Facebook is touting the fact that people are spending less time on its social network as a sign that a recent tweak to its news feed is working.
CEO Mark Zuckerberg said in a statement that Facebook “will be stronger over the long term” after noting that overall use of its service dropped by “roughly 50 million hours every day” since those changes went into effect. The revamp prioritizes posts from users’ friends and family over viral content and posts from large news publishers.
Initially, Wall Street did not initially react positively to the fourth-quarter earnings results and drop in its users’ daily engagement time, as Facebook’s shares briefly dipped. Eventually, Facebook’s stock rebounded, and ultimately jumped 1.3% in after-hours trading, thanks to the fact that the social networking giant also easily topped Wall Street forecasts for the company’s quarterly revenue, which increased by 47% from a year ago to $12.97 billion.
Investors also bucked up after Facebook executives stressed on an earnings call that the news feed changes may affect the amount of time users spend on the site, but that it would not drag down ad revenue or other ways the company makes money. Despite the fact that the changes reduced the amount of time users spent on Facebook by roughly 5%, chief operating officer Sheryl Sandberg said that “our business is strong” on the call, during which she and other Facebook executives also tried to calm any concerns about short-term declines in engagement.
Zuckerberg emphasized on the call that Facebook would be stronger because of the news feed changes. In a statement on Wednesday, he said the changes to Facebook would encourage “meaningful connections between people rather than passive consumption of content.”
The tech billionaire said later that he expects “the amount we actually interact with each other will go up over time” and that the changes would make Facebook more successful in the long-term. “By focusing on meaningful interactions, I believe that the time spent on Facebook will be more valuable,” Zuckerberg said on Wednesday’s earnings call. “If people interact more, it should lead to stronger community. When you care about something, you’re willing to see ads to experience it.”
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Facebook announced the changes to its news feed a few weeks ago and Zuckerberg was clear at the time that he was bracing for a drop in engagement, at least initially. “I expect the time people spend on Facebook and some measures of engagement will go down.”
The company’s fourth-quarter results also showed that Facebook’s number of daily active users actually dropped in the U.S. And Canada for the first time ever during that period, falling to 184 million from 185 million in the third quarter. It’s a troubling sign for the company, even though overall daily and monthly active users increased 14%—to 1.4 billion and 2.13 billion worldwide, respectively—from the same period last year.
Even as Facebook’s revenue and profits continue to climb, the company has faced ongoing criticism in recent years for the spread of misinformation and fake accounts on the social networking service, along with Facebook’s own recent admission that too much passive consumption of content on its site can harm mental health. The latter issue helped influence Facebook’s decision to tweak its news feed algorithm, while Zuckerberg has also talked recently about Facebook’s efforts to promote more “trustworthy” news sites along with local news organizations.
