Facebook’s profits increased by 53 per cent last year compared to 2019, as the tech giant benefited from more people being at home during the pandemic and saw an increase in use of their platforms.
Mark Zuckerberg, however, is sounding the alarm about forthcoming changes from Apple that could threaten Facebook.
Facebook’s results for the final quarter of 2020, reported on Wednesday, came as Apple announced that it too had had a bumper year, with revenues of more than $100 billion in the three months to the end of December.
Only a handful of companies, including Walmart, have previously reported $100 billion quarters, while Amazon is expected to break this barrier when it reports next month.
But Apple’s profit margins are projected at about 23 per cent – roughly five times that of either retailer.
Apple is planning on making a software change that will give iPhone and iPad users a more clear opportunity to opt out of ad-tracking for online advertising, a big piece of Facebook’s pie.
Zuckerberg also believes Apple is positioning iMessage to overtake Facebook Messenger and WhatsApp.
‘iMessage is a key linchpin of their ecosystem,’ Zuckerberg said on the earnings call, according to CNBC. ‘It comes pre-installed on every iPhone and they preference it with private APIs and permissions, which is why iMessage is the most used messaging service in the U.S.’
Apple’s new policy will prohibit certain data collection and sharing unless people opt into tracking on iOS 14 devices, via a prompt when they download the app.
Zuckerberg had more harsh words to say about Apple’s business practices.
Mark Zuckerberg’s company posted $28 billion in profits in the final quarter of 2020
‘Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own.
‘Apple may say they’re doing this to help people but the moves clearly track their competitor interests. We and others are going to be up against this for the foreseeable future.’
Facebook still had much to celebrate on Wednesday, posting a profit of $11.2 billion on revenues of $28 billion in the final three months of 2020.
The Californian company’s revenue rose 33 per cent to roughly $28 billion during the quarter.
On Apple, Zuckerberg had some harsh words about their upcoming software changes. Pictured: Apple CEO Tim Cook
Their apps – Instagram, Messenger and WhatsApp – saw a 14 per cent increase year-on-year in monthly active users, with 3.3 billion people, almost half the world’s population, using them.
After an initial drop in advertising in March, Facebook’s business boomed as more people bought products online during the pandemic, executives said.
‘We had a strong end to the year as people and businesses continued to use our services during these challenging times,’ said Mark Zuckerberg, Facebook CEO, in a statement.
But the 36-year-old’s company cautioned that there may be challenges ahead, with the ‘evolving regulatory landscape’, including the Apple software changes.
‘We also expect to face more significant ad targeting headwinds in 2021,’ the chief financial officer, David Wehner, said in a statement.
‘This includes the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape.
‘While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter.’
Facebook has warned that pressure from governments may change their financial future
The 36-year-old said that he remained optimistic about the next year for the company
Dozens of states and the federal government sued Facebook last month, alleging the social media giant has abused its dominance in the digital marketplace and engaged in anti-competitive behavior.
This month the social media giant removed Donald Trump, and many of his allies, from their site after the January 6 attack on the Capitol, accusing him of inciting violence.
Zuckerberg said he was optimistic about the year ahead.
‘I’m excited about our product road map for 2021 as we build new and meaningful ways to create economic opportunity, build community and help people just have fun,’ he said.
Analysts said the results showed the resilience of the Palo Alto firm.
‘Despite the negative publicity and antitrust cases, it appears there is nothing that can stop what is arguably the world’s most important advertising platform,’ said Jesse Cohen, senior analyst at Investing.com.
Apple, meanwhile, finished 2020 with its most profitable quarter ever, with $111.4 billion in sales powered by people upgrading their technology to work from home.
Apple on Wednesday announced they had surpassed $100 billion in quarterly revenues
On Wednesday they announced results for the fiscal 2021 first quarter, ended December 26, 2020.
Profit rose 29 per cent to $28.76 billion in the three months that ended on December 31.
Apple shares rose 81 per cent in 2020, and are up about seven per cent this through Wednesday.
Revenues from iPhones were up 17 per cent year-on-year, with $65.60 billion in sales.
Apple released four new iPhone 12 models in October – the first to include 5G.
Investors believe that created a ‘supercycle’ of users clamoring to upgrade. The new iPhone helped sales rise 57 per cent in China, which has a more developed 5G network.
‘They’re full of features that customers love, and they came in at exactly the right time, with where 5G networks were,’ said Tim Cook, the Apple CEO.
The iPhone 12’s launch by Tim Cook, pictured, has helped boost Apple’s profits
In the U.S., the average retail price of the iPhone rose to $873 from $809 a year ago, driven by buyers gravitating to the more expensive versions, according to a survey of customers by Consumer Intelligence Research Partners LLC.
A mini iPhone 12 has a starting price of $699, while the biggest and most expensive iPhone 12 Max begins at $1,099.
Apple’s other products category, which includes Apple Watch and headphones such as AirPods and Beats, was up 29 per cent from last year to $12.97 billion, even as people are spending less time commuting and traveling.
Apple released a high-end set of headphones, AirPods Pro Max, in December, with a steep $549 suggested price.
Macs and iPads, the Apple devices most likely to be used for remote work and school, were also up this quarter.
Cook said sales would have been higher, had not the pandemic forced the closure of stores.
‘We could not be more optimistic,’ he told The Wall Street Journal.