People are spending less time scrolling, but Zuckerberg says that’s by design.

Facebook CEO Mark Zuckerberg said something surprising on Wednesday when the company reported its fourth quarter earnings results: Users are spending less time on the social network — and that’s a good thing.

Zuckerberg said that users spent 50 million hours less, per day, using the social network last quarter than the previous quarter. Those 50 million hours amounted to a 5 percent decline in time spent on the app.

In early January, Zuckerberg warned people that a decline was coming as a result of changes Facebook was making to its News Feed algorithm, a decision by Facebook to show users more posts from friends and family, and fewer posts from publishers.

But those changes came after Facebook’s Q4 was in the books. Which means they can’t be used to explain the 5 percent decline Facebook reported Wednesday.

So if the decrease wasn’t caused by the News Feed algorithm, what caused it? Fewer viral videos, Zuckerberg says, adding that it’s all part of Facebook’s mission to ensure people are spending quality time on the network, not just passively scrolling.

Here’s how he described it on the call.

“On our last earnings call, I said that video done well can bring people together. But too often today, watching video is just a passive experience. To shift that balance, I said that we were going to focus on vides that encourage meaningful social interactions. So in Q4 we updated out video recommendations and made other quality changes to reflect these values.”

In other words: Facebook claims its product improvements are meant to decrease the amount of time people spend on the network. The hope is that by doing so, Facebook will improve the quality of the time those users do spend.

This decrease in time spent will likely continue. When Facebook unveiled its News Feed changes earlier this month, Zuckerberg said that the changes would likely mean “the time people spend on Facebook and some measures of engagement will go down.”

The concern, of course, is that Facebook’s business will suffer as a result. Virtually all of Facebook’s revenue comes from advertising, and the more time people spend on the site, the more ads they will see. (The counter to this: Fewer ads means higher demand, and it’s possible higher ad prices, which could offset fewer ads. We don’t know yet.)

In either instance, Zuckerberg says he’s not worried.

“Let me be clear: Helping people connect is more important than maximizing the time they spend on Facebook,” he said, later adding that more “meaningful interactions” are the key here. “We think that that’s going to be positive. We think it’ll help make the community stronger over the long term, and we think it’ll be good for the business over the long term.”

Facebook’s shrinking user base in the U.S.

The other concerning part of Facebook’s earnings report was that the company’s user base in the U.S. and Canada shrunk for the first time ever in Q4. The company reported 184 million daily users for the last three months of the year, down from 185 million in Q3.

Yes, it’s a small change. But it’s a concern considering the U.S. and Canada is by far Facebook’s most valuable market. Each monthly active user in that region brought in almost $27 in revenue for the company last quarter.

It’s still not entirely clear what caused the decline. CFO Dave Wehner attributed it to “product quality changes,” and when asked to elaborate later on the call, Wehner declined.

But Facebook still soothed concerns about the decline with investors. Wehner clarified that the decline wasn’t even a million users — 700,000 in total, he said — before adding that he “don’t see this as an ongoing trend.”

It was about this time that Facebook’s stock made a u-turn. It ultimately ended the call trading up close to 2 percent after being down more than 4 percent in early after-hours trading.


Recode – All Go to Source
Author:

Kurt Wagner

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