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Facebook reserves $3B for FTC fine, but keeps growing with 2.38B users in Q1 – TechCrunch

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A massive penalty hangs over Facebook’s head, but it otherwise had a very strong Q1 earnings report. Facebook reached 2.38 billion monthly users, up 2.5 percent from 2.32 billion in Q4 2018 when it grew 2.2 percent, and it now has 1.56 billion daily active users, up 2.63 percent from 1.52 billion last quarter when it grew 2 percent. Facebook pulled in $15.08 in revenue, up 26 percent year-over-year compared to Refinitiv’s consensus estimates of $14.98 billion in revenue.

Facebook recorded earnings per share of $0.85 compared to estimates of $1.63 EPS. However, that’s because Facebook has set aside $3 billion to cover a potential FTC fine that it’s still resolving. Without that fine, it would have had an EPS of $1.89. Despite the set-aside, Facebook still earned $2.429 billion in profit, though that’s down from $4.988 a year ago and $6.8 billion in Q4 2018.

Facebook’s share price rose 8.3 percent to $197.84 after closing before earnings at $182.58, way up from its recent low of $124.06 in December. Wall Street seems to have already priced in the potential FTC fine. Facebook has agreed to strict oversight of how it handled user privacy in a 2011 deal with the FTC. It promised to not misrepresent its privacy practices or change privacy controls without user permission, and it’s now negotiating the fine for potentially breaking those terms.

Facebook wrote in its earnings release about the FTC fine that:

“In the first quarter of 2019, we reasonably estimated a probable loss and recorded an accrual of $3.0 billion in connection with the inquiry of the FTC into our platform and user data practices, which accrual is included in accrued expenses and other current liabilities on our condensed consolidated balance sheet. We estimate that the range of loss in this matter is $3.0 billion to $5.0 billion. The matter remains unresolved, and there can be no assurance as to the timing or the terms of any final outcome.”

It’s possible Facebook escapes with a lesser fine that would likely still dwarf Google’s $22.5 million penalty for violating an FTC privacy deal. But it also might have to drag down a future quarter of earnings if the fine ranges as high as $5 billion or larger. Though Facebook does have $45.2 billion in cash and securities on hand to pay that fine and make any necessary acquisitions. Facebook’s headcount grew 36% year-over-year to 37,773 as it staffs up its security team, but it still has a 22 percent operating margin.

Facebook has managed to hold on to its 66 percent daily to monthly user ratio, showing people aren’t necessarily using it less despite all the backlash. It added 39 million daily users, compared to Snapchat’s addition of 4 million in Q1. But Facebook failed to grow past its 186 million daily user count in the US & Canada where it got stuck last quarter, but at least it added 4 million in its lucrative Europe market, plus it had atypically large gains in Asia-Pacific and the Rest Of World regions. As for monetization, Facebook made modest gains in average revenue per user across markets compared to Q3 2018 (excluding the holiday-laden Q4). Europe did especially well, growing ARPU 8.2 percent.

Zooming out, Facebook now has over 2.7 billion total mothly users across its family of Facebook, Messenger, Instagram, and WhatsApp, the same as last quarter. 2.1 billion people use at least one of those apps daily, up from 2 billion last quarter. Instagram Stories, WhatsApp Status, and Facebook Stories on Facebook and Messenger combined each now have 500 million daily users. Facebook also now has 3 million advertisers buying Stories ads across its apps, so the ephemeral format will likely start to contribute meaningful revenue soon.

Color From The Earnings Call

In March, Zuckerberg announced plans for a massive privacy-centric overhaul of Facebook to turn it from just a townsquare into also a “living room”. That means unifying its messaging apps with a backend that supports end-to-end encryption, and promoting ephemerality in content sharing and communication. That could help deter calls for regulation, make Facebook harder to break up, and help it stay ahead of competitors like Snapchat, but will also be a massive product and engineering undertaking.

Today, Zuckerberg focused on providing more details to this plan to expand privacy, encryption, impermanence, safety, interoperability, and secure data storage. He stressed that given people traditionally spend more time communicating and consuming content privately than publicly, strengthening Facebook’s “living room” could boost its business. Zuckerberg noted that since Facebook already doesn’t use messaging content for ad targeting and recent content is more useful for its business, encryption and impermanence shouldn’t be a big risk either. Refusing to store data in countries with poor records of privacy could lead to Facebook being banned there, which Zuckerberg admitted is a major business threat, but one it’s grappled with over content policies for years.

In fact, impermanence is already earning money for Facebook. It said that Instagram Stories was the greatest contributor of additional ad impressions this quarter. And while the Facebook and Instagram feeds are already jammed full of ads with little room for more, Facebook says there’s still room to significantly increase Instagram Stories ad load.

Another highlight of the call was Zuckerberg’s discussion of Facebook’s payments strategy. He confirmed that Facebook plans to build out ways for people to pay merchants through its messaging apps. “So I think that what we’re going to end up seeing is building out payments, which is going to end up being something that we do country by country . . . The goal is to have something where you could do discovery through the broader townsquare-like platforms like Instagram and Facebook, and then you can complete the transactions and follow up with businesses individually and have an ongoing relationship through Messenger and WhatsApp.”

This is the first earnings report of a full quarter following Facebook’s worst-ever security breach in September that impacted 50 million users, shaking confidence in the social network’s privacy and security. It’s also the first full quarter in which Facebook sold its own branded hardware — its Portal video chat device that was well received by critics except for the fact that it was made by Facebook.

Yet the defining story continues to be Facebook’s struggle with claims that its user research and developer platform efforts endangered user privacy and steamrolled competitors in search of growth. That includes TechCrunch’s big scoop that Facebook was paying teens to snoop on their data with a VPN app, which eventually led Facebook to shut down its Onavo user surveillance apps. The fact that Facebook isn’t losing massive numbers of users after years of sustained scandals is a testament to how deeply it’s woven itself into people’s lives.

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Google winds down feature that put playable podcasts directly in search results • TechCrunch

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Google confirmed it’s putting an end to a feature that allowed users to access playable podcasts directly from the Google Search results in favor of offering podcast recommendations. Officially launched in 2019, the feature surfaced podcasts when they matched a user’s query, including in those cases where a user specifically included the word “podcast” in their search terms. But a few weeks ago, some creators began noticing the podcast carousels had disappeared from Google Search results — and now the company is explaining why that’s the case.

The disappearance was first spotted by Podnews.net, which noted in January that searches for podcasts no longer returned any play buttons or links to Google Podcasts itself. When they tested the feature by searching for “history podcasts” they were only provided with a list of shows alongside links to podcast reviews, Apple Podcast pages, and other places to stream.

At the time, Google simply told the site the feature was working “as intended.”

But a new announcement in Google Podcasts Manager indicates the feature is officially being shut down as of February 13.

“Google Search will stop showing podcast carousels by February 13. As a result, clicks and impressions in How people find your show will drop to zero after that date,” the message states. Podcasters are also being instructed to download any historical data they want to keep in advance of this final closure.

Of course, as many podcasters already discovered, their metrics had already declined as the feature was being wound down.

To be fair, playable podcasts in search wasn’t a remarkably well-executed product as it didn’t offer a way to do much more than click to play an episode. On YouTube’s Podcasts vertical, by comparison, podcast creators can create an index to the various parts of an episode, allowing users to jump directly to the section they wanted to hear. Plus, users can watch a video of the podcast, if the creator chooses to film.

YouTube has also proven to be more popular than Google Podcasts and other competitors. In a 2022 market survey of podcast listeners, for example, YouTube came out ahead of Spotify, Apple Podcasts, and Google Podcasts as users’ preferred podcast platform. Though many podcast market analysis reports don’t consider YouTube when comparing the popularity of various podcast apps, one recent report by Buzzsprout at least suggests that using web browser as a listening app had a very small market share of just 3.5%. And that share had barely increased over the years, despite Google’s indexing of shows.

Reached for comment, Google explained its decision to wind down playable podcasts in Search will allow it to focus on a new addition instead.

“Our existing podcast features will gradually be replaced with a new, single feature, What to Podcast,” a spokesperson told us. They noted the feature is currently live on mobile for English users in the U.S. “This feature provides detailed information about podcasts, links to listen to shows on different platforms, and links to podcasters’ own websites, where available,” the spokesperson added.

According to the help documentation, these recommendations will be personalized to the user if they’re signed into their Google account and will factor in things like the user’s past searches and browsing history, saved podcasts and other podcast preferences. The personalized results can be turned off, however, if the user wants more generic suggestions, Google says.

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Roku partners with DoorDash to give users 6 months of free DashPass and shoppable ads • TechCrunch

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Today, Roku and DoorDash announced a multi-year partnership in the U.S., Canada and Mexico to give Roku users six months of complimentary DashPass, as well as interactive shoppable ads for DoorDash businesses in the U.S.

Now, new and existing Roku members with linked streaming or smart home devices can get $0 delivery fees on DoorDash orders. DoorDash’s membership program also provides exclusive access to DashPass-only promotions and priority customer support on both DoorDash and the Caviar app, a delivery platform for higher-end restaurants that DoorDash acquired in 2019. After the free six-month trial ends for Roku customers, DashPass costs $9.99 per month.

Plus, for the first time, DoorDash merchants can buy interactive shoppable ads and place click-to-order offers within the ad, the companies claim. This is also the first time that restaurant advertisers can partner with both the streaming company and the food delivery platform to target, measure and attribute TV streaming ads on Roku, the companies added.

Once a user clicks on a TV ad offer, they are sent an SMS message or email directing them to the DoorDash app to redeem the promotion. For instance, if Roku customers see this Wendy’s ad (in the picture below), they get $5 off with any Wendy’s purchase of $15 or more. Wendy’s is the first restaurant brand to partner with DoorDash for this new Roku partnership. The offer ends on March 12.

Image Credits: Roku

“We are thrilled to partner with Roku on this unique partnership. While this offer unlocks DashPass benefits and perks for Roku users everywhere, it also provides our merchant partners with an opportunity to promote DoorDash offers through TV streaming. Consumers can conveniently and affordably get the best of their neighborhood delivered to their door, while brands can reach diners at the right time and drive instant conversion from the comfort of the living room,” Rob Edell, GM and head of Consumer Engagement at DoorDash, said in a statement.

The partnership was a smart move for both companies. According to Roku’s internal research, one in three Roku users orders take-out or food delivery weekly. Also, 36% of Roku users have an interest in shoppable components like scannable QR codes or text messages.

“Streaming and delivery just go together, which is why we’re making it easier than ever for Roku users to order their favorite food right from their TV,” Gidon Katz, president, Consumer Experience at Roku, said in a statement.

Roku and Walmart announced a similar partnership in June 2022, which allowed viewers to purchase Walmart items while streaming on Roku devices. The biggest difference is that Roku users can buy products directly on the screen instead of being redirected to Walmart.com.

Roku recently reached a new milestone, surpassing 70 million active accounts globally.

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TikTok is crushing YouTube in annual study of kids’ and teens’ app usage • TechCrunch

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For another year in a row, TikTok has found itself as the social app kids and teens are spending the most time using throughout the day, even outpacing YouTube. According to an ongoing annual review of kids’ and teens’ app usage and behavior globally, the younger demographic — minors ranging in ages from 4 through 18 —  began to watch more TikTok than YouTube on an average daily basis starting in June 2020 and TikTok’s numbers have continued to grow ever since.

In June 2020, TikTok overtook YouTube for the first time, with kids watching an average of 82 minutes per day on TikTok versus an average of 75 minutes per day on YouTube, according to new data from parental control software maker Qustodio.

This past year, the gulf between the two widened, it said, as kids in 2022 saw their average daily use of TikTok climb to a whopping 107 minutes, or 60% longer than the time they spent watching video content on YouTube (67 minutes).

TikTok not only topped the average daily usage of other video apps, like Netflix (48 mins.) and Disney+ (40 mins.), it also came out ahead of other social apps, including Snapchat (72 mins.), Instagram (45 mins.), Facebook (20 mins.), Pinterest (16 mins.) and Twitter (10 mins.) among the under-18 crowd.

Image Credits: Qustodio

Meanwhile, as the U.S. grapples with TikTok bans across college campuses and in the government, the app’s addictive video content was viewed, on average, 113 minutes per day in this market, compared with 77 minutes per day on YouTube, 52 minutes for Netflix, 90 minutes on Snapchat, and 20 minutes on Pinterest.

There is still some good news for YouTube, though. The study found that the average daily time spent on YouTube was up by 20% year-over-year, to reach 67 minutes — the highest number since Qustodio began reporting on annual trends in 2019. YouTube also gained sizable global market share and mindshare last year, as 63% of kids worldwide were using the service in 2022. The report additionally broke down a few top markets in more detail, noting that 60% of U.S. kids watch YouTube, compared with 67% in the U.K., 73% in Spain, and 58% in Australia. The second most popular video service was Netflix, with 39% popularity among kids worldwide.

Overall, kids under 18 managed to increase their video content viewing by 18% in 2022, watching 45 minutes daily, on average, across long-form video services like YouTube, Netflix, Disney+, Prime Videos, and others.

Other winners for the year included Netflix and Amazon Prime Video, which saw 7% and 10% gains in popularity, respectively — meaning if they were used at some point by these under-18 years. But in terms of average daily minutes spent, Prime Video dropped 15% year-over-year to 34 minutes. Disney+ declined by the same percentage, dropping from a 47-minute average daily to 40 minutes in 2022. Twitch also suffered last year with only 11% of under-18-year-olds tuning in compared with 16% in 2021.

Image Credits: Qustodio

TikTok’s growth among the younger demographic has forced big tech giants to combat the threat with short-form video of their own. YouTube Shorts is YouTube’s solution to the problem. Google this month reported Shorts crossed 50 billion daily views. Instagram, of course, has been cramming Reels into its experience — and receiving some backlash over the changes. Instagram head Adam Mosseri even admitted earlier this year, the platform has been pushing “too many videos” on users.

It’s not clear this shoehorning of Reels into Instagram has paid off with the younger crowd. In Qustodio’s analysis, the app fell out of the top 5 most popular social media apps in the U.S., U.K., and Australia with users under 18. It still ranked No. 5 globally, however, behind TikTok, Facebook (38% of kids used it globally!), Snapchat, and Pinterest.

Though the software firm chose to analyze Roblox among other video games, it’s worth also noting the game is a social network of sorts — and an extremely popular destination among kids worldwide. The gaming platform was popular with 59% of kids globally, and average daily time spent grew 4% year-over-year to 180 minutes. That’s larger than any other games, including the No. 2 game Minecraft (up 37% to 48 mins.), Clash Royale, Brawl Stars, Clash of Clans and What Would You Choose?

Qustodio’s full report digs into other app trends as well, including Twitter’s 7% growth in popularity worldwide, which also led to it appearing in the list of most-blocked apps by parents in 2022 for the first time. It also delved into educational app usage where Google Classroom ruled on school devices, and Duolingo remained a top app on personal devices. And it looked at communication, where WhatsApp and Discord edged out Messages as the most popular way to chat with friends, though Zoom saw more minutes spent daily.

While the report’s data is limited to the app usage Quostido tracks on its own platform, it’s a sizable group that includes over 400,000 global families with children in the Gen Z and/or Gen Alpha demographic. It additionally sureveyed 1,617 parents directly to ask them about how they manage their children’s access to technology.

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