Despite facing a slew of controversies this year – from the Cambridge Analytica scandal, accusations of spreading violence in some countries, and spreading fake news – Facebook seemed to be on track with sales projections and profit estimates. Until this week.
The social media platform’s second quarter earnings report showed it had lost approximately a million monthly users and 3 million daily users in Europe, with no user growth in the US. According to Facebook CEO Mark Zuckerberg, the implementation of the EU’s General Data Protection Regulation (GDPR) is to be blamed.
"GDPR was an important moment for our industry," Zuckerberg said on Wednesday. "Looking ahead, we will continue to invest heavily in security and privacy. This is our responsibility to keep people safe."
Facebook’s shareholders and investors began unfriending the social media platform after the company’s chief financial officer, David Wehner, predicted that revenue growth would continue to be slow for a while, sending Facebook share prices plummeting as much as 24%.
The company warned its investors that a huge financial injection would be required to buttress the business to address the controversies it’s currently facing, with revenue growth expected “to decline by high single-digit percentages from prior quarters”.
The drop in share price sent Mark Zuckerberg’s fortune tumbling by US$16.8 billion, which could send him sliding down the Bloomberg Billionaires Index.
While Facebook faces the worst week in the company’s history, it still holds the world’s largest repository of user information. And although the loss of active users in Europe has hit its advertising revenue as well, the company insists the advertising part of its business is still strong
According to the company, Facebook Messenger and WhatsApp show promise as new advertising platforms, although chief operating officer Sheryl Sandberg doesn’t believe they’ll contribute strongly for a few years yet.
Despite Facebook facing the hard truth behind user disenchantment, it still remains a profitable company and we definitely haven’t seen the last of it yet.