Despite an avalanche of damaging whistleblower claims and revelations based on internal documents, Facebook on Monday reported soaring profits for the latest quarter.
Facebook stock rose more than 1 percent in pre-market trading on Tuesday, a day after whistleblower Frances Haugen testified to British lawmakers and at least a dozen US news outlets published scathing reports based on internal documents known as the Facebook Papers.
Facebook said its net income grew 17 percent in the July-September period to $9.19 billion, buoyed by strong advertising revenue. That's up from profits of $7.85 billion a year earlier.
Revenue grew 35 percent to $29.01 billion. The results exceeded analyst expectations and appeared to show that advertisers, who fuel Facebook's revenue, are undeterred by the revelations that are drawing bipartisan fury in Congress.
On a call with investors, Facebook CEO Mark Zuckerberg slammed criticism of the company as a 'coordinated effort' to 'paint a false picture of our company.'
'Good faith criticism helps us get better,' Zuckerberg said on the call. 'But my view is that what we are seeing is a coordinated effort to selectively use leaked documents to paint a false picture of our company.'
Facebook stock rose more than 1 percent in pre-market trading on Tuesday, after the company reported soaring profits for the latest quarter
On a call with investors, Facebook CEO Mark Zuckerberg slammed criticism of the company as a 'coordinated effort' to 'paint a false picture of our company'
Facebook whistleblower Frances Haugen, right, gives evidence to UK lawmakers in London. Haugen said Monday that Facebook is making online hate and extremism worse
'The reality is that we have an open culture, where we encourage discussion and research about our work so we can make progress on many complex issues that are not specific to just us,' he added.
'It makes a good soundbite to say that we don't solve these impossible trade-offs because we're just focused on making money, but the reality is these questions are not primarily about our business, but about balancing difficult social values,' said Zuckerberg.
Zuckerberg's remarks followed Haugen's testimony in British Parliament on Monday, in which the former Facebook employee said the tech firm's algorithms help foster political dissent, contribute to mental health and emotional problems among teenagers and can lead to real-world violence in volatile regions.
The testimony, and a slew of reports based on the Facebook Papers, drew fresh rounds of harsh criticism from US lawmakers from both sides of the aisle, with Democrats accusing the platform of failing to stop misinformation and hate speech.
'Facebook allows the spread of hate, extremism, and attacks on our democracy,' tweeted Rep. Pramila Jayapal, a Washington state Democrat and chair of the Progressive Caucus.
'These disclosures demand the full release of the company's research on the harms to teens & even to our democracy,' tweeted Senator Richard Blumenthal, a Connecticut Democrat.
Meanwhile, Republicans were incensed over Facebook's perceived anti-conservative bias and monopolistic practices.
'As these Facebook Papers reports illustrate, employees at these companies are not just hysterically anti-conservative -- they are against any idea that doesn't fit their narrative,' House Minority Leader Kevin McCarthy, a California Republican, said in a statement.
'What Facebook -- and other platforms -- are doing to narrow the ability of Americans to access information, is itself a particularly dangerous practice of misinformation, McCarthy added.
'The latest whistleblower documents compliment what The Antitrust Subcommittee found in our investigation: Facebook knows it is a monopoly. They have engaged in anticompetitive practices, and we must update the antitrust laws to help create competition,' tweeted Rep. Ken Buck, a Colorado Republican.
The world's largest social media network is under scrutiny from global lawmakers and regulators, including from the Federal Trade Commission which has filed an antitrust lawsuit alleging anticompetitive practices.
Nevertheless, Facebook's strong earnings report sent the company's stock rising on Tuesday, after it closed up 1 percent a day earlier.
'For now, the revenue picture for Facebook looks as good as can be expected,' said eMarketer analyst Debra Aho Williamson. But she predicted more revelations and described the findings so far as 'unsettling and stomach-churning.'
'It makes a good soundbite to say that we don´t solve these impossible tradeoffs because we're just focused on making money, but the reality is these questions are not primarily about our business, but about balancing difficult social values,' Zuckerberg said.
Haugen, meanwhile, told a British parliamentary committee Monday that the social media giant stokes online hate and extremism, fails to protect children from harmful content and lacks any incentive to fix the problems, providing momentum for efforts by European governments working on stricter regulation of tech companies.
Facebook whistleblower Frances Haugen leaves after giving evidence to the joint committee for the Draft Online Safety Bill, as part of British government plans for social media regulation
Haugen, center, said Monday that Facebook is making online hate and extremism worse and outlined how it could improve online safety
Among her Haugen's damaging claims, she testified yesterday:
- Instagram may 'never be safe for 14-year-olds' because it turns them into addicts and bullying follows them home
- Facebook's algorithm prioritizes hate speech by showing people content based on how much engagement it has received
- This led conservatives to be inundated with conspiracy theories from QAnon and other far-right content
- Facebook is reluctant to sacrifice 'even slithers of profit' to priorities online safety and 'unquestionably' makes online hate worse
- 'Underinvestment' in foreign languages means Facebook is less able to monitor content not in US English
- Facebook is used as a platform to traffic maids in the Middle East despite company promising to crack down
While her testimony echoed much of what she told the U.S. Senate this month, her in-person appearance drew intense interest from a British parliamentary committee that is much further along in drawing up legislation to rein in the power of social media companies.
Haugen told the committee of United Kingdom lawmakers that Facebook Groups amplifies online hate, saying algorithms that prioritize engagement take people with mainstream interests and push them to the extremes.
The former Facebook data scientist said the company could add moderators to prevent groups over a certain size from being used to spread extremist views.
'Unquestionably, it´s making hate worse,' she said.
Haugen said she was 'shocked' to hear that Facebook wants to double down on what Zuckerberg calls 'the metaverse,' the company´s plan for an immersive online world it believes will be the next big internet trend.
'They´re gonna hire 10,000 engineers in Europe to work on the metaverse,' Haugen said. 'I was like, `Wow, do you know what we could have done with safety if we had 10,000 more engineers?´' she said.
The former Facebook data scientist said the company could add moderators to prevent groups over a certain size from being used to spread extremist views
Haugen said she was 'shocked' to hear that Facebook wants to double down on what Zuckerberg calls 'the metaverse,' the company´s plan for an immersive online world
Facebook says it wants regulation for tech companies and was glad the U.K. was leading the way.
'While we have rules against harmful content and publish regular transparency reports, we agree we need regulation for the whole industry so that businesses like ours aren´t making these decisions on our own,' Facebook said Monday.
It pointed to investing $13 billion on safety and security since 2016 and asserted that it´s 'almost halved' the amount of hate speech over the last three quarters.
Haugen accused Facebook-owned Instagram of failing to keep children under 13 - the minimum user age - from opening accounts, saying it wasn´t doing enough to protect kids from content that, for example, makes them feel bad about their bodies.
'Facebook´s own research describes it as an addict's narrative. Kids say, `This makes me unhappy, I feel like I don´t have the ability to control my usage of it, and I feel like if I left, I'd be ostracized,`' she said.
The company last month delayed plans for a kids´ version of Instagram, geared toward those under 13, in order to address concerns about the vulnerability of younger users.
Senior campaigner from SumOfUs Flora Rebello Arduini adjusts an installation protesting Facebook outside parliament in Westminster in London on Monday
Pressed on whether she believes Facebook is fundamentally evil, Haugen demurred and said, 'I can´t see into the hearts of men.' Facebook is not evil, but negligent, she suggested.
It was Haugen's second appearance before lawmakers after she testified in the U.S. about the danger she says the company poses, from harming children to inciting political violence and fueling misinformation. Haugen cited internal research documents she secretly copied before leaving her job in Facebook´s civic integrity unit.
The documents, which Haugen provided to the U.S. Securities and Exchange Commission, allege Facebook prioritized profits over safety and hid its own research from investors and the public. Some stories based on the files have already been published, exposing internal turmoil after Facebook was blindsided by the Jan. 6 U.S. Capitol riot and how it dithered over curbing divisive content in India. More is to come.
Representatives from Facebook and other social media companies plan to speak to the British committee Thursday.
Haugen is scheduled to meet next month with European Union officials in Brussels, where the bloc's executive commission is updating its digital rulebook to better protect internet users by holding online companies more responsible for illegal or dangerous content.
Under the U.K. rules, expected to take effect next year, Silicon Valley giants face an ultimate penalty of up to 10 percent of their global revenue for any violations. The EU is proposing a similar penalty.
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