate (ED) has seized businessman Raj Kundra's pro
MOVERS & SHAKERS
Clover Infotech appointed Subham Banerjee as CDO
Clover Infotech has announced the appointment of Subham Banerjee as its Ch
Saviynt ropes in Sanjeevi Kumar as new Sales Director in India
The cloud-native identity and governance platform solutions provider Saviy
OPEN YOUR EYES
INTERVIEWS
Fire-Boltt innovates and introduces newer categories to make i
One of the biggest strengths and focus area of Fire-Boltt is innovation. Wi
Check Point takes pride in providing customers with the best c
Check Point has categorized its 80 products and technologies into four main
HOT PICK
COLORFUL rolls out an array of gaming laptops
COLORFUL launched its incredible series of COLORFUL EVOL P15 gaming laptop
Dell Technologies launches new AI-powered commercial PC portfo
Dell Technologies has launched the broadest portfolio of commercial AI lap
MAKE IN INDIA BRANDS
QUICK HEAL TECHNOLOGIES PVT. Ltd.
TAC SECURITY SOLUTIONS
FINOLEX INDUSTRIES LTD.
SECLORE TECHNOLOGY PVT. LTD.
EMINENT CIO'S OF INDIA
ICONS OF INDIA
Technology Icons Of India 2023: Dr. Sanjay Bahl
Sanjay Bahl is currently with the Indian Computer Emergency Response T...
Technology Icons Of India 2023: Lt Gen (Dr.) Rajesh Pant (Retd.)
LT Gen(Dr.) Rajesh Panth (Retd.), National cyber security coordination...
Technology Icons Of India 2023: Gautam Adani
Gautam Adani is the Founder and the Chairman of the Adani Group, an In...
PARTNER SPEAKERS
PSU
C-DOT enabling India in indigenous design, development and production of telecom technologies
An autonomous telecom R&D centre of Government of India, Center of Dev...
CSCs enabling rural India digitally empowered
Common service centres (CSCs) are digital access points under the Digi...
TCIL continues to strengthen India with its technology expertise
TCIL undertakes consultancy & turnkey projects in the field of Telecom...
VIDEOS
Top 25 Brands
Value-Added Distribution
INTEGRA MICRO SYSTEMS PVT. LTD.
Integra is a leading provider of innovative hi-technology products an...
WPG C&C COMPUTERS & PERIPHERALS PVT. LTD.
WPG C&C Computers & Peripherals (India) was incorporated in 2008 and ...
NETPOLEON SOLUTIONS
Netpoleon Group is a Value-Added Distributor (VAD) of Network Security...
ITFORUM 2024
WIITF 2024
CMO of the Year
WOMEN LEADERSHIP
EMINENT CIO's OF INDIA
TRENDS IN TECHNOLOGY
MORE VIDEOS
ADVERTISEMENTS
TECHNOLOGY DISRUPTION
UNICORNS REVOLUTIONISING
