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Its dependence on advertising revenues leaves Facebook’s parent Meta the most exposed of the Big Tech companies to an economic downturn and, sure enough, the social media company has just recorded its first year-on-year quarterly revenue decline.
Revenues for the April-June period were $28.82bn, down 1 per cent on the same period in 2021 and slightly below the analyst consensus. Operating profit of $11bn in the quarter was down $4bn from a year ago and about half of Google’s second-quarter result.
Dave Lee reports it also offered investors a gloomy outlook as advertisers pulled back on spending. Chief executive Mark Zuckerberg said of the remainder of 2022.: “We seem to have entered an economic downturn that will have a broad impact on the digital advertising business, and it’s always hard to predict how deep or how long these cycles will be. But I’d say that the situation seems worse than it did.”
Meta shares are down more than 6 per cent on the news and are worth less than half last year’s peak. Lex says investors are set to view more critically other parts of the business that are not producing profits, such as the push into the metaverse.
Facebook is still faring much better than Twitter and Snap, who reported a revenue decline and bigger losses respectively last week due to an advertising reversal.
Twitter employees, former staffers and ad industry executives have told our reporters that chief executive Parag Agrawal has sought to spend extra time with advertisers in recent months to answer their mounting concerns about uncertainty around the business, fuelled by Elon Musk’s bid and subsequent attempt to withdraw his $44bn offer for the company.
“Everyone’s given up on leadership,” one senior Twitter employee said, speaking on condition of anonymity. “It seems like Twitter’s take is ‘This man is awful [but] he should run the company’. Either way it seems like the loser gets Twitter.”
The Internet of (Five) Things
1. FTC tries to block Meta VR deal
The US competition regulator is suing to block Meta from acquiring a virtual reality fitness start-up, accusing it of “illegally” trying to “buy its way to the top” of the nascent metaverse sector. The Federal Trade Commission’s case centres on a deal struck last year to acquire Within, the creator of a popular virtual reality fitness game, Supernatural.
2. DeepMind cracks protein structures
Artificial intelligence has surpassed the limits of scientific knowledge by predicting the shape of almost every known protein, a breakthrough that will significantly accelerate the time required to make biological discoveries. The research was done by London-based AI company DeepMind — owned by Google parent Alphabet — which used its AlphaFold algorithm to build the most complete and accurate database yet of the more than 200mn known proteins.
3. Missfresh misses paying staff
Missfresh, a Chinese grocery delivery start-up once valued at $3bn, told hundreds of employees that it had run out of cash, as a group of unpaid suppliers protested at its Beijing offices. An executive at the Tiger Global-backed company told employees on a hastily arranged call that an expected investment from a coal mining group had not materialised, and that it could not pay overdue June salaries.
4. BT boss takes hard line on strike
The chief executive of Britain’s largest telecoms group said a £1,500 pay deal offered to frontline staff was “history” and not open for negotiation as he downplayed the likely impact of tens of thousands of staff members striking on Friday and Monday. Meanwhile, Juliet Riddell feels a strange sense of loss over her parents abandoning their landline number.
5. Legal tech gets VC boost
Venture capital money has been pouring into legal tech start-ups, particularly in the US. Investors are waking up to the potential rewards from tech that makes a lawyer’s life easier, whether that is esignature tools or software to draft and review contracts. Jane Croft looks at the scene as part of our Accelerating Business special report.
Tech tools — Somnox 2
Controlling your breathing can be one of the most effective methods of relaxing in order to get off to sleep and the Somnox 2 is a plush and cuddly companion that trains you to inhale and exhale away any stress and anxiety. About the size of a large rugby ball, the Somnox is comfortable to hug with its memory foam padding and soft fabric. It has an air bladder inside that rises and falls, allowing you to sync your breathing with it. A built-in speaker plays soothing ambient sounds, or your own choice of music through its Bluetooth connection. The accompanying app allows you to choose exercises such as 4-7-8 breathing, the box breathing pattern and coherence slow-breathing. I found myself nodding off within a few minutes, although my insomniac wife found it less effective and has her own breathing disciplines. The Somnox 2 is made in Holland and sells in the US for $599.
