Facebook reports drop in revenue for the first time

Facebook’s decade-long streak of nonstop revenue growth has come to end.

The social network reported its first-ever yearly decline in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion, and predicted that growth in the third quarter could fall even more. The overall profit for its parent company, Meta, fell 36 percent to $6.6 billion. The Reality Labs division responsible for building Mark Zuckerberg’s metaverse dreams lost $2.8 billion in the quarter.

While the first-ever drop in revenue growth was expected on Wall Street going into Wednesday’s earnings report, it solidifies how challenged Meta’s business has quickly become on all fronts. Apple’s “ask app not to track” prompt on iPhones has made its ads much less effective, costing Meta $10 billion in ad revenue last year alone. And now a rapidly slowing economy has caused advertisers to pull back on their spending. Meanwhile, in its effort to compete with TikTok, Meta is rearchitecting Facebook and Instagram to place an emphasis on short videos it doesn’t yet monetize well.

There is a silver lining for Meta in its most recent earnings: It managed to grow Facebook’s daily users by 3% to 1.97 billion, reversing a worrisome decline in users it observed a couple of quarters ago. Meta reported that 2.88 billion now use its suite of social apps — Facebook, Messenger, Instagram, and WhatsAppp — every day, an increase of 4 percent from a year ago.

This story is developing…