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Snap Forecasts Zero Revenue Growth for Q4 2022; Shares Crash Dragging Meta, Alphabet, Twitter

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Shares of Snap sank about 25 percent before the bell on Friday, after the owner of photo messaging app Snapchat forecast zero revenue growth for the current quarter, triggering a slide in other social media stocks dependent on advertising revenue.

YouTube-parent Alphabet, Facebook-parent Meta Platform, Pinterest and Twitter all slid between 1.7 percent and 9.2 percent in premarket trade.

“We believe Snap is facing increased competition, primarily from TikTok, both for time spent and increasingly for ad dollars, which is compounding the challenges of a softer macro and Apple’s (privacy-related) changes,” Atlantic Equities analysts said in a note.

The brokerage said competition is likely to continue to increase in 2023.

Snap, on Thursday, reported its slowest revenue growth as a public company for the latest quarter and forecast no revenue growth in the typically busy holiday quarter, while Wall Street analysts were expecting a 3.3 percent rise, according to Refinitiv data.

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The company had said in August it would lay off 20 percent of its employees and discontinue projects such as gaming and a flying camera drone to cut costs and brace for a deteriorating economy.

“Given SNAP had been growing headcount over 30 percent y/y for 4 straight quarters, we wonder if the company can execute on its lofty growth objectives with a 20 percent smaller employee base,” Jefferies analysts said in a note.

Snap’s stock, now trading at $8.06 (roughly Rs. 600), has lost about 77 percent of its value so far this year, while Alphabet, Meta and Pinterest have lost between 30 percent and 60 percent. Twitter, however, has gained 21 percent on the prospect of billionaire Elon Musk buying the company.

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© Thomson Reuters 2022


Apple launched the iPad Pro (2022) and the iPad (2022) alongside the new Apple TV this week. We discuss the company’s latest products, along with our review of the iPhone 14 Pro on Orbital, the Gadgets 360 podcast. Orbital is available on Spotify, Gaana, JioSaavn, Google Podcasts, Apple Podcasts, Amazon Music and wherever you get your podcasts.

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Mark Zuckerberg Calls Apple’s App Store Moderation Rules a ‘Conflict of Interest’

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Meta Chief Executive Officer Mark Zuckerberg said that Apple’s App Store presents a conflict of interest, adding his voice to a flurry of criticism of the iPhone maker’s software policies. “It is problematic for one company to be able to control what app experiences end up on a device,” Zuckerberg said Wednesday in an interview at the New York Times DealBook conference. The “vast majority of profits in mobile ecosystem go toward Apple,” he added.

App Store policies and fees implemented by Apple, and to a lesser extent Google parent Alphabet, have long been a point of contention for technology companies looking to reach broad mobile audiences. Billionaire Elon Musk added to the chorus after his acquisition of Twitter, sending a flurry of tweets this week denouncing Apple’s fees and restrictions on what apps can be sold.

Zuckerberg echoed some of Musk’s points. He called Apple’s content moderation rules for apps a “conflict of interest” since they are often pointed at rivals. It makes Apple “not just a governor looking out for people’s interests.” Revenue at Meta, which owns social networks Facebook and Instagram, has taken a hit since Apple tightened its privacy policies to restrict how users can be tracked and targeted with advertising.

Though Zuckerberg seemed to back up his objection to Apple’s policies, Musk on Wednesday walked back some of his criticism of the iPhone maker, saying he met with CEO Tim Cook at the company’s headquarters and had a “good conversation” that resolved a “misunderstanding” about Twitter’s place in the App Store.

As for Musk’s approach to running Twitter, Zuckerberg hedged his comments — he said he guesses that some approaches will work and others won’t. “I think it’ll be very interesting to see how this plays out,” he said.

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On whether Meta would allow former US President Donald Trump back onto Facebook, Zuckerberg didn’t answer, but pointed to prior guidance the company has gotten from its external Oversight Board, weighing in on difficult content decisions. Meta is expected to make a decision in January.

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Wall Street has become increasingly bearish on Meta’s investment in its money-losing virtual reality business amid slowing ad revenue. Earlier this month, Zuckerberg said the company would slash more than 11,000 jobs, and took personal responsibility for decisions that led to the need to cut costs. In April, Meta reported its first-ever quarterly revenue drop.

The interview Wednesday began with a recorded conversation between Zuckerberg and the moderator as avatars in the immersive digital world the company calls the metaverse. Still, Zuckerberg said the idea that Meta is wholly focused on the metaverse is “basically wrong.” Messaging program WhatsApp will be his next major monetization target, he said, as that platform is “largely untapped.”

He cited progress in Reels, the company’s short video feature, saying some estimates show it has half the traffic of viral video-sharing app TikTok outside of China.

Zuckerberg also raised the issue of TikTok’s ownership by Beijing-based ByteDance, adding that there are “real questions” about the influence of China’s government on TikTok. “In a lot of countries, all data goes to the government,” the CEO said.

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© 2022 Bloomberg L.P.


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Twitter Faces Ban Over Content Moderation, EU Chief Warns Elon Musk: Report

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The European Union has threatened Elon Musk’s Twitter with a ban unless the billionaire abides by its strict rules on content moderation, setting up a regulatory battle over the future of the social media platform, the Financial Times reported on Wednesday.

EU industry chief Thierry Breton made the threat during a video meeting with Musk on Wednesday, the FT reported, citing people with knowledge of the conversation.

Breton told Musk he must adhere to a checklist of rules, including ditching an “arbitrary” approach to reinstating banned users and agreeing to an “extensive independent audit” of the platform by next year, according to the report.

Twitter and the EU did not immediately respond to Reuters’ requests for comment.

Breton had previously urged Musk to comply with landmark EU rules against online hate speech and disinformation. The European Commission’s justice chief Didier Reynders had also voiced similar comments.

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Reuters reported in October that Elon Musk had assured the European Commission that Twitter will continue to abide by tough European rules on illegal online content policing now the social network has passed under his ownership.

The assurances from Musk appeared to suggest a pragmatic attitude from the CEO of electric car maker Tesla, who has previously expressed his desire to see Twitter have fewer limits on content that can be posted.

In May this year, EU industry chief Thierry Breton met Musk in Texas and the two signalled agreement on EU digital media regulation ahead of Musk’s purchase of Twitter.

The previous meeting came weeks after the world’s richest man clinched a deal to buy the social media company for $44 billion (roughly Rs. 3,40,270 crore) in cash.

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In a video with the two men posted on Twitter by Breton, the EU official tells Musk that he explained the Digital Services Act to Musk. “It fits pretty well with what you think we should do,” Breton tells Musk in a tweet that included the hashtag #DSA.

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“I think it’s exactly aligned with my thinking,” Musk responds.

The two did not go into detail on the new law, which levies hefty fines on companies if they do not control illegal content. The rules ban advertising aimed at children or based on religion, gender, race, and political opinions, for example.

© Thomson Reuters 2022


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Twitter Not Safer Under Elon Musk Leadership, Says Former Head of Trust and Safety

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Twitter’s former head of trust and safety Yoel Roth on Tuesday said the social media company was not safer under new owner Elon Musk, warning in his first interview since resigning this month that the company no longer had enough staff for safety work.

Roth had tweeted after Musk’s takeover that by some measures, Twitter safety had improved under the billionaire’s ownership.

Asked in an interview at the Knight Foundation conference on Tuesday whether he still felt that way, Roth said: “No.”

Roth was a Twitter veteran who helped steer the social media platform through several watershed decisions, including the move to permanently suspend its most famous user, former US President Donald Trump, last year.

His departure further rattled advertisers, many of whom backed away from Twitter after Musk laid off half of the staff, including many involved with content moderation.

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Before Musk assumed the helm at Twitter, about 2,200 people globally were focused on content moderation work, said Roth. He said he did not know the number after the acquisition because the corporate directory had been turned off.

Twitter under Musk began to stray from its adherence to written and publicly available policies toward content decisions made unilaterally by Musk, which Roth cited as a reason for his resignation.

“One of my limits was if Twitter starts being ruled by dictatorial edict rather than by policy … there’s no longer a need for me in my role, doing what I do,” he said.

The revamp of the Twitter Blue premium subscription, which would allow users to pay for a verified checkmark on their account, launched despite warnings and advice from the trust and safety team, Roth said.

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The launch was quickly beset by spammers impersonating major public companies such as Eli Lilly, Nestle and Lockheed Martin.

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Roth also said Tuesday that Twitter erred in restricting the dissemination of a New York Post article that made claims about then-Democratic presidential candidate Joe Biden’s son shortly before the 2020 presidential election.

But he defended Twitter’s decision to permanently suspend Trump for risk of further incitement of violence after the riot at the US Capitol on January 6, 2021.

“We saw the clearest possible example of what it looked like for things to move from online to off,” Roth said. “We saw people dead in the Capitol.”

Musk tweeted on November 19 that Trump’s account would be reinstated after a slim majority voted in favour of the move in a surprise Twitter poll.

© Thomson Reuters 2022

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