What Facebook's internal documents reveal 3:53
New York (CNN Business) -
Facebook CEO Mark Zuckerberg kicked off the company's quarterly earnings call addressing the latest wave of massive media coverage based on a trove of leaked internal documents on Monday.
"Good faith reviews help us improve, but my view is that we are seeing a coordinated effort to selectively use leaked documents to paint a false image of our company," Zuckerberg said.
"The reality is that we have an open culture that encourages discussion and research about our work so that we can move forward on many complex issues that are not specific to us."
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The company's results come amid perhaps the biggest crisis in the social media giant's 17-year history. Tens of thousands of pages of internal documents leaked by whistleblower Frances Haugen shaped The Wall Street Journal's "Facebook Files" series, and on Monday, a deluge of additional news coverage from a consortium of 17 US news organizations, as well as hearings with US and British legislators. The documents provide the most in-depth look at many of Facebook's biggest problems, including its struggles to regulate hate speech and disinformation, the use of its platform by human traffickers, research on harm to young people, and plus.
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Facebook has rejected many of the reports, saying they are misleading and mischaracterize its investigations and actions.
Zuckerberg last commented on the situation after Haugen's Senate hearing earlier this month, in a statement in which he tried to discredit the whistleblower.
However, on Friday, another former Facebook employee anonymously filed a complaint against the company with the SEC, with allegations similar to Haugen's.
But despite all the bad headlines, the company reminded investors on Monday that it is still a money maker.
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Facebook reported $ 29 billion in revenue for the three months ended September, 35% more than in the same period last year.
The company posted nearly $ 9.2 billion in profit, 17% more than the previous year.
The number of people using Facebook's family of apps grew 12% year-over-year, to nearly 3.6 billion during the quarter.
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The results were almost in line with Wall Street analysts' projections.
Shares of Facebook (FB) rose as much as 3% in after-hours trading on Monday after the earnings report, before falling to around 1% higher.
Facebook is no stranger to public relations crises. And in most cases, Facebook's business has continued to advance at a healthy pace despite protests from regulators and the public.
But this time it could be different.
Facebook's huge ad business is already in a vulnerable state due to recent changes to Apple's app tracking rules.
Apple's iOS 14.5 software update, which went into effect in April, requires users to grant explicit permission for apps to track their behavior and sell their personal data, such as age, location, spending habits, and health information. , to advertisers.
Facebook has aggressively rejected the changes, warning investors last year that the update could hurt its business if many users choose not to track.
On Monday, Facebook warned that changes to iOS 14 could create "continued headwinds" in the fourth quarter of 2021.
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"We've been open about the fact that headwinds are coming and we experienced it in the third quarter. The biggest is the impact of the iOS 14 changes," Chief Operating Officer Sheryl Sandberg said on the company's earnings call. company on Monday.
"As a result, we have faced two challenges: one is that our ad targeting accuracy decreased, which increased the cost of generating results for our advertisers, and the other is that measuring those results became more difficult."
While much of the world spent the day concentrating on Facebook's real-world damage, the company hinted to investors in the report that it wants them to look forward, not back.
Starting in the fourth quarter, the company plans to expand Facebook Reality Labs, its division dedicated to virtual and augmented reality services, as a separate reporting segment from its family of applications, which includes Instagram, WhatsApp and the eponymous social network Facebook. .
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Chief Financial Officer Dave Wehner said Facebook is investing so much in this new division that it will reduce "our overall operating profit in 2021 by approximately $ 10 billion."
In a statement with the results, Zuckerberg also focused on what's to come: "I'm excited about our roadmap, especially around creators, trading, and helping build the metaverse."
During the earnings call, Wall Street analysts asked far more about Facebook's new initiatives and products like the metaverse and Instagram Reels than they did about Monday's news coverage, a reminder that investors often prioritize growth potential. the company's potential for harm.
Evercore ISI asked Zuckerberg to assess the company's progress in building artificial intelligence that can identify problematic content.
Zuckerberg pointed to the company's quarterly transparency reports, which identify "what percentage of the content we act on is our AI ... finding it instead of people having to report it."
He said that "in most of these categories ... more than 90 percent of the content that we act on, we identify largely through the artificial intelligence system."
However, he noted that the success of his systems can vary by category.
"Some of the categories, like hate speech, have been more difficult," he said, because "we are operating in about 150 languages around the world ... there are many cultural nuances in this."
Zuckerberg also tried to call his staff.
"I know there is a lot of scrutiny of our efforts, and I guess I just want to tell the team and the people working on this that I am really proud of the progress they are making," he said.
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