For Facebook, an Exclamation Point to Cap a Chaotic Year - eMarketer

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For Facebook, an Exclamation Point to Cap a Chaotic Year

2016 was marked by controversy and huge revenue gains

February 2, 2017

Facebook capped a tumultuous year by reporting that ad revenue jumped more than 50% in Q4 2016, but it also found itself on the wrong side of a court decision that could force it to pay $500 million in a lawsuit involving the company’s Oculus unit.

US Social Network Users, by Platform, 2017 (millions)

A jury in Dallas ruled that Facebook must pay $500 million to a video game publisher that claimed Oculus had stolen its technology.

The damage finding, large as it is, was dwarfed by Facebook’s Q4 revenue, which came in at $8.81 billion. Mobile advertising revenue accounted for 84% of total ad revenue, up from 80% a year earlier.

For Facebook, the financial results complete a chaotic year that put it in the center of a raging debate over whether the social platform had swayed the US election as a channel for “fake news.”

Founder Mark Zuckerberg referred to the controversy obliquely in the earnings statement, saying, “Our mission to connect the world is more important now than ever. Our business did well in 2016, but we have a lot of work ahead to help bring people together.”

Even as it weathered angry accusations about the election, Facebook was forced to issue a series of corrections regarding its usage metrics—which frustrated advertisers but, as is clear from the financial results, did not keep them from using the platform.

Looking ahead, Facebook has warned that revenue may not grow at the staggering pace seen previously, as it limits the number of ads in user feeds. That could be balanced by the addition of advertising in its Facebook Messenger platform, which it is experimenting with in two markets.

User growth, meanwhile, is tailing off, as the majority of internet users in the US and many other markets globally now use Facebook regularly. eMarketer expects the number of US Facebook users will increase just 2.7% in 2017, while Facebook user growth worldwide will be 7.9%.

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