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Chat bots were central to Facebook Messenger’s strategy three years ago. Now they’re being hidden from view in the app along with games and businesses. Facebook Messenger is now removing the Discover tab as it focuses on speed and simplicity instead of broad utility like China’s WeChat.
The changes are part of a larger Messenger redesign that reorients the People tab around Stories as Facebook continues to try to dominate the ephemeral social media format it copied from Snapchat. The People tab now defaults to a full-screen sub-tab of friends’ Stories, and requires a tap over to the Active sub tab to see which friends are online now.

The changes could push users to spend more time visually communicating with friends and consuming content than exploring chat bots for shopping, connecting with businesses and playing games. That in turn could help Facebook earn more money from Messenger as it’s now showing Stories ads.
TechCrunch was tipped off to the redesign by social media director Jeff Higgins, who provided us with extensive screenshots of the update. These show the absence of Discover tab, the switch to just Chat and People tabs and the People sub-tabs for Stories and Active. We poked around some more and noticed the Instant Games and Transportation options missing from the chat composer’s utility tray. That formerly offered quick Uber and Lyft hailing. Messenger’s M Suggestions also no longer recommend the Transportation feature.
When we asked Messenger about the changes, a spokesperson confirmed that this redesign will soon start rolling out, removing Discover and splitting the People tab. Some users already have the update, and more will likely get it this week. They noted that Facebook had announced last August that it planned to eventually axe Discover, and that the added emphasis on Stories was motivated by users’ affinity for the ephemeral social media format. They also told us that Transportation was removed in late 2017, and Instant Games’ removal from the composer is part of the migration to Facebook Gaming announced last July.
A look at the old Messenger Discover tab that’s being removed
Chat bots, businesses and games are being hidden, but not completely banished from Messenger. They’ll still be accessible if users purposefully seek them through the Messenger search bar, Pages and ads on Facebook, buttons to start conversations on businesses’ websites, and m.me URL that create QR codes which open to business accounts in Messenger. The spokesperson diplomatically claimed that businesses are still an important part of Messenger.
But without promotion via Discover, businesses will have to rely on their owned or paid marketing channels to gain traction for their chat bots. That could discourage them from building on the Messenger platform.
The update feels like the end of a four-year era for Facebook. Back in 2016, it saw artificially intelligent chat bots as a way for businesses to scalably communicate with people, deliver customer service and push e-commerce. But when it launched the chat bot platform at its F8 conference that year, it arrived half-baked.

The typing-based semantic user interfaces were confusing, the AI necessary to make chat bots seem human (or at least reliably understand their human conversation partners hadn’t evolved yet) and several of the launch partner bots like Poncho The Weather Cat were laughably useless. The public soured on the idea of chat bots, and attempts to improve them felt insufficient.
Messenger launched Discover in 2017 in hopes that free promotion and visibility might convince developers to invest in building better chatbots. Yet by early 2018, even Facebook was backpedaling, shelving its plan to build out a full-service AI personal assistant called M that you could ask to do anything. Instead, it’d merely make AI suggestions of different Messenger features to use, like Stickers or reminders based on what you typed. Then it announced last year that it would move Instant Games out of Messenger and into Facebook’s dedicated Gaming tab.
There is still an opportunity to use chat bots for gathering initial info from people with sales or customer service inquiries. Everyone hates dealing with this stuff over the phone, waiting on hold and wading through touch-tone menus. Using asynchronous messaging makes communicating with businesses much more convenient. I’d bet Facebook will still be pushing this as an enterprise use case for Messenger. But this still usually requires a human in the loop at some point, and these are better structured as reactive utilities users search for than as experience proactively promoted by a Discover tab.
A laughably bad interaction with old Messenger chat bot Poncho The Weather Cat
Now with Discover disappearing, Messenger seems to be surrendering the fight to become a WeChat-style monolithic utility. In China, WeCat serves not just as a messaging app but as a way to make payments, hail a taxi, book flights, top up your mobile data, get a loan, find housing or shop at businesses via mini programs.
But while that centralized all-in-one style fit Chinese culture, Western markets have experienced more of an unbundling with different apps emerging to handle each of these use cases. Facebook’s constant privacy scandals and increasing anti-trust scrutiny also inhibited this approach with Messenger. Users and the U.S. government weren’t ready to trust Facebook to handle so much of our daily lives. Facebook Messenger also has to jockey with competition like iMessage and Snapchat that could undercut it if it gets too bloated.
So now Messenger is going in the opposite direction. It’s becoming more WhatsApp-like — simple, speedy and centered around peer-to-peer communication. Visual communication through Stories, with replies to them delivered as messages, feels like a natural extension of this focus while conveniently offering a path to monetization. If Messenger can be the best-in-class place to chat, unencumbered by promotion of chat bots and businesses, users might stay locked into the Facebook ecosystem.
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Facebook is copying Instagram while simultaneously invading its acquisition with branding and links back to the mothership. TechCrunch has spotted Facebook testing a feature called Popular Photos, which affixes an endless scroll of algorithmically selected pics from friends beneath the full-screen view of a photo opened from the News Feed. The result is an experience that feels like the Instagram feed, but inside of Facebook.

Popular Photos could offer users a more relaxing, lean-back browsing experience that omits links you have to click through, status updates you have to read, and other content types that bog down the News Feed. Instead, users can just passively watch the pretty pictures go by.
Facebook’s text and link-heavy feed looks increasingly stodgy and exhausting compared to visual communication-based social networks like Instagram, Snapchat, and TikTok. Users have to do the work of digging into the meaning of News Feed each post rather than being instantly entertained. That experience doesn’t fit as well into short browsing sessions throughout the day, or when users are already drained from work, school, or family. Facebook used to have a dedicated Photos bookmark on desktop that would let you just browse that content type, but at some point it disappeared.
A Facebook spokesperson confirms that Facebook was running a small test of Popular Photos in October when we spotted it. That trial has concluded but the team is now iterating on the product and plans to do updated tests in the future. The company refused to disclose more details or its motives for Popular Photos. Given Facebook already has Stories, messaging, profiles, and its IGTV-esque Watch video hub, it’s only the Explore tab and a dedicated media feed that are missing from it being a full clone of Instagram.

Here’s how Popular Photos works. When users discover a photo in the News Feed or a profile, they can tap on it to see it full-screen on a black theater-view background. Typically, if users swipe or scroll on that photo, they’re just booted back out to where they came from. But with the Popular Photos feature, Facebook splays out more images for users to scroll through after the original.
By scrolling down past the Popular Photos title, they’ll see additional pics and a “See More Photos” label beckoning them to keep whipping through more public and friends-only images shared by friends and who they follow. Like on Instagram but unlike the News Feed, Facebook truncates the captions of Popular Photos after only around 65 characters so the stream doesn’t look overwhelmingly wordy. The black backgrounds give a more cinematic feel to the Popular Photos, putting emphasis on the imagery.

Facebook started showing Related Videos in 2014 when users scrolled past a video they’d opened full-screen. Now this “More Videos” feature will auto-play the next video and automatically bump users down the feed to view it. The feature even shows video ads. That could foreshadow Facebook inserting advertisers’ photos into the Popular Photos tab to monetize the extra browsing.

Facebook hasn’t been shy about trying to leverage Instagram to benefit itself. The company has placed an Open Facebook button in the Instagram navigation sidebar.
Previously, Instagram tried showing Facebook alerts in its own Notifications tab, and an annoying red counter for Facebook notifications on the three-line hamburger button that opens the Instagram sidebar in an attempt to drive referral traffic back to the Facebook app. Facebook has also tried notifying users in its app asking them to Like the Facebook Pages of people they follow on Instagram. And now, a “from Facebook” and new FACEBOOK logo can be found appended to the Instagram loading screen.

For Facebook to keep growing after 15 years in the market, it needs to fully embrace visual communication. It’s already copied Snapchat Stories and implemented the ephemeral photo and video format across its apps. Clearly it’s not above copying its own subsidiary Instagram to offer an alternative take on feed scrolling. I wonder how Instagram’s team feels about its parent company building a direct competitor?
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Despite ongoing public relations crises, Facebook kept growing in Q3 2019, demonstrating that media backlash does not necessarily equate to poor business performance.
Facebook reached 2.45 billion monthly users, up 1.65%, from 2.41 billion in Q2 2019 when it grew 1.6%, and it now has 1.62 billion daily active users, up 2% from 1.587 billion last quarter when it grew 1.6%. Facebook scored $17.652 billion of revenue, up 29% year-over-year, with $2.12 in earnings per share.

Facebook’s earnings beat expectations compared to Refinitiv’s consensus estimates of $17.37 billion in revenue and $1.91 earnings per share. Facebook’s quarter was mixed compared to Bloomberg’s consensus estimate of $2.28 EPS. Facebook earned $6 billion in profit after only racking up $2.6 billion last quarter due to its SEC settlement.
Facebook shares rose 5.18% in after-hours trading, to $198.01 after earnings were announced, following a day where it closed down 0.56% at $188.25.
Notably, Facebook gained 2 million users in each of its core U.S. & Canada and Europe markets that drive its business, after quarters of shrinkage, no growth or weak growth there in the past two years. Average revenue per user grew healthily across all markets, boding well for Facebook’s ability to monetize the developing world where the bulk of user growth currently comes from.
Facebook says 2.2 billion users access Facebook, Instagram, WhatsApp or Messenger every day, and 2.8 billion use one of this family of apps each month. That’s up from 2.1 billion and 2.7 billion last quarter. Facebook has managed to stay sticky even as it faces increased competition from a revived Snapchat, and more recently TikTok. However, those rivals might more heavily weigh on Instagram, for which Facebook doesn’t routinely disclose user stats.

Facebook’s earnings announcement was somewhat overshadowed by Twitter CEO Jack Dorsey announcing it would ban all political ads — something TechCrunch previously recommended social networks do. That move flies in the face of Facebook CEO Mark Zuckerberg’s staunch support for allowing politicians to spread misinformation without fact-checks via Facebook ads. This should put additional pressure on Facebook to rethink its policy.
Zuckerberg doubled-down on the policy, saying “I believe that the better approach is to work to increase transparency. Ads on Facebook are already more transparent than anywhere else,” he said. Attempting to dispel that the policy is driven by greed, he noted Facebook expects political ads to make up “less than 0.5% of our revenue next year.” Because people will disagree and the issue will keep coming up, Zuckerberg admitted it’s going to be “a very tough year.”
Facebook also announced that lead independent board member Susan D. Desmond-Hellmann has resigned to focus on health issues.
Facebook expects revenue deceleration to be pronounced in Q4. But CFO David Wehner provided some hope, saying “we would expect our revenue growth deceleration in 2020 versus the Q4 rate to be much less pronounced.” That led Facebook’s share price to spike from around $191 to around $198.
However, Facebook will maintain its aggressive hiring to moderate content. While the company has touted how artificial intelligence would increasingly help, Zuckerberg said that hiring would continue because “There’s just so much content. We do need a lot of people.”

Regarding Libra’s regulatory pushback, Zuckerberg explained that Facebook was already diversified in commerce if that doesn’t work out, citing WhatsApp Payments, Facebook Marketplace and Instagram shopping.
On anti-trust concerns, Zuckerberg reminded analysts that Instagram’s success wasn’t assured when Facebook acquired it, and it has survived a lot of competition thanks to Facebook’s contributions. In a new talking point we’re likely to hear more of, Zuckerberg noted that other competitors had used their success in one vertical to push others, saying “Apple and Google built cameras and private photo sharing and photo management directly into their operating systems.”
Overall, it was another rough quarter for Facebook’s public perception as it dealt with outages and struggled to get buy-in from regulators for its Libra cryptocurrency project. Former co-founder Chris Hughes (who I’ll be leading a talk with at SXSW) campaigned for the social network to be broken up — a position echoed by Elizabeth Warren and other presidential candidates.
The company did spin up some new revenue sources, including taking a 30% cut of fan patronage subscriptions to content creators. It’s also trying to sell video subscriptions for publishers, and it upped the price of its Workplace collaboration suite. But gains were likely offset as the company continued to rapidly hire to address abusive content on its platform, which saw headcount grow 28% year-over-year, to 43,000. There are still problems with how it treats content moderators, and Facebook has had to repeatedly remove coordinated misinformation campaigns from abroad. Appearing concerned about its waning brand, Facebook moved to add “from Facebook” to the names of Instagram and WhatsApp.
It escaped with just a $5 billion fine as part of its FTC settlement that some consider a slap on the wrist, especially since it won’t have to significantly alter its business model. But the company will have to continue to invest and divert product resources to meet its new privacy, security and transparency requirements. These could slow its response to a growing threat: Chinese tech giant ByteDance’s TikTok.
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Submit campaign ads to fact checking, limit microtargeting, cap spending, observe silence periods or at least warn users. These are the solutions Facebook employees put forward in an open letter pleading with CEO Mark Zuckerberg and company leadership to address misinformation in political ads.
The letter, obtained by The New York Times’ Mike Isaac, insists that “Free speech and paid speech are not the same thing . . . Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for.” The letter was posted to Facebook’s internal collaboration forum a few weeks ago.
The sentiments echo what I called for in a TechCrunch opinion piece on October 13th calling on Facebook to ban political ads. Unfettered misinformation in political ads on Facebook lets politicians and their supporters spread inflammatory and inaccurate claims about their views and their rivals while racking up donations to buy more of these ads.
The social network can still offer freedom of expression to political campaigns on their own Facebook Pages while limiting the ability of the richest and most dishonest to pay to make their lies the loudest. We suggested that if Facebook won’t drop political ads, they should be fact checked and/or use an array of generic “vote for me” or “donate here” ad units that don’t allow accusations. We also criticized how microtargeting of communities vulnerable to misinformation and instant donation links make Facebook ads more dangerous than equivalent TV or radio spots.
The Facebook CEO, Mark Zuckerberg, testified before the House Financial Services Committee on Wednesday October 23, 2019 in Washington, D.C. (Photo by Aurora Samperio/NurPhoto via Getty Images)
More than 250 employees of Facebook’s 35,000 staffers have signed the letter, which declares, “We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.” It suggests the current policy undermines Facebook’s election integrity work, confuses users about where misinformation is allowed, and signals Facebook is happy to profit from lies.
The solutions suggested include:
A combination of these approaches could let Facebook stop short of banning political ads without allowing rampant misinformation or having to police individual claims.
Facebook’s response to the letter was “We remain committed to not censoring political speech, and will continue exploring additional steps we can take to bring increased transparency to political ads.” But that straw-man’s the letter’s request. Employees aren’t asking politicians to be kicked off Facebook or have their posts/ads deleted. They’re asking for warning labels and limits on paid reach. That’s not censorship.

Zuckerberg had stood resolute on the policy despite backlash from the press and lawmakers, including Representative Alexandria Ocasio-Cortez (D-NY). She left him tongue-tied during a congressional testimony when she asked exactly what kinds of misinfo were allowed in ads.
But then Friday, Facebook blocked an ad designed to test its limits by claiming Republican Lindsey Graham had voted for Ocasio-Cortez’s Green Deal he actually opposes. Facebook told Reuters it will fact-check PAC ads.
One sensible approach for politicians’ ads would be for Facebook to ramp up fact-checking, starting with presidential candidates until it has the resources to scan more. Those fact-checked as false should receive an interstitial warning blocking their content rather than just a “false” label. That could be paired with giving political ads a bigger disclaimer without making them too prominent-looking in general and only allowing targeting by state.
Deciding on potential spending limits and silent periods would be more messy. Low limits could even the playing field and broad silent periods, especially during voting periods, and could prevent voter suppression. Perhaps these specifics should be left to Facebook’s upcoming independent Oversight Board that acts as a supreme court for moderation decisions and policies.

Zuckerberg’s core argument for the policy is that over time, history bends toward more speech, not censorship. But that succumbs to utopic fallacy that assumes technology evenly advantages the honest and dishonest. In reality, sensational misinformation spreads much further and faster than level-headed truth. Microtargeted ads with thousands of variants undercut and overwhelm the democratic apparatus designed to punish liars, while partisan news outlets counter attempts to call them out.
Zuckerberg wants to avoid Facebook becoming the truth police. But as we and employees have put forward, there is a progressive approach to limiting misinformation if he’s willing to step back from his philosophical orthodoxy.
The full text of the letter from Facebook employees to leadership about political ads can be found below, via The New York Times:
We are proud to work here.
Facebook stands for people expressing their voice. Creating a place where we can debate, share different opinions, and express our views is what makes our app and technologies meaningful for people all over the world.
We are proud to work for a place that enables that expression, and we believe it is imperative to evolve as societies change. As Chris Cox said, “We know the effects of social media are not neutral, and its history has not yet been written.”
This is our company.
We’re reaching out to you, the leaders of this company, because we’re worried we’re on track to undo the great strides our product teams have made in integrity over the last two years. We work here because we care, because we know that even our smallest choices impact communities at an astounding scale. We want to raise our concerns before it’s too late.
Free speech and paid speech are not the same thing.
Misinformation affects us all. Our current policies on fact checking people in political office, or those running for office, are a threat to what FB stands for. We strongly object to this policy as it stands. It doesn’t protect voices, but instead allows politicians to weaponize our platform by targeting people who believe that content posted by political figures is trustworthy.
Allowing paid civic misinformation to run on the platform in its current state has the potential to:
— Increase distrust in our platform by allowing similar paid and organic content to sit side-by-side — some with third-party fact-checking and some without. Additionally, it communicates that we are OK profiting from deliberate misinformation campaigns by those in or seeking positions of power.
— Undo integrity product work. Currently, integrity teams are working hard to give users more context on the content they see, demote violating content, and more. For the Election 2020 Lockdown, these teams made hard choices on what to support and what not to support, and this policy will undo much of that work by undermining trust in the platform. And after the 2020 Lockdown, this policy has the potential to continue to cause harm in coming elections around the world.
Proposals for improvement
Our goal is to bring awareness to our leadership that a large part of the employee body does not agree with this policy. We want to work with our leadership to develop better solutions that both protect our business and the people who use our products. We know this work is nuanced, but there are many things we can do short of eliminating political ads altogether.
These suggestions are all focused on ad-related content, not organic.
1. Hold political ads to the same standard as other ads.
a. Misinformation shared by political advertisers has an outsized detrimental impact on our community. We should not accept money for political ads without applying the standards that our other ads have to follow.
2. Stronger visual design treatment for political ads.
a. People have trouble distinguishing political ads from organic posts. We should apply a stronger design treatment to political ads that makes it easier for people to establish context.
3. Restrict targeting for political ads.
a. Currently, politicians and political campaigns can use our advanced targeting tools, such as Custom Audiences. It is common for political advertisers to upload voter rolls (which are publicly available in order to reach voters) and then use behavioral tracking tools (such as the FB pixel) and ad engagement to refine ads further. The risk with allowing this is that it’s hard for people in the electorate to participate in the “public scrutiny” that we’re saying comes along with political speech. These ads are often so micro-targeted that the conversations on our platforms are much more siloed than on other platforms. Currently we restrict targeting for housing and education and credit verticals due to a history of discrimination. We should extend similar restrictions to political advertising.
4. Broader observance of the election silence periods
a. Observe election silence in compliance with local laws and regulations. Explore a self-imposed election silence for all elections around the world to act in good faith and as good citizens.
5. Spend caps for individual politicians, regardless of source
a. FB has stated that one of the benefits of running political ads is to help more voices get heard. However, high-profile politicians can out-spend new voices and drown out the competition. To solve for this, if you have a PAC and a politician both running ads, there would be a limit that would apply to both together, rather than to each advertiser individually.
6. Clearer policies for political ads
a. If FB does not change the policies for political ads, we need to update the way they are displayed. For consumers and advertisers, it’s not immediately clear that political ads are exempt from the fact-checking that other ads go through. It should be easily understood by anyone that our advertising policies about misinformation don’t apply to original political content or ads, especially since political misinformation is more destructive than other types of misinformation.
Therefore, the section of the policies should be moved from “prohibited content” (which is not allowed at all) to “restricted content” (which is allowed with restrictions).
We want to have this conversation in an open dialog because we want to see actual change.
We are proud of the work that the integrity teams have done, and we don’t want to see that undermined by policy. Over the coming months, we’ll continue this conversation, and we look forward to working towards solutions together.
This is still our company.
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You might think it’s redundant with Instagram Stories, or just don’t want to see high school friends’ boring lives, but ephemeral Snapchat-style Stories now have 500 million daily users across Facebook and Messenger. WhatsApp’s Stories feature Status has 500 million dailies too, and Instagram hit that milestone three months ago. That’s impressive, because it means one-third of Facebook’s 1.56 billion daily users are posting or watching Stories each day, up from zero when Facebook launched the feature two years ago.
For reference, Stories inventor Snapchat has just 190 million total daily users.
Facebook Stories
CEO Mark Zuckerberg announced the new stats on today’s Facebook Q1 2019 earnings call, which showed it’s user growth rate had increased but it had to save $3 billion for a potential FTC fine over privacy practices.
Facebook isn’t just using Stories to keep people engaged, but to squeeze more cash out of them. Today COO Sheryl Sandberg announced that 3 million advertisers have now bought Stories ads across Facebook’s family of apps. I’d expect Facebook to launch a Stories Ad Network soon so other apps can show Facebook’s vertical video ads and get a cut of the revenue.

Facebook’s aggressive move to clone Snapchat Stories not just in Instagram but everywhere might have pissed users off at first, but many of them have come around. If you give people a place to put their face at the top of their friends’ phones, they’ll fill it. And if someone dangles a window into the lives of people you know and people you wish you did, you’ll open that window regularly.
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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.

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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Feed and Stories unite! Facebook is so eager to preempt the shift to Stories that it might even let us use the same interface of horizontally swipeable cards to sift through News Feed posts. If users won’t scroll down any more, Facebook’s ad business could take a huge hit. But by allowing traditional feed posts and ads to appear amidst Stories in the same carousel you’re more prone to swipe through, it could squeeze more views and dollars out of that content. This would help Facebook gracefully transition to the post-News Feed era while it teaches advertisers how to use the full-screen Stories ad format.
In this image, you can see a user in mid-swipe through the hybrid carousel between a News Feed story about a friend updating their profile photo to an animated GIF-style video on the left and a Stories video on the right.

We’re awaiting comment from Facebook about this. There’s a chance it was just caused by a bug like the briefly side-scrollable Instagram feed that popped up in December, or that it will never be publicly tested, let alone launch. But given the significance of Facebook potentially reimagining navigation of its main revenue stream, we considered it worth covering immediately. After all, Facebook predicts that Stories sharing will surpass feed sharing across all social apps sometime this year. It already has 300 million daily users across Stories on Facebook and Messenger, plus another 500 million on Instagram Stories and 450 million on WhatsApp Status.
[Update: Facebook confirms that this feature is a very early-stage prototype of a new way to navigate News Feed posts. A Facebook spokesperson tells TechCrunch that “We are currently not testing this publicly” as the company still needs do a lot more user research before any public experimentation.]
This swipeable hybrid carousel was first spotted by reverse-engineering specialist and frequent TechCrunch tipster Jane Manchun Wong. She discovered this unreleased feature inside the Android version of Facebook and screenrecorded the new navigation method. In this prototype, when a News Feed post’s header or surrounding space is tapped, users see a full-screen version of the post. From there they can swipe left to reveal the next content in the hybrid carousel, which can include both traditional News Feed posts, News Feed ads and purposefully vertical Stories and Stories ads.
Users can tap to Like, react to or comment on feed posts while still in the carousel interface. Facebook has been offering ways to syndicate your News Feed posts to Stories since last year, but those posts got reformatted to look like Stories rather than retaining their old design and white background as we see here.
Facebook is testing to turn News Feed into Story Feed pic.twitter.com/83H7VWcgmD
— Jane Manchun Wong (@wongmjane) April 15, 2019
If Facebook moved forward with offering this as an optional way to browse its social network, it would hedge the business against the biggest behavior change it’s seen since the move from desktop to mobile. Vertically scrolling News Feeds are useful for browsing text-heavy content, but the navigation requires more work. Users have to stop and start scrolling precisely to get a whole post in view, and it takes longer to move between pieces of content.
In contrast, swipeable Stories carousels offer a more convenient lean-back navigation style where posts always appear fully visible. All it takes to advance to the next full-screen piece of content is a single tap, which is easier on your joints. This allows rapid-fire fast-forwarding through friends’ lives, which works well with more visual, instantly digestible content. While cramming text-filled News Feed posts may not be ideal, at least they might get more attention. If Facebook combined all this with unskippable Stories ads like Snapchat is increasingly using, the medium shift could lure more TV dollars to the web.
The hybrid posts and Stories carousel can contain both traditional image plus caption News Feed posts and News feed ads as well as Stories
Facebook has repeatedly warned that it’s out of space for more ads in the News Feed, and that users are moving their viewing time to Stories, where advertisers are still getting acclimated. When Facebook made it clear on its Q2 2018 earnings call that this could significantly reduce revenue growth, its share price dropped 20 percent, vaporizing $120 billion in value. Wall Street is rightfully concerned that the Stories medium shift could upend Facebook’s massive business.
Stories is a bustling up-and-coming neighborhood. News Feed is a steadily declining industrial city that’s where Facebook’s money is earned but that’s on its way to becoming a ghost town. A hybrid Stories/posts carousel would build a super highway between them, connecting where Facebook users want to spend time with where the municipality generates the taxes necessary to keep the lights on.
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Facebook’s crack down on non-consensual ad targeting last year will finally produce results. In March, TechCrunch discovered Facebook planned to require advertisers to pledge that they had permission to upload someone’s phone number or email address for ad targeting. That tool debuted in June, though there was no verification process and Facebook just took businesses at their word despite the financial incentive to lie. In November, Facebook launched a way for ad agencies and marketing tech developers to specify who they were buying promotions “on behalf of.” Soon that information will finally be revealed to users.
Facebook’s new Custom Audiences transparency feature shows when your contact info was uploaded and by whom, and if it was shared between brands and partners
Facebook previously only revealed what brand was using your contact info for targeting, not who uploaded it or when
Starting February 28th, Facebook’s “Why am I seeing this?” button in the drop-down menu of feed posts will reveal more than the brand that paid for the ad, some biographical details they targeted and if they’d uploaded your contact info. Facebook will start to show when your contact info was uploaded, if it was by the brand or one of their agency/developer partners and when access was shared between partners. A Facebook spokesperson tells me the goal is to keep giving people a better understanding of how advertisers use their information.
This new level of transparency could help users pinpoint what caused a brand to get hold of their contact info. That might help them change their behavior to stay more private. The system could also help Facebook zero in on agencies or partners that are constantly uploading contact info and might not have attained it legitimately. Apparently seeking not to dredge up old privacy problems, Facebook didn’t publish a blog post about the change but simply announced it in a Facebook post to the Facebook Advertiser Hub Page.
The move comes in the wake of Facebook attaching immediately visible “paid for by” labels to more political ads to defend against election interference. With so many users concerned about how Facebook exploits their data, the Custom Audiences transparency feature could provide a small boost of confidence in a time when people have little faith in the social network’s privacy practices.
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It’s an ad duopoly battle. Facebook is starting to test search ads in its search results and Marketplace, directly competing with Google’s AdWords. Facebook first tried Sponsored Results back in 2012 but eventually shut down the product in 2013. Now it’s going to let a small set of automotive, retail and e-commerce industry advertisers show users ads on the search results page on mobile in the U.S. and Canada.
They’ll be repurposed News Feed ads featuring a headline, image, copy text and a link in the static image or carousel format that can point users to external websites. Facebook declined to share screenshots as it says the exact design is still evolving. Facebook may expand search ads to more countries based on the test’s performance.
The reintroduction of search ads could open an important new revenue stream at a time when Facebook’s revenue growth is quickly decelerating as it runs out of News Feed ad space, the Stories format that advertisers are still adapting is poised to overtake feed sharing on social apps and users shift their time elsewhere. In Q3 2018, revenue grew 33 percent year-over-year, but that’s far slower than the 49 percent YOY gain it had a year ago, and the 59 percent from Q3 2016. Opening up new ad inventory for search could reinvigorate the sagging revenue growth rate that, combined with Facebook’s privacy and security scandals, has put intense pressure on Facebook’s leaders Mark Zuckerberg and Sheryl Sandberg.
Facebook’s revenue growth rate has slowed significantly over the past two years
“We’re running a small test to place ads in Facebook search results, and we’ll be evaluating whether these ads are beneficial for people and businesses before deciding whether to expand it,” Facebook product manager Zoheb Hajiyani told TechCrunch in a statement. The announcement of the search ads comes as Google’s CEO Sundar Pichai is under fire from Congress over data privacy, though the move could help Google look less like it has a monopoly in search.
Back in 2012, Facebook desperately sought extra revenue streams following its botched IPO. Sponsored Results let game companies, retailers and more inject links to their Facebook apps, Pages and posts as ads in the search type-ahead results. Since advertisers could target searches for specific other Pages and apps, brands and game developers often tried to swoop in and steal traffic from their competitors. For example, dating app Match.com could target searches for competitor OkCupid and appear above its results. Facebook isn’t allowing advertisers to be quite as cutthroat with this test.
Facebook’s 2012 Sponsored Results ads let competitors swoop on each other’s traffic
With the relaunch, advertisers with access will be able to simply extend their existing News Feed ads to the new “Search” placement through the Facebook Ads Manager, similar to how they’d pick Facebook Audience Network or Instagram. No video ads will be allowed, and search ads won’t appear on desktop. Marketplace search ads will appear on iOS and Android, while Facebook search ads are only testing on Android. For now, advertisers won’t pick specific keywords to advertise against, and instead may appear in search terms related to auto or retail topics. Still, the placement will let advertisers dive deeper down the conversion funnel to reach people who might already have intent to buy something and fulfill that demand. Facebook’s News Feed ads (other than those retargeted based on web browsing) are better for demand generation, and sit higher in the funnel reaching users who don’t know what they want yet.
Ads will feature a “Sponsored” tag, and are subject to the same transparency controls around “Why Am I Seeing This?” Facebook plans to evaluate the benefits for users and advertisers in order to determine whether to roll out the ads to more countries and categories. Users will not be able to opt out of seeing search ads. They can “hide” ads using the drop-down arrow as with News Feed ads, but that won’t prevent different ones from showing up in search later.
Facebook’s share of the $279.56 billion total worldwide digital ad market will grow to 19.5 percent this year, trailing No. 1 Google, which has 31.5 percent. After gaining multiple percentage points of share the last few years, eMarketer estimated Facebook’s cut of total digital ad spend would fall to around 1 percent the next two years. Unlocking search ad inventory could perk up those projections. Facebook would only need to hit 3.3 percent of total search ad share to surpass Microsoft for the No. 3 spot, or 6.5 percent to top Chinese search engine Baidu.

One major concern is that Facebook already collects as much information as possible about people and their behavior to target its ads. With the reintroduction of search ads, it’s even more incentivized to gather what we do online, what we buy offline and who we are.
Facebook will have to balance the injection of the ads with remaining an easy way to search for friends, content, businesses and more. Search is far from the core of Facebook’s offering, where users typically browse the News Feed for serendipitous content discovery rather than go looking for something specific. The most common searches are likely for friends’ names which won’t be great ad candidates. But given how accustomed users are to search ads on Google, this new revenue stream could help Facebook boost its numbers without too much disruption to its service.
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Facebook pissed off journalists earlier this year when it announced that ads run by news publishers to promote their articles involving elected officials, candidates and national issues would have to sport “paid for by…” labels and be included alongside political campaign ads in its ads transparency archive that launched in June, albeit in a separate section. The News Media Alliance — representing 2,000 newspapers, including The New York Times and NewsCorp, plus other new organizations — sent a letter to Mark Zuckerberg in June protesting their inclusion. They claimed it would blur the lines between propaganda and journalism, and asked Facebook to exempt news publishers.
Now Facebook has granted that exception. Next year once Facebook has figured out more ways to verify legitimate news organizations that publish with bylines and dates, cite sources and don’t have a history of having stories flagged as false by third-party fact checkers, they’ll no longer have their U.S. ads appear in the Ads Archive. They also won’t have to carry a “Paid for by…” label when they appear in the News Feed or Instagram. News organizations will still have to verify their identity, but not through the political ads process. This exemption will roll out today in the U.K.
The change will also allow news outlets to run “dark post” ads that target specific users but don’t appear on their Pages. This will allow them to secretly test different ad variants without being exposed to potential criticism or competitors looking to copy their ad strategies.
Facebook’s political ads archive of campaign ads will no longer include publications promoting articles about politics or issues
Facebook will be using its recently built news publisher index to which outlets can apply to decide which ad buyers are exempt. That index is up and running in the U.S. and will expand to other countries, but Facebook still wants to build more safeguards against fake news outlets before starting the exemption in the U.S. For now, Facebook is using a third-party list of legitimate U.K. news outlets that’ll be exempted starting today. Jason Kint of publishers association Digital Content Next tells TechCrunch, “We are pleased that Facebook understands and values the important role of news organizations. We have worked cooperatively with Twitter who understood this from the beginning. We look forward to working in a similar fashion with Facebook.”
Facebook’s “Paid for by…” labels will no longer appear on news publishers’ ads on Facebook or Instagram
The change comes as Facebook rolls out enforcement of its political ads transparency rules in the U.K. today. “Now political advertisers must confirm their identity and location, as well as say who paid for the ad, before they can be approved to run political ads on Facebook and/or Instagram,” Facebook tells TechCrunch. These ads will also feature the “Paid for by…” label. Facebook hoped that by self-regulating ads transparency, it might avoid more heavy-handed government regulation, such as through the U.S.’s proposed Honest Ads Act that would bring internet political advertising to parity with transparency rules for television commercials.
The hope is that by determining who is paying for these ads, properly labeling them and exempting journalists, Facebook will be able to better track foreign misinformation campaigns and election interference. Meanwhile, users will have a better understanding of who’s funding the political and issue ads they see on Facebook.
[Update: This story has been updated to reflect that the news publisher exemption won’t roll out for U.S. outlets until next year.]
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