The Daily Telegraph Wednesday 24 July 2019 ** 35
Can Facebook stop its users from switching off?
A
year ago, Mark
Zuckerberg watched
almost $120bn (£96bn)
wiped off Facebook’s
market value in a matter
of hours. The drop – the
biggest single daily loss by a public
company in US history – came after
the social network revealed an
unexpected growth slowdown, as
users stayed away following the
Cambridge Analytica scandal.
Investors questioned if Facebook’s
days of supercharged growth were
coming to an end. But 12 months later,
those questions have receded. Shares
have climbed more than 60pc, close to
their peak a year ago.
“Facebook has rebounded and done
very well,” says Debra Williamson, an
analyst at eMarketer. “Generally,
Facebook is perceived very positively
by investors right now, which is
testament to their ability to turn
around a negative story and make
things seem like everything is going
well.”
As Facebook prepares to reveal its
second-quarter results later today,
investors will be looking for signs that
users remain engaged with the main
app, as well as with its Instagram and
WhatsApp services. Some believe
Facebook’s rebound is an illusion. As
Williamson points out, in reality,
“consumers are definitely feeling
restless about Facebook” – eMarketer
predicts that for the first time the
hours Americans spent on Facebook
fell last year. That contradicts
Facebook’s own impressive growth
statistics – the number of users who
log in monthly or daily.
Facebook has faced intense media
coverage highlighting its potentially
negative effects on privacy and
democracy, Williamson says. But a
more concerning trend may be
simpler: Facebook’s users could simply
be getting bored.
The Silicon Valley company can
handle slowing account sign-ups as
long as it can ensure it is keeping loyal
users engaged. But independent
figures suggest that the world has tired
of checking in, tagging friends in
holiday photos or arguing about their
political stance on their news feed.
Figures from eMarketer suggest the
average time US users spent on
permanently logged on to Facebook
through its smartphone apps, but
might only be checking when
someone messages us. That is not the
sort of meaningful interaction
advertisers want.
Meanwhile, stricter privacy
regulation has not only curbed
Facebook’s potential to gather data
about its users, but also made people
more aware of the information the
company has on them.
If both Facebook and Instagram are
in decline, at least in its most lucrative
market, then what about WhatsApp?
The company’s messaging app has
become one of the world’s main ways
to communicate, replacing SMS and
voice calls. Its group conversation
function has become the popular
method for families, colleagues and
old school friends to stay in touch.
However, the app has become a
victim of its own success in India
where it has been highlighted as one
of the main tools for spreading fake
news, with health professionals
warning that its use to spread
anti-vaccination material may cause a
health crisis.
Facebook was forced to limit the
times a message could be resent after
public lynchings followed rumours
spread via the app.
The app is still yet to generate
revenue for Facebook, five years after
it was bought for $19bn. Facebook
hopes that will change next year when
it introduces adverts as well as its
cryptocurrency Libra, which will
allow payments through WhatsApp.
Facebook also faces resurgent
competition, in particular from
TikTok, the popular video app owned
by Chinese tech giant Bytedance.
Its primary function of sharing
videos poses a distinct threat to
Facebook, which is working on
bumping up video advertising, and
Instagram, which is trying to monetise
through Stories and IGTV.
Jessica Liu, social media analyst at
Forrester, says the rise of rivals should
not worry Facebook: “It is not a zero
sum game with social networks. If one
social network wins, it doesn’t mean
that the others automatically lose. All
can theoretically experience success in
today’s world.”
Other than user figures, tonight’s
results could reveal details about
Libra. Investors will be also be hoping
to learn about the terms of the $5bn
Federal Trade Commission fine that
Facebook is preparing to pay to settle
a US probe into the company’s privacy
practices.
But behind the fine and Libra,
investors will be searching for clues
that any decline in user activity has
affected Facebook’s revenue, or
threatens to become more entrenched.
That is likely to worry shareholders,
and Mr Zuckerberg, more than any
one-off financial penalty.Facebook a day will fall from 40 to 38
minutes – and next year it will fall
again. This is backed up by data from
analytics company Comscore that
suggests Americans are spending less
time on Facebook’s core product.
The company has long had a
back-up if lucrative users abandon
Facebook: its photosharing app
Instagram has grown immensely in
recent years while at the same time
avoiding many of Facebook’s
reputational problems.
The results tonight could give a
better indication of how Instagram is
performing, as well as new services
such as Instagram Checkout, which
lets users buy products within the app.
Such tools have helped the app
carve out a niche for fashion, beauty,style and nutrition, making it a
lucrative target for advertisers and
retailers. Analysts at Deutsche Bank
confirmed that “multiple digital ad
agencies” are spending more on
Instagram after taking part in a trial of
Instagram Checkout.
But figures suggest that Instagram is
seeing a similar drop in usage.
Comscore figures show the average
time US users spend on Instagram fell
by 9pc in the second quarter of the
year. The total time Americans spent
fell by 2pc, after increases of between
21pc and 32pc last year.
Facebook’s data paints a different
picture. The most recent report from
Audience Insights, which it shows to
marketers buying advertising, claims
that more people posted photos,commented on and liked content on
Facebook between January and July
than the period before.
Users have noticed Facebook
“nudging” them into interacting with
the app more in recent months. If you
scroll through Facebook’s video
discovery feature, Watch, you are
nudged to invite friends to a “Watch
Party” in which you can comment
while watching the same TV show.
It has added several prompts to
learn more about an advert that is
showing, or how to use a feature,
which means users are more likely to
navigate and tap through their mobile
screen rather than passively scroll
through the feed.
What counts as user engagement is
a tricky question. Many of us will beAs people spend less
time on the network
and rivals tempt
them away, Margi
Murphy reports from
San Francisco on the
giant’s fightback
Facebook’s
resurgent share
price masks a trend
for users to spend
less time on its
core productANAÏS MIMS FOR THE TELEGRAPHUS opens anti-trust investigation
into big-name tech companies
By Margi Murphy in San Francisco
THE US Department of Justice has
opened an investigation into whether
companies such as Amazon, Facebook
and Google have “stifled innovation” by
thwarting competition unlawfully.
The department’s anti-trust division
did not name the companies but an-
nounced last night that it was reviewing
market-leading “online platforms” to
see how they have come to power and
whether they engaged in illegal prac-
tices that reduced competition and
made it difficult for smaller companies
to thrive.
The investigation raises the prospect
that the companies could be fined,
forced to change their business models,
or in an extreme scenario, broken up.
The Justice Department said it had
received a number of complaints
against big tech companies that include
allegations surrounding search, social
media and retail services.
The investigation signals increasing
anti-technology rhetoric in Washing-
ton, which had long been considered an
ally of Silicon Valley. President Donald
Trump has repeatedly accused technol-
ogy companies of bias against Conserv-
atives, and presidential hopeful
Elizabeth Warren has pushed for the
break up of large tech companies, which
critics say have avoided the scrutiny of
the law for too long. There have been
concerns over Facebook, which oper-ates WhatsApp and Instagram, and
Google-owner Alphabet, which owns
numerous different companies across
different industries.
Assistant Attorney General Makan
Delrahim of the department’s anti-trust
division said: “Without the discipline of
meaningful market-based competition,
digital platforms may act in ways thatare not responsive to consumer de-
mands. The department’s anti-trust re-
view will explore these important
issues.”
In Europe, Google has already been
dealt three anti-trust fines from the EU
totalling €8.2bn (£7.4bn) in the past
three years. It found that Google abused
its dominance in the smartphone mar-
ket through its operating system, An-
droid, and that it forced its AdSense
customers to use only Google’s services.
The European Commission also found it
was unfairly promoting preferred retail-
ers on Google Shopping.
A Google spokesman pointed The Tel-
egraph to the testimony of Adam Cohen,
director of economic policy, during a US
hearing last week.
Mr Cohen had said: “In the face of in-
tense competition, we are proud of our
record of continued innovation. We
have helped reduce prices and expand
choice for consumers and merchants in
the US and around the world.
Shares in Facebook, Amazon and Al-
phabet fell between 1pc and 1.6pc after
the news.£7.4bn
The amount Google has already been
fined by the EU over the past three years
for unfair practicesVodafone taken to
High Court over 4G
network patents
Supply chain revamp for
IQE lifts British chipmaker
By James Cook
CARDIFF-BASED chipmaker IQE ex-
pects new supply chains in Asia to
protect it from the fallout of the trade
war between the US and China.
The Apple supplier said that it was
redeveloping its supply chains around
the world following delays caused by
Washington’s restrictions on Chinese
telecoms giant Huawei.
“This has had an impact on sales vol-
umes for IQE’s products, as global cus-
tomers adjust to these new supply
chain situations and IQE becomes
qualified in these new supply chains,”
the company said.
IQE operates manufacturing plants
outside of China, including factories
in the US, Europe, Taiwan and Singa-
pore. It said it had found a “major cus-
tomer” for chips produced in Taiwan,
and had received “significant addi-
tional orders” from a smartphone
producer in Asia. The deals appeared to
soothe investor concerns with shares
soaring by a quarter to almost 65p.
However, IQE’s share price is still lower
than it was in March when it fell after
worse than expected results.
Last month, the company warned
that 2019 revenues would be millions
below estimates.
Drew Nelson, IQE’s chief executive,
said at the time that it faced “unprece-
dented times” as the global semicon-
ductor market endures disruption
from political tensions. Dr Nelson had
said the breadth of IQE’s product range,new materials tech to be introduced
and its global manufacturing footprint
were “powerful mitigating factors”.
The business initially claimed in May
that the sanctions would have a “lim-
ited impact on our mid to long-term
revenue trajectory” but has since
warned of reductions in revenues and
sales as a result of the turmoil.By Matthew FieldVODAFONE faces a High Court patent
battle over its 4G emergency network
technology with a licensing firm that
has previously chased billions of
pounds in royalties from tech giants.
Germany’s private equity-backed
IPCom has issued a claim for in excess
of £100m. It claims Vodafone breached
a patent allowing mobile phones access
to the LTE network, including technol-
ogy giving emergency service calls pri-
ority. The case is set for November.
IPCom sued Apple for more than
€1.6bn (£1.3bn) over 3G technology but
the claim was dismissed in Germany in- It did win hundreds of millions in
euros from Deutsche Telekom in 2013.
The German firm owns more than
1,000 patents, largely acquired from
German technology giant Robert
Bosch. It is backed by private equity
including US investment management
firm Fortress Investment Group.
Vodafone said it “believes this patent
claim is misconceived, and we will
defend it vigorously”.
Technology Intelligence
The Silicon
Valle y
company
can handleslowing
account
sign-ups aslong as it
can ensurethat it is
keeping loyal
usersengaged
‘It had a major customer for
chips produced in Taiwanand significant orders from
a smartphone producer’РЕЛИЗ ПОДГОТОВИЛА ГРУППА "What's News" VK.COM/WSNWS