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
Legal Battle Over IT Act Intensifies Amid Musk’s India Plans
The outcome of the legal dispute between X Corp and the Indian government c...
Wipro inks 10-year deal with Phoenix Group's ReAssure UK worth
The agreement, executed through Wipro and its 100% subsidiary,...
Centre announces that DPDP Rules nearing Finalisation by April
The government seeks to refine the rules for robust data protection, ensuri...
Home Ministry cracks down on PoS agents in digital arrest scam
Digital arrest scams are a growing cybercrime where victims are coerced or ...
E-Magazine
TECHNOTAINMENT
Hrithik Roshan to endorse RuPay as Brand Ambassador
RuPay is reportedly planning to feature Bollywood superstar Hrithik Rosha
India Today Group launches – AI Pop Stars
Staying true to our industry leadership position in using cutting-edge tech
MOVERS & SHAKERS
TelioLabs ropes in Phaniraj V A as the Group CEO
TelioLabs has announced the onboarding of Phaniraj V A as its new Group CE
Wipro Appoints Amit Kumar as Managing Partner and Global Head
Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO), a leading technology s
OPEN YOUR EYES
INTERVIEWS
Cisco building a trusted and resilient future for the nation
Security is foundational to everything Cisco does and customers insist on e
In India, 88% of Indian business leaders are planning to inves
As we move through 2024, it has become increasingly clear that AI is not ju
HOT PICK
MSI Announces the availability of RTX 50 series of laptops in
MSI, the innovative computing manufacturer in gaming, creator
Nothing Phone (3a) goes on sale today, starting at Rs 19,999
The phone was launched on March 4, featuring a 50MP main, ultra-wide, and t
MAKE IN INDIA BRANDS
LAVA INTERNATIONAL LTD.
ALPHAMAX TECHNOLOGIES PVT. LTD.
SECUREYE SERVICES PVT. LTD.
BEETEL TELETECH LTD.
EMINENT CIO'S OF INDIA
ICONS OF INDIA
Icons Of India : Dr. Arvind Gupta
Arvind Gupta is the Head and Co-Founder of the Digital India Foundatio...
Icons Of India : Debjani Ghosh
Debjani Ghosh is the President of the National Association of Software...
Icons Of India : Kumar Mangalam Birla
Aditya Birla Group chairman Kumar Mangalam Birla recently made a comeb...
PARTNER SPEAKERS
PSU
STPI - Software Technology Parks of India
STPI promotes and facilitates the growth of the IT and ITES industry i...
TCIL - Telecommunications Consultants India Limited
TCIL is a government-owned engineering and consultancy company...
IFFCO - Indian Farmers Fertiliser Cooperative
IFFCO operates as a cooperative society owned and controlled by its fa...
VIDEOS
Top 25 Brands
Global Indian industry
Indian Tech Talent Excelling The Tech World - Thomas Kurian, CEO- Google Cloud
Thomas Kurian, the CEO of Google Cloud, has been instrumental in expan...
Indian Tech Talent Excelling The Tech World - NIKESH ARORA, Chairman CEO - Palo Alto Networks
Nikesh Arora, the Chairman and CEO of Palo Alto Networks, is steering ...
Indian Tech Talent Excelling The Tech World - Shantanu Narayen, CEO- Adobe Systems Incorporated
Shantanu Narayen, CEO of Adobe Systems Incorporated, is renowned for h...
ITFORUM 2025
CMO of the Year
WOMEN LEADERSHIP
IMAGE GALLERY
TRENDS IN TECHNOLOGY
MORE VIDEOS
ADVERTISEMENTS
TECHNOLOGY DISRUPTION
UNICORNS REVOLUTIONISING
of images belongs to the respective copyright holders
