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Facebook Blames Pricey Data Packs For Disappointing Q4 Numbers

Facebook Blames Pricey Data Packs For Disappointing Q4 Numbers

Facebook’s Daily Active Users tumbled to 1.92 Bn in Q4 from 1.93 Bn in Q3 of 2021

Meta still remains widely profitable with Q4 total revenue standing at $33.7 Bn, up 20%

Facebook reported first-ever quarterly decline in daily active users in Q4

Facebook has blamed COVID-19 and pricey data packs in India for its disappointing Q4 results.

Meta (formerly called Facebook), in its quarterly report, said that, “Facebook user growth was impacted by a few headwinds in Q4. User growth in India was also limited by an increase in data package pricing. In addition to these factors, we believe competitive services are negatively impacting growth, particularly with younger audiences.”

This came right after the social media platform came up short on its Q4 profit and user numbers. 

The Daily Active Users (DAUs) on Facebook also saw a decline in Q4, compared to the previous quarter. The DAUs were down to 1.92 Bn in Q4 of 2021 from 1.93 Bn in Q3 2021. 

A report by Refinitiv had expected sales to hover around $30 Bn, but the platform fell short. Facebook now expects quarterly revenue to be in the range of $27 Bn – $29 Bn. This too, played a major role in Meta shares tumbling on the stock exchange. 

Overall, Meta still remains widely profitable with Q4 total revenue standing at $33.7 Bn, up 20%. The bummer, however, came from its VR-related subsidiary, Reality Labs, which recorded operating losses of $3.3 Bn in Q4 2021.

According to Statista, as of October 2021, Facebook had 349 Mn users in India. 

Telecom Tariff Hike Turns Out Costly For Facebook

Facebook blaming Indian telcos for its debacle underlines the domino effect that telecom networks have on data consumption in India. 

The data packs were really expensive in early 2012, hovering under INR 248/ GB, that too on the 3G network. But, it all changed with the entry of Mukesh Ambani-backed Reliance Jio, which offered unlimited monthly 4G data and calls. This led to a price war, which ultimately concluded in telcos undercutting each other by slashing calls as well as data usage rates. 

It came to the point that many players in the sector had to shut shop while others like Vodafone and Idea decided to join forces, in a bid, to survive.

The battle continued until later last year when in November of 2021, Airtel and Vodafone hiked prepaid plans by 20-25%. Reliance Jio too followed suit and raised the prices of their recharge packs by INR 16-480.

It is pertinent to note that India, at one point, had the cheapest data prices in the world, A 2019 BBC report had claimed that Indians paid $0.26  for a GB of mobile data, against a global average of $8.53. But, by March 2021, India had slipped 28 places. This was attributed to mounting AGR dues and a push to increase Average Revenue Per User (ARPU), which led to an industry-wide mobile data tariff hike.

The price hike could have likely curtailed screen time for conscious Indian users, which in turn might have played spoilsport for Facebook. But, while Year-on-Year ad revenue growth was strongest in Asia-Pacific, Facebook reportedly has put the onus on pricey data packs for its lackluster performance.

Keeping aside the last quarter, overall, India’s internet user base grew to 830 Mn in 2021 from  nearly 500 Mn internet users in 2020. Add to that, the 2021-22 Economic Survey claimed that India’s average internet data usage has increased from 1.24 GB per month in 2018 to 14.1 GB in June 2021. 

India also clocked the second-highest number of mobile app downloads in the world after China, with over 27 Bn downloads. Another Kantar report last year had said that almost 9 out of 10 active internet users in urban and rural areas use the internet for entertainment and communication. 

Additionally, according to a RedSeer report, India also added close to 40 Mn new ecommerce shoppers in 2021, double of the 20 Mn new shoppers in 2020. Besides digital payments also grew from INR 6,842 Cr in December 2021 to INR 7.,022 Cr in January 2022, according to official DigiDhan records.

Coming back to Facebook, besides limited growth in India, the social media platform also had its fair share of troubles during the course of the quarter. The Mark Zuckerberg-led social media giant has been the centre of attention in India for a skew of reasons. Days ago, executives of Facebook and other tech giants were pulled up by the Govt for not acting on ‘fake news.’ The platform has also been slammed by human rights activists for stalling human rights assessment report in India.

The decline in user numbers could also be attributed to the rise of home-grown social media platforms like ShareChat and Koo. These platforms have local language support, opening up a whole new vernacular market for them. On the other hand, Facebook is still predominantly English and Hindi-based, keeping it away from the booming regional Indian language social media market.

While Indians spent an average of about 4.7 hours daily on mobile apps last year, social media apps ruled the roost with users’ spending 70.8% of their average time being spent on these apps. So, are the users moving away or is it just a ruse by Facebook, only time will tell.

Update | 4th Feb, 12:10

The previous version of the story had mentioned the incorrect value of users, the same has been edited to reflect the right value. We regret the error.