Facebook Messenger Has Huge Financial Potential

When Facebook first unveiled News Feed in 2006, its 10 million users threatened to revolt. In a matter of months, though, the redesigned product took off with users and, ultimately, advertisers. The familiar, blue-bordered scroll of news articles and baby pictures now reaches 2 billion people around the world and accounts for much of the company’s more than $30 billion in annual advertising revenue.

- Ainsley Harris

News Feed is also under fire, of course, for reinforcing partisan viewpoints by creating social echo chambers, spreading misinformation, and, through its targeted advertising tools, possibly enabling election interference. As investigations unfold into how Russian intelligence operations manipulated Facebook, it’s clear that News Feed has become a global political weapon—and some users are rethinking its place in their lives. This controversy exacerbates a more basic business problem for News Feed: Revenue growth has been falling every quarter for the past year, and Facebook executives have suggested to investors that News Feed capacity is, in part, the culprit. With ads already littering users’ feeds, there is dwindling real estate available for additional ones, and the quality of the experience is starting to suffer.

Amid this complex maelstrom of controversy and stuttering growth, Facebook has been increasingly turning its attention to another form of social interaction: messaging. Last year, for the first time, the world’s largest messaging platforms surpassed the world’s largest social networks in terms of monthly active users. Messenger, Facebook’s satellite app for private conversations, has 1.3 billion monthly users; WhatsApp, which Facebook acquired for $22 billion in 2014, has 1.3 billion monthly users of its own. Whether these platforms are the next big revenue spigot—or the next frontier of exploitation—may be one of the biggest questions facing Facebook’s future.