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spk_0: good afternoon my name is mike and i will be your conference operator today at this time i would like for everyone to the facebook fourth quarter and four year twenty twenty earnings conference call or lines have been placed on need to prevent the background noise after the speech which remarks they'll be a question and answer session if you'd like to ask a question during that time please press start than the number one on your telephone keypad this will be recorded thank you very much miss deborah crawford books vice president of it relations you may begin
spk_1: thank you good afternoon and welcome to face of fourth quarter and four year twenty twenty earning conference call joining me today to discuss the results are mark zuckerberg l carol danvers the though and a plane or cfl before we get started i would like to take this opportunity to remind you that i remarked that will include forward looking statements actual results may differ materially from the contemplated by the for bugging statement factors that could cause these results to differ materially or set forth in today's press release and in our quarterly report on one ten queue filed with the fcc any for looking statements that we make on that call are based on assumptions as of today and we undertake an obligation to update the statement as a result of new information or future events during the couple we we may present both gap and non gaap financial measure for reconciliation of captain on gap measure is included in today's earnings petrelli the press release and an accompanying investor presentation are available on her website and investor dot fb dot com and now i like to turn the call over to mark
spk_2: alright thanks everyone for joining us today i hope you're all stay healthy and well our community and business had a strong and of year is covered continue to keep many of us apart and at home the people and businesses continue relying on our services to stay in touch you create economic opportunity to point six billion people now use one or more of our apps each day and more than two hundred million businesses mostly small businesses use our free tools to reach customers those numbers give a sense of scale ah but some the stories we are show the impact groups have formed were covered long hollers are helping each other through the scary experience where there's not much else to turn to add teachers are sending class assignment to suit your what's up local bookstores and coffee shops are using instagram at let customers know they're open for curbside pick up i we saw people come together to raised one point eight billion dollars for non profits impersonal causes to our fundraising tools last year i'm including one hundred and seventy five million dollars for covered related causes alone i am i'm proud of the role that are services played and helping people support each other again what has been such a hard time nice to the a fair amount of time on recent earnings calls talk about our election integrity efforts silicate discuss them at length today are but i do want to call out that according to our estimates wheat we easily surpassed our goal to help four million people registered to vote as part of the largest ever ah effort to largest effort to distribute authoritative voting information recent history and i want to thank everyone involved i'm in our teams and in and outside and got to that effort so today the to focus on our product work and specifically i'm going to focus on for teams are that i'm excited about for the year ahead communities private messaging commerce tools for small businesses and a building the next computing platform the let's start with communities
spk_3: the i think that helping people build community is ah
spk_2: is one the most important things that we can do our social fabric is is made of multiple different layers through which we get our social support and a first we have friends and family and i must personal layer than we have a communities were part of where we feel a sense of purpose and belonging to explore interests develop skills grow as individual olds and and meet new people and then finally there's the safety net that that society and and government provide and in many parts of the world there's been an unfortunate decline and community participation over that the last several decades at that second layer and visited some that we can solve alone but i think we can help so another we've held billions of people stay connected with friends and family helping iran find in participate in communities that are meaningful to them i had been our next goal and we've been updated our miss in a few years ago to reflect this making it a give people the power to build community and bring the world closer together today more than six hundred million people are now members of a group on facebook that they consider to be meaningful in their lives at this is growing steadily over time in and i hear all the time from people who are and parents and groups that there are major resources the navigate raising kids or from people who found a group that shares the same health condition and they can lena that community for knowledge and support and or from people have moved to new place and enjoying local groups to meet people and get situated
spk_3: our product focused and now is to develop this community infrastructure beyond that feeds and message boards to help people build and run full self sustaining community institutions some we're building tools to help groups get things done together and provide support for people that span
spk_2: messaging video chat and even community don't website and we're exploring different way is to raise funds including donations merchandise and membership fees to help group leaders support their communities operations and and hire people are for different roles that are needed to build sustainable communities for the long term does we continue to focus on this a we need to make sure that the communities that people connect with are healthy and positive and that that's something that we've been focused on for a while now a one way of course that we do this is by taking down groups that break our rules against things like violence or hate speech and in september we share the weed remove more than one million groups in the last year alone
spk_3: ah but there are also a lot of groups that the we may not want to encourage people to join even if they don't violate our policies that so for example we stopped recommending civic in political groups in the us ahead of the elections
spk_4: i'm and
spk_2: where we're continuing to define to how this works but now we plan to keep civic in political groups out of recommendations for the long term and we plan to expand that policy globally and it to be clear this is a continuation of work we've been doing for a while i had to turn down the temperature and discourage a divisive conversation and communities no along the same lines are more also currently considering steps that we can take to reduce the amount of political content in newsfeed as well ah we're still working through the exactly the best ways to do this and to be clear of course we're still going to enable people to engage in political groups and discussions if they want to these can often be important and helpful and they can be ways that people organize grassroots movements or speaking out against injustice there were learned from people with different perspectives as we want these discussions to be able to keep happening born in the top piece of the feedback that we are hearing from our community right now is that people don't want politics and fighting and to take over their experience on our services the one theme for this year is that we're going to continue to focus on and helping millions more people participate in healthy communities and we're going to focus even more on being a force for bringing people closer together next let's talk about private messaging as we've discussed before a while people enjoy connecting with friends and community isn't the digital equivalent of a town square in a apps like facebook and instagram add the fastest growing social experiences are about collecting privately and the digital equivalent of the living room and services like what's up and and messenger as that's why we kicked off a big effort a couple of years ago a to reimagine what a modern social platform with look like if you build it from the bottom up to be privacy first and we identified several a core principles a private social platform i should be built around the most intimate interactions that that we have and that's one on one conversation the most important aspect of privacy and security is that your conversations should stay between you and that means that your conversations should always be end to end encrypted and they should disappear when you're done with them
spk_3: the safety and reducing spam matter to and that means that we should maintain a minimum amount of meditator out to build sophisticated tools to stop bad actors are using these services and you should have choice over what services you use so we should make messaging as interoperable as possible across our apps
spk_2: and finally no matter what are we should only store people data in countries where we know we can keep it secure and and we should continue opposing data localization i in countries with week records on human rights or privacy
spk_5: i think that these
spk_2: or the privacy principle that matter most to people first and foremost people cared their conversation stay private a but after that people also care about safety and other convenience to and from this perspective of what's up and the direction that we're heading and with messenger or the best private social apps avail no we have a lot of competitors to make claims about privacy that are often misleading the apple recently released so called nutrition labels are which focused largely on meditator that apps collect a rather than that the privacy and security of people that your messages but i messaged a stores none intend encrypted backups of your messages by default and lucky to save like clouds of apple and governments have the ability to access most people messages don't want when it comes to what matters most protecting people's messages i think that what's app is clearly superior now since i try to use these earnings call to discuss aspects of business strategy that i think are important for investors to understand i i do want to highlight that we increasingly see apple is one of our biggest competitors hi message is a keep spend of their ecosystem i had comes pre installed on every i phone i'm in a preference it with private a p eyes and permissions which is why i messages that the most used messaging service in the us cod and now are we are also seen or apple business depend more and more on gaining share in apps and services are against us and other developers to apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work at which they regularly due to preference their own and this impact the growth of of millions of businesses around the world the including with the upcoming i was fourteen changes many small businesses that will no longer be able to reach their customers with targeted ads now apple made me say that they're doing this to help people but the moves clearly track their competitive interests and i think that this dynamic is important for people understand because we and others are going to be up against this for the foreseeable future now or messaging services continue growing up or is an uphill battle and and our services i just need to be that much better as private social platforms to succeed so our to make sure that we remain the best i'm a couple years back we kicked off a number of long term effort or that have started shipping recently had more these projects duran strengthening encryption ephemerality interoperability and often other tools are going to be shipping throughout this year parts now let's talk about commerce our goal here is to give every individual entrepreneur and small business access to the same kinds of tools that historically only the big companies that access to and we've always cared about this ah but the pandemic has made it more urgent do it used to be the case that only large companies could afford to have analytics or targeted advertising capacity to reach their customers it was expensive to build these capabilities and and often required building teams in storing large amounts of data in house which and most small businesses can't do
spk_6: it and is one of the things i'm most proud of and is that we build the tools so we can offer the same capabilities to small businesses are often for free
spk_3: so when you hear people say or that we hold a lot of data and that's because hundreds of millions of businesses that would have otherwise had to do this individually i'm in would have had no easy way of doing so are now using our services to help them reach customers and when you hear people say that we're connecting data from lots of sources or that's to help small businesses
spk_2: as reach customers more efficiently no big companies often do this themselves or but small businesses can't a lot of times we do this for them as when you hear people are you are the we should be doing these things or that we should go back to the old days of on targeted at television ads and i think that what the really arguing for is a regression at were only the largest companies have this capacity small businesses are severely disadvantaged and competition
spk_7: is diminished
spk_2: though with with our commerce tools and we've made it so that a business can set up a shop once and then they will have an online store front and in both facebook and instagram immediately and eventually on what's happened messenger as well and we recently expanded check out at you all us businesses make the process of buying a lot more seamless and as the lockdowns have continued wheat we some more businesses more small businesses and craters also used paid online events as way to make money what up and is also an important part of our strategy here a more than one hundred and seventy five million people a message a what app business account every day i'm in rebuilding new features to make it even easier to transact with businesses and the app and we introduced carts which lets people browse catalogs select multiple products and and send the order and as a message to a business and the more people than interact with businesses the better tools that we're going to need to provide for businesses to help and support their customers and many businesses need more than a phone to manage their customer service so we're we're building tools like businesses store and manage other what's up chat using our secure hosting infrastructure if they with like i'm a more in the process of updating what that privacy policy in terms of service to reflect our viewed optional experiences and now and to clarify some confusion that we've seen this update does not change the privacy and of anyone have any ones messages or with friends and family
spk_3: all these messages or and an encrypted at which means we can't see or hear what you say and we never will but unless the person you message chooses to share it i and in business messages will only be host on our infrastructure if the business chooses to do so as we want everyone to know the lengths that we go to to protect your private mess
spk_2: fujitsu we're moving at the date of this update back to give everyone time to understand what the update means finally alex discuss our work building the next computing platform and this is one of the areas that i'm most excited about our progress heading into twenty twenty twenty one i'm if you look at the history of computing a every fifteen years or so a new major platform emergence that integrates technology more now naturally and ubiquitous way into our lives are starting with main frames and pc use than browser based computing and than mobile and i believe that the next logical step here is an immersive computing platform that just of delivers the magical sense of presence of the you're really there with another person or in another place i'm er phones can deliver this and neither can any other technology that have come before it this is going to unlock the type of social experiences that that i dreamed about building as since i was a kid and and it's it's what we're building towards at facebook reality labs
spk_0: we launched quest to in october and it is on track to be the first mainstream virtual reality headset are we decided to that anyone could jump in our with the best and most immersive experience out there on and at a price that makes it available to as many people as possible
spk_2: i think the facebook has done more than any other company to help bring virtual reality to the mainstream and had been great to see so many people embrace this especially in this year during the pandemic an interesting people use it to play games with friends when the can be together a person at the workouts in their living room or to meet with colleagues while
spk_8: they're working from home
spk_2: is there a lot of reasons the question was one of the hot holiday gifts or this year we're also seeing a growing ecosystem of developers a building amazing new experiences for the platform the right now more than sixty akio developers are are generating revenue in the millions on and at nearly twice as many as a few months ago i'm in previous quarter is have a talked about our long term future goals and comes to virtual reality but but i think that this quarter's results show that this future is here augmented reality glasses or are going to be a key part of his vision to and we're still working on some a foundational technology to underpin the is and the ultimate product is is still some years away or but this year we're excited to deliver a first glimpse of what will be a when we launched our first pair of smart glasses from ray ban in partnership with luxottica and and during this pandemic we also seen portal has proven to be a great way for people to stay connected especially over the holiday his family had to celebrate apart i did you know this year we're we're focused on expanding the role of a portal and virtual reality presence and into the workplace a brain more features that that can improve or what presents collaboration and and productivity when he twenty one and has a lot of unknowns in a when we don't know when of vaccines are can be widely available when our teams will be back in the office or when our lives or to start feeling normal again but i would i do know is that we're going to keep investing in i'm in innovating on the big themes that i discussed here in order to put more power in the hands of people and small businesses am i personally believe that technology can unlock progress and opera
spk_9: unity and that the the full story the internet i had not yet been written that's why i'm hopeful for the your ahead and grateful to you are on this journey with us and and now here is cheryl to talk about our business thanks mark and hi everyone like mark i hope everyone is safe and healthy it was a strong quarter for our business a big salaries and of online commerce a theme during a pandemic continued into the holiday season
spk_1: the total revenue for queue for with twenty eight point one billion which is a thirty three percent year over year increase or fastest growth rate in over two years
spk_9: after a really difficult year for so many businesses that holiday period was important and while many businesses are still struggling the good news is that queue for with stronger than expected for retail in the us the national retail federation reported that sales in november and december when up eight percent year over year and online sales were up twenty four percent that holiday period with also longer compared to previous years advertisers started spending earlier and sustained that spend well beyond black friday and cyber monday we thought robots performance across region as well as an improvement in brand advertising the streets of our cue for performance is the result of years of investments and free and paid tools to help businesses succeed online even before the pandemic businesses were going digital but coven made that necessity almost overnight businesses had to create digital forefront figure out how to take online orders and find new ways to reach their customers are many small companies these steps or even just setting up a website or mobile app and be difficult and expensive are free and prayed to have helped solve these problems for businesses around the world with so many businesses struggling when the pandemic hit we asked our team what you businesses need and how can we help first they need to talk to get their business up and running on line so what can we do to make are simpler and more effective in can we build new ones to help them second they need the digital skills and know how to succeed so how can we help more businesses with training and resources and third they need their voices to be heard how can we use our scale to amplify their voices and tell their stories we've been asking these questions throughout the last year and into que for on the first week salad rated r work on tools to make it easier for people to find branson products they love and for businesses to manage their online presence and connect with customers mark talked about some of the new tools we've launched like shops and paid online events in the fall we also rolled out fit for business sweet a new interface to help businesses manages their pages or profiles across europe we also continue to invest in making our products as effective as possible so businesses can get more about doubt value for every dollar they spend
spk_1: personalize ads your privacy safe and help businesses reach customers were they are which has been more important than ever during the pandemic
spk_9: one notable areas progress as pasture wasn't story that which have become more effective for direct response advertisers one business that youth story dad's his car loan a flower lab a florist and love tray of mexico before coven they made seventy percent of their revenue from face to face worship workshop to when the pandemic had found your parliament those i had to get creative she is personalized that's on instagram to reach new audiences and even found her first international customers with campaign targeting california and texas one campaign for dia de los muertos the day of the dad and november lead to a twenty four times return on ads and helping college triple her annual revenue in twenty twenty despite coven i'm a second resources and training we did some big things and twenty twenty we created a business research have a one stop shop for resources and training for small businesses that we've continued to build out through the end of the year we committed to reach one million members of the black community and one million members of the latin next and hispanic communities and the us with free digital skills training through our elevate program by twenty twenty three and we reimagine our boots with facebook event to reach businesses virtually with one hundred million people tuning in throughout the year this included are twelve weeks season enough support to help businesses are press sixteen countries prepare for the holidays on the third a great example of how we amplify the voices of our businesses in queue for his our by black friday campaign one of my favorite campaigns ever in the us black owned businesses closed at twice the rate of others after the start of the pandemic so we wanted to help people see people shop with them over the holidays we created ways for people to find like businesses in their local area a gift guide featuring products from black businesses across the us and even apply black friday show on facebook live that with seen by fifteen million people one of the small businesses we featured is a and skincare pratt brand called review from new york city it's founder asia grant appeared on the five like friday show that became one of her most successful sales they've ever the campaign gave her record revenue in web traffic and she was even able to hire more people something that's so important given current unemployment rate business owners like asia and power have worked hard to adapt and girl on line but lots of businesses will continue to struggle and twenty twenty one so we're going to keep listening to them and building on what we did last year that means improving our products and tools to help businesses seamlessly manage their online presence advertiser class our app think communicate with customers do business messaging
spk_1: it means making more training available through programs like she means that enough for women and elevate for diverse communities
spk_9: and it means finding more ways to amplify their voices whether at sharing the stories of small businesses worried that apple's iowa fourteen changes will hurt their ability to reach customers or showcasing small businesses and gift cards and products like businesses nearby i want to close by thing how grateful i am to all the businesses around the world to work with us your partnership helps us filled the tools you need that you can continue to grow in higher and as always i'm grateful to are incredible teams who have done so much to help businesses survived a difficult year including coming up with great idea of like by black friday i hope that twenty twenty one of the better your for everyone
spk_2: now here's dave sure that good afternoon everyone queue for was a strong quarter capping off a solid your for a business as four years when he twenty revenue grew twenty two percent eighty six billion dollars we have been encouraged to the improved demand for ads during the second half of beer after facing significant headwinds of the onset of the pandemic
spk_3: or results reflect the ongoing strengthen the digital economy and the value were providing millions of businesses to use or services to reach consumers and generate sale
spk_10: let's begin with our community metrics in december we estimate that approximately two point six billion people used at least one of our services on a daily basis and but approximately three point three billion people used at least one on a monthly basis based with daily active users reached one point eight four billion of eleven percent or a hundred and eighty eight million compared to last year
spk_3: the i use represented approximately sixty six percent of the two point eight billion monthly active users in december and they use grew two hundred ninety nine million or twelve percent compared to last year consistent with our outlook us and canada via you declined one million sequentially as usage continue to normalize from be covered levels experienced earlier in the year turning to the financials all comparisons are and you ever your basis unless otherwise noted for total revenue was twenty eight point one billion of thirty three percent or thirty two percent on a constant currency basis we benefited from a currency tailwind and had foreign exchange rates remain constant with coupon last year total revenue
spk_2: you would have been three hundred and thirty nine million dollars lower
spk_3: you for ad revenue was twenty seven point two billion dollars or thirty one percent or thirty percent a constant currency basis the great in advertising revenue was largely driven by a strong holidays shopping season for retail which benefited from the ongoing shift the online commerce
spk_2: on a user geography basis ad revenue was strongest in europe which grew thirty five percent and benefited from currency tailwind us and canada grew thirty one percent in asia pacific great twenty nine percent the world growth improved twenty five percent but continue to be significantly impacted by currency headwinds
spk_10: in queue for the total number of ad impressions served across our services increased twenty five percent and the average price for add increased by percent
spk_3: impression growth be driven by the face the get the spring the increase in average price for ad was driven primarily by is the mobile feed as well as pricing improvement in instagram stories
spk_2: other revenue was eight hundred and eighty five million dollars of one hundred and fifty six percent due to strong question holiday feel cells we've been encouraged by the positive reception a question since october launch turning out to expenses keyboard total expenses were fifteen point three billion dollars or twenty five percent compared to last year in terms of specific line items cost of revenue increased forty nine percent driven primarily by hardware costs related quest to sales korea infrastructure investment and payments partners already increased thirty four percent driven primarily by hiring in investments in core product as well as our consumer hardware efforts
spk_6: marketing and sales increased a percent given by hiring and marketing spend lastly week expensive decrease thirteen percent as we lap charges related to the people legal settlement recorded in the fourth quarter twenty nineteen
spk_3: in the past year we added a record thirteen thousand six hundred net employees and reached our goal of adding ten thousand employees in tech and product roles
spk_6: the end of year with over fifty eight thousand six hundred full time employees of thirty two percent compared to last year we continue to be pleased with our ability to recruit onboard and retain talent in this environment
spk_3: fourth quarter operating income was twelve point eight billion dollars representing a forty six percent operating margin or tax rate was fourteen percent net income and eleven point two billion dollars or three dollars and eighty eight cents per share capital expenditures for four point eight billion dollars driven by doesn't the data centers servers officer hillary the network and first
spk_2: thrasher free cash flow with nine point two billion dollars in the end of the quarter with sixty two billion dollars in cash and marketable securities for the full year we repurchase six point three billion dollars per class a common stock and had a point six million remaining in our prior authorization as of december thirty first
spk_3: today we announced the twenty five billion dollar increase in our scott repurchase authorization
spk_2: turning out to the outlook we continue to take significant uncertainty as we managed to a number of cross currents and twenty twenty one we believe our business has benefited from to brought economic trends playing out there and the pandemic the first is the ongoing shit the online commerce the second is the ship in consumer demands towards products and away from services we believe these she provided a tailwind to our advertising business in the second half and twenty twenty given our strength and product burger cancelled the a
spk_3: online commerce and are lower exposure to service articles like travel looking forward to moderation a reversal in one or both of these trends could serve at the head when to our advertising revenue growth
spk_2: at the same time in the first happened twenty twenty one will be laughing a period of growth that would negatively impacted by reduced advertising demands are in the early stages of the pandemic
spk_10: as a result we expect your over year growth rates and total revenue to remain stable or modestly accelerate sequentially in the first and second quarters and twenty twenty one
spk_6: in the second half of the year we will lap periods of increasingly strong grant which will significantly pressure year over year growth rates
spk_2: we also expect to taste more significant ad targeting headwinds and twenty twenty one that includes the impact of platform changes notably i let fourteen as well be evolving regulatory landscape while the timing of i the i was fourteen changes remains uncertain we would expect to see an impact beginning in the late for score be getting late in the first quarter
spk_10: there is also continuing uncertainty around the viability of transatlantic data transfers in light of recent european regulatory developments and like other companies in our industry they are closely monitoring the potential impact on our european operations of these developments progress turning now too expensive we expect twenty twenty one total expenses to be in the range of sixty eight to seventy three billion dollars unchanged from our prior outlet
spk_2: this is driven by investment and technical and product out as well continued growth in infrastructure costs
spk_3: we continue to expect twenty twenty one capital expenditures to be in the range of twenty one twenty three billion dollars driven by data centers servers network infrastructure and office and leave our outlook include spend that was delayed from twenty twenty two to be impacted the pandemic on our construction efforts
spk_2: turning out to tax we continue to expect our full year twenty twenty one tax rates to be in the high teens
spk_10: including twenty twenty with unique operating environment that introduced a number of unforeseen challenges we've been pleased with our team's ability to adapt in order to maintain the reliability of our services deliver new products and experiences and support the millions of businesses he used our platforms to reach consumers
spk_0: with that might let's open up the copper questions we now open the lines for a question and answer session to ask a question press star followed by the number one on your touchstone phone please pick up your handset before asking a question to ensure clarity if you are streaming today's call please meet your computer speakers
spk_11: your first question comes from the line of brian the like from morgan stanley thanks to my question i've i've to the first time for either mark or share cheryl at appreciate the collar on on commerce was curious is for any encouraging quantifiable signposts are learning that you've seen so far and instagram shopping as or give you confidence are making progress and building out this opportunity and the second one dave yeah net a pretty the comment on the forward outlook and our outlook commentary and i guess the question as he sort of talk about this shift a consumer expenditure toward products away from services and i could potentially be a headwind and the back half as it as a reverses the glass core you mentioned get ten
spk_12: alien advertisers so maybe talk to us about sarah some of the segment of advertisers you think that you're missing and what initiatives the haven't played this sort of broaden the advertiser based three more services on the platform thanks
spk_9: i can get the first i'm with instagram shopping we launched a new shop tab on instagram and cheer for and if of felt fine other are shopping efforts we've had we see this as an overall part of our commerce effort you know we've always then i think a great place for people to discover new products and services that we are very interested in putting people on lay down that funnel fans of every to protect the finding products and services checking out and as well and are shopping efforts are part of that we're seeing nice up tech it's still really early days and but we think businesses are having a good experience and people are having it that external and as always like our ad for with our at products and with our commerce fact we to make sure we provide a great experience to the
spk_3: angier said it they said that they can find the thing is they're looking for
spk_2: hey brian is dave yes you know the data that we've looked at there really is that you know when you look at the data from the us be a it it basically showed that in in que three white while the services consumer spend with still down year over year
spk_3: spending on good actually surged to in a record levels are the highest in like fifteen years and we don't have the results for queue for the we expect that sort of trend continued if you look at the balance of our of our business it tends to skew more towards products relative to the overall you know gdp and cons are the overall consumer span
spk_2: you know in in in in for instance view us so we just think we're overall exposed a little bit more to products we continue to invest in to to improve our exposure and travel a starting in service areas like travel
spk_0: i'm a but you know our expectation would be in twenty twenty one will continue to have a similar skewed towards products as we'd have my passport continue to make investments maker and products more relevant for services as well
spk_13: your next question comes from the line of doug aiming from jp morgan great thanks for taking the question for david cheryl
spk_0: we know he mentioned and significant as targeting headwinds but as your view on idea if a changed at all over the past few months and is here's how you're thinking about fate books ability now to offset some of the impact just through things like limited log in mode and you a the eyes and other conversion tools and data and if you could just talk a little bit more about
spk_10: out ah our thinking about the impact across fan and then the core products thanks a dog i'll take that so you know i don't think our outlook has has changed
spk_3: in you know any significant way on i was fourteen wheat we continue to believe that that will be a headwind in the ads business it's in our view not just limited to idea day but but broader than that as we're going to have to be providing a me know a
spk_2: and and a prompt asking people for permission to use third party data to deliver a personalized dad so that's going to be true but are you using idea pay or not and we do expect there to be no hi opt out rates related to that and that's factored into our outlook on you know we expect that to roll out some time you know we expect later and in que one
spk_10: but the timing is uncertain and an apple haven't given you know clarity on that at this point and we do expect that will have increasing impact through the year as more users adopter i was fourteen and and guthrie does permissions and when you think about what the medications might be an obviously there is going to be mitigation of the impact on us to some extent is because this is a platform why change in that so little impact every one
spk_6: and so that's gonna that's gonna mitigated to some extent and in addition over time we help that we have to help businesses by providing more on site conversion opportunities through initiatives like shops on and also clicking messaging as
spk_2: and as as it as it relates to specifically the audience never products obviously that's going to have a on yeah significant impact on audience network on iowa asses we've explained in the past
spk_0: but it said but that the broader impact given that size of that business is really to are to that to the core the core advertising business on a o s
spk_14: your next question comes from the line of eric sheridan from gbs thanks so much for taking the question may be too if i can market conduct your comment what you see is some of the key investments either one the hardware side or the content application side to unlock the opportunity based on what you recently saw with the success of aki less in the holiday period where are those piece of hardware are the see that that's hole through quite well and how do you think about aligning investments against the opportunity or in the coming years and then maybe a band of up it's for cheryl or gave give you just follow up a little bit on on dodge question you know when you think out to the language you're using about the back half of the year is there any sense you can give us a quantity
spk_2: the hubbard think about some of the up proper tom show fee as we move to twenty one person's identifying at the degree of the severity of different outcomes from some of the headwinds thanks so much i can take the first on so when we started working on virtual and augmented reality we basically laid out a ah path where we knew that virtual reality would be practical to build first and we view that that i'm that it's it's kind of all part of one continuous ecosystem for spatial immersive ah computing and presence tell the key things that were trying to do with the are now i do believe that quest to is the first ah
spk_3: mainstream virtual reality product it is doing quite well i'm and i'm really proud of what we've been able to do there
spk_2: the gold there is you know we we keep on ah yes shipping content and titles and working with developers and shipping new capabilities to the device like last year we we ship the ability to do now hand tracking care which no one expected to be possible yet but i've the team working on that it's really great work and it just made the device better i and and increase the value ah
spk_15: so you know other what we're continuing to work on a new hardware as well as the new hardware will kind of fit the same platform said the the content that works on quest you should be a forward compatible and salary woodwork and build one a larger install base arm around that the virtual reality headsets to be have
spk_2: i'm at the same time more building towards a future with some of this the a fundamental technology investments that were making to be able to provide augmented reality glasses that hopefully we'll be able to support in a lot of the same content in and the ecosystem overtime and and take advantage of a lot of these foundational investments that we've made so this is if this continues to be a long term i'm a long term investment i think it's it's very important both for the vision of what we want to do like i said my script before earlier it's it just you know it some of the things that were email to build with vr and and a are the types of social experiences that i've wanted us to i wanted to build that was a kid and and i'm excited to build on walk that i also think strategically it's not important for us to am have a little more control of our own destiny i in terms of the the operating systems and
spk_10: platforms that all of our services operate on so i'll continue to to be very focused on us an optimistic about what we're saying
spk_2: yeah eric i'm if it's stages just just coming back here question i think we know the context is it we had this trump we've added tremendously strong quarter to four this year yeah number of factors which we talked about driving that you know a couple of her or pandemic related which is just the shifter online commerce as well as the ongoing you know that the ship to more spend on products or services on in que por we also saw strength and with server full range of advertisers weed seeds are small and medium sized businesses come back and in in and start
spk_10: eating strength and you know que to into three or two three specifically and in a queue for we also saw strength from some of our largest advertisers as well i'm so as you look out in twenty twenty one you know i think we're just going to be facing tougher cops in the back half of the are some of those things related to the you know to really related to the pandemic have the potential
spk_6: lt to revert whether it's more on consumer expenditure shifting toward services away from products on to that i'll make it a little bit of a tougher top and then you layer on top of that headwinds to to growth related to
spk_16: yeah privacy related had when the biggest factor there as i was fourteen so you know we certainly anticipate growth but you know we're we're just looking at get tougher cops as we hit the back half of the air at given really most importantly the strength that we saw this year and then on top of that that that that headwinds that we're seeing from from some of the price
spk_0: see changes
spk_17: your next question comes from the line of just can post from bank of america
spk_10: great thank you
spk_13: i guess i'll ask about regulation i know i know it's a tough topic i'm i'm first mark and you prepared remarks you you elevated a little bit competition with apple age or anything going on with with iowa fourteen besides idea fair that maybe put you in more direct competition with apple and then secondly i obviously the ftc
spk_6: i'm file their case since last earnings call or maybe get an open forum any thoughts on on mad that you you're able to share they
spk_2: full in terms of the competition with with apple specifically yeah i laid out the rear of for product focus areas and in with the exception of the work that we're doing on communities which i think it's quite separate from from the work that they do on the other three areas that figure can have very significant competitive overlap with apple in messaging certainly keep an eye messages is the most popular service in the us i think because of the fact they pre install it in and give their up several advantages that that than other apps don't have ah and commerce and and supporting small businesses i think there you have some the i was fourteen i changes that are we think are can be very problematic especially for small businesses and the longer term as we move towards building on the next computing platform on it i think we would expect to see them i'm is is more of a competitor there as well so i do think that this is sort of shaping up
spk_0: in that and we fit many competitors to either like competitors in that the core social app work that we do
spk_18: excuse me this is the operator i apologize for the will be a slight delay in today's conference please hold on the conference rooms him shortly thank you for your patience
spk_0: i too i mean
spk_2: it's because we are now connected
spk_10: was there another question on the last one i was with answer whether his passion about the ftp on egg i've learned what op
spk_0: i are we are we are now through this one
spk_19: yes you are connected
spk_10: okay
spk_3: to where did i lose you
spk_10: thank you had covered that question of the dynamics related to
spk_2: the competitive landscape and then there was a follow on question around the ft ftc case in any thoughts that that we have on that i don't think we have anything we necessarily are commenting on at this point yeah nothing on the case amount regulation overall can i think some of the question was focused on that the point that i would highlight is i actually think would be very helpful to us and
spk_20: and the internet sector over all for their to be clear rules and expectations on some of these social issues around
spk_2: in a how content should be handled or on how elections should be handled arm around out what privacy norms governments want want want to see and place because these these questions all have tradeoffs trail that the contents elections come to earn less elections questions have tradeoffs between giving people free expression and a voice but but homes their trade off sick and safety and ah and and privacy and other social equity they're all very important and it's
spk_0: in i thank you very difficult for a private company dad to balance and those and and i think would be much better to have an interest in the clear guidance and clear rules for the internet so that can be selling the we continued advocate for
spk_21: i forgotten next question
spk_22: your next question comes from the line of raw stamler from barclays
spk_10: ah hey guys question about the oil price volume i love you i now are limiting
spk_14: can you hear me yeah i put i got here you know yeah question about the price vs volume metrics daily just mentioned on the first quarter a long time that price i think was up year on year and other the lot of factors go into that but you also mention that you're seeing strong traction from d our advertisers around the story one out to maybe just a little bit more color on
spk_10: you know where we are the stories vs feed price dynamic and know what kind of the our advertisers you're seeing and was traction around these are story that makes a lot
spk_3: yeah sure sure ross
spk_2: so we can be as as you know with the auction dynamic the growth pricing is you know that's really depend on him for impression breath and we saw impression bread slow this quarter to twenty five percent from the key to made a thirty five percent and some of that is just you know lapping product optimisations on instagram during cube
spk_3: for of nineteen as well as just a normalization of engagement trans on on facebook
spk_2: and so we would expect that sort of overall story to continue into que one with those trends and then we're also continuing to make you know it or of improvements that in yemen have the performance and
spk_0: in benefit pricing over time and and you know the one example if we give their instagram story that as you know it's been an area we've been focused on the try and make vr performance and you through better or as interactivity
spk_2: it work better on story than and we've been seeing some good progress there so we called that out as as well as being a driver of of a price improvement there's still a gap with done story that and on and that if he adds an that and we've been pleased with the progress we've been making on that front
spk_14: your next question comes from the line of cancer bash him from barrett
spk_10: a great thing for much to grip on for me i guess i guess given the ongoing efforts and five and that's the game and curious ultimately what will differentiate messenger for what that other than branding your geography as as an inevitable consolidation of of functionality there and then suddenly unreal know it's still early
spk_2: any update our performance reuptake as well as that the road that the month they should i think what be helpful and you
spk_23: marty want to take this
spk_2: yeah i can take the first one i mean that the biggest connection with for the biggest difference between messenger and what's out there is obviously the connection to facebook and and be kind of same identity and and nam graph day that you use on facebook comes comes with you to messenger so you if you can send messages across the different apps and and and there's there's more interoperability and we bring the same world class privacy features to both second that that will still make the apps feel i've fairly distinct i also think the kind of aesthetic and of focus of the app son ah know how much different functionality they may include will will vary i think what's up as always had ah
spk_1: and we voice focused a lot on a minute very utilitarian experience and and least more premium on and simplicity their civil war continue adding new functionality but i'm are more focused on keeping that minimal are worse than and messenger we have a lot more to
spk_24: oh and features for expression
spk_9: and i would i would expect the will continue adding more there as well which we are we're really pleased with the early data and consumption and we have a bunch of work ahead of us can make it easier for people to create and discover contact we've now ruled out the product and over fifty country you know in mind division of it
spk_1: we've launched branded content hiding the off said that helps creators as share the content from mine has a launch shopping in real and we've had that we will launch had the timing and to be determined i'm going to follow the same pattern we found another things like story
spk_9: you know we launched and humor products
spk_0: we make sure there's product market fat some people are using it
spk_25: then we launched an ad product can we make sure that it's beneficial for consumers and if david answers and i think the last question we worked in a very diligently quarterback quarter on the basis point improvements and help us scale a product and we will do things can make it easier for people to create the rights witnesses to create the right and format we will do things to make as ads and get to the person who might be looking for that pakistan your next question comes from the line of youssef squarely from true as securities great thank you very much or two questions please mark i want to go back to the first team debut this cause of communities and how you look to potentially deemphasize civic and political groups on how important are how ah large is civic and political arm her content on the side of her way to quantify it or qualified engagement with it to see if this is one of the the headlines that town
spk_2: that you guys talk about in terms of potentially ah emergent and in the and twenty twenty one and second on the regulatory headwinds there is just increase in talk as about section to twenty protection i know it's a it's a thorny subject about from where you stand how do you see facebook and not just really face pop or other social media platforms dealing with it and ah if if it was either to be narrowed or even completely eliminated thank you there i can probably take both of those
spk_15: yeah don't know if we have any stats to share on the size of civic and political content but it's it some in a pretty small minority of the content that and and it's some and and all the feedback that we have from our community suggested the vast majority of people would like to would like to stay that way
spk_2: and i think there's been this friend i think across society where a lot of things have become politicized and arm and and politics it has has kind of had a way of creeping into everything and i think a lot of the the work that where i have i'll be back a we see from our communities that people don't want that in their in their experience i'm in the come to our services to connect with friends and family to connect communities that they care about and ah i think that that weekend can potentially do a better job of those core jobs that we have on and to a better job of helping to bring people together and helping to promote healthy or community is on if we can i reduce the amount of politics the on on our on our services now i'm it's it's a and will have to balance was carefully because now we have a deep commitment to free expression so i believe that people want to feel to discuss the stuff or join groups their arm they should certainly be able to do that ah by it the but i i just don't think that i'm it's serving the community particular well to be recommending that content right now but i'm one one thing to mention just because you're asking about in a headwind know that is i don't think that this is a factor in any of that and and waner can can jump and if there's any more the you wanna ah add on that bad but i don't think that that's what what he had in mind and and in any way their i'm waiter i'll skip a beat for you to jump and if you want before going to the next question yeah no i just gonna say that exact thing you said that is not something that factoring entire outlook it's not a it's not a headwind that is is it is a factor in our twenty twenty one outlook or and certainly on the ads front as well political ways you know extremely small it's low single digit revenue or even in you don't act political corner like we had so no it's not factoring in are neither the outside or the engagement side outlet
spk_26: yeah and now going to your to thirty question
spk_2: yeah i do think and i i testified this is about this in congress had you think that congress should update section two thirty odd to make sure that it's working the way that that people intent right in it in after i think being in place for almost twenty five years and the to thirty have been very important it's helped give our rise to the internet is as we know it today and it's given internet platforms tools to appeal to balance free expression safety i'm and and i think it's also gone pre he far in terms of helping to ensure that values like free expression ah are built into the the internet's dna so i think that any changes should be i thought through very carefully and should not be thought through
spk_1: not just from the perspective of what a larger company like
spk_0: i'm like facebook or google or twitter could handle in terms of updating their content moderation
spk_27: policies but it also you from the perspective of making sure the new new companies can can can continue to emerge i heard that's that's very important as well so we supported changes in this ah for for a while back and twenty eight and we asked to forge a change to prevent and sex
spk_2: the game and arm and you know will support to similar efforts to tackle harms like i'm child exploitation
spk_27: imagery and material and and opioids and die and and and walls to support me pushed to make content moderation systems more transparent and the detailed knowledge of course matter but we we hope to go to work with the new congress on us
spk_2: right we have time for one last question your last question comes from the line of john blackledge from callen i agree i think get to questions on marble on community kid could use provide further details on lowering more services often facebook groups and expectation of for uptake of those in services and and could community of all that are meaningful or month decent driver army are in the come mean years and then on idea to a needy for dave or share all i you think advertisers are prepared for the changes and will the long till advertisers been work or impacted than the larger more sophisticated advertisers like i can speak to the the first point i'm a first for for the business i'm in i'm fucked we look at community separately from friends and family they they're both different types of content that shop and and v in that people interact with but my guess is that it's probably already pretty meaningful driver of of the business and and
spk_23: and then the value that people get from the services today so absolutely i think if this continues to grow ah much should be in the in the future
spk_2: beat the the big trend that we're the we're looking at now and then i tried to call out my my remarks earlier is that right now i'm your there's a there's a spectrum of different kinds of groups and communities on facebook you never am yeah everything from the meme groups that that people find very entertaining and fun to i groups that people really turn you for support when they have i can a serious issues in their lives and i think of right now though most of these communities you know they they have are the backbone of it is feared i there's their way to to message people but when i think about the physical communities that tom that that i'm a part of ah he was in in in my life they they did they often have more of an institutional structure either is there a sub communities
spk_1: there there are people who are it's their full time job to basically help you know help people engage in and and and damn i at end
spk_9: and it basically help people navigate i'm i'm i'm thinking about things like that the synagogue that i'm that i'm a member of credit them there there are people there whose job it is is to help and the congregation and help them i'm get are basically is that the most out of out of everything that the the institution has to offer and that's very important kind of
spk_28: our community organization and i would love up for more institutions like that are to be able to organized and build community more effectively online to there are lots of just different tools that ah that i think that if we if we provide you know with spanning messaging as spanning video chat ah these organizations own website sites and and other things that they do that
spk_9: we can help i and in a lot of those areas then we can make it said groups on facebook or not just they're not just to feared and a place we post some content and maybe engage on a post but that we can really help more organization build up community institution like that i think get that could be a very big contribution and something that i'm i'm excited about taking on your second question in a we think it's a really important question one that in are we we had barrister think that small businesses are very reliant on personal i found the ability to use data in a very proud of the safe way to get the customers who are interested in their products and services and that makes sense in a big
spk_1: didn't we can finance and the whole country we can buy an ads on whole wheat and hobbies as if to have to provide the precise i since they want and i think one of the mainstay of our business as me the name of that targeting in a very proud of the safely without giving information without permission to advertisers
spk_0: and what's happening with idea say that small businesses are really concerned because they're worried that they're not gonna be out of the by effective advertising if all person i that's right away small businesses with see a sixty percent cut in website sales now we don't think of contemplating doing that
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