Instagram Apologizes for Horizontal-Scrolling Test Glitch

Instagram has rolled out what it thought was a small-scale test of a new tap-to-advance feature that lets users scroll through posts horizontally.

But the new feature went to more users than it expected — with a high number of complaints from Instagram users, leading the social network to swiftly pull the plug on the test.

Adam Mosseri, whom Facebook recently installed as head of Instagram with the departure of the photo-and-video-sharing app’s founders, responded Thursday morning to users on Twitter, explaining that the horizontal-scrolling feature was “supposed to be a very small test that went broad by accident. Should be fixed now. If you’re still seeing it simply restart the app. Happy holidays!”

The test “went to a few orders of magnitude more people than intended… sorry about that,” Mosseri posted on Twitter. He also tweeted, “Sorry for the confusion! Always trying new ideas, usually with a much smaller number of people…”

An Instagram rep blamed a “bug” for the unwelcome appearance of the feature. “Due to a bug, some users saw a change to the way their feed appears today. We quickly fixed the issue and feed is back to normal,” the rep said.

Many users who received the Instagram app with the new scrolling feature immediately decried it as a step backward compared with the vertical-feed orientation — making it harder to see updates and slowing down the ability to navigate through posts.

Reactions to the test on social media were overwhelmingly negative.

Instagram — like other popular apps — has faced a backlash in making design changes. In 2016, Instagram switched users’ feeds from chronological to algorithmically sorted presentation; that led to a Change.org petition to keep Instagram chronological signed by 343,000 people (but Instagram did not revert to the previous design).

Mosseri is a 10-year Facebook veteran who most recently was head of Facebook’s News Feed. He took over the reins at Instagram this fall following the surprise announcement that co-founders CEO Kevin Systrom and CTO Mike Krieger were departing.

Instagram, which Facebook acquired for $1 billion, is a key asset for its parent company. Instagram would be worth more than $100 billion if it were a standalone company, according to an estimate by Bloomberg Intelligence. This summer, Instagram topped 1 billion monthly active users and says it has 25 million businesses that maintain accounts on the service.

Source: Variety Media

Facebook’s Ongoing Privacy Crises: What Happens Next After a Disastrous 2018?

Facebook investors, alarmed by latest privacy problems, pushed the stock down more than 7% in Dec — wiping out around $30 billion in market value.

At the start of the year, CEO Mark Zuckerberg wrote in a Jan. 4 post that his “personal challenge for 2018 is to focus on fixing” issues Facebook was wrestling with, including “defending against interference by nation states.” Instead, 2018 has delivered a steady drumbeat of public failings for Facebook, with Zuckerberg and his company under more scrutiny than ever.

Here’s a summary of the scope of the problems Facebook is dealing with and what’s likely to happen.

Facebook was sued after it was alleged that the company failed to protect the private data of millions of users that wound up in the hands of Cambridge Analytica, a political consulting firm that used the information to target voters during the 2016 presidential election. That came less than a day after a damaging report by the New York Times, which alleged Facebook has given large tech partners, including Microsoft and Amazon, data on hundreds of millions of users each month, including email addresses and phone numbers — which those partners were able to access without users’ knowledge or consent, according to the Times.

How big a deal are the revelations that Facebook gave big partners extensive access to user data, including the ability for some to write and delete private messages?

Facebook is downplaying them, but the new information has renewed calls for more comprehensive U.S. privacy legislation and could fuel the Federal Trade Commission’s probe into whether the company violated its consumer-privacy deal with the agency. Facebook says many of the data deals documented in most recent Times report have expired, while it is pledging to review “all our APIs and the partners who can access them,” Konstantinos Papamiltiadis, director of developer platforms and programs, wrote in a blog post. The company also claims that it never granted access to user data without the permission of its users.

On the issue of letting partners like Netflix and Spotify access Facebook users’ messages, Facebook essentially says that this has been overblown. By necessity, Facebook had to enable read/write/delete access for those partners to Messenger accounts of users who had opted-in to the features in order to make those integrations possible. “These experiences are common in our industry — think of being able to have Alexa read your email aloud or to read your email on Apple’s Mail app,” VP of product partnerships Ime Archibong wrote in a blog post response Wednesday. At the same time, Facebook noted, those messaging features have been discontinued.

How do the latest issues compound what came to light about Facebook earlier in 2018?

For context: Other internet players including YouTube and Twitter have been targets of controversy, including for failing to curb hate speech, misinformation and abuse, while Google’s CEO was called in front of Congress earlier this month to address topics including its data-collection practices, anticompetitive actions and alleged political bias. And data-privacy problems aren’t unique to Facebook (see: Marriott’s disclosure of a hack compromising info on 500 million Starwood guests).

But Facebook has spent more than its share of the time in the spotlight. A string of negative headlines and disclosures about the company’s business practices and security breaches have rattled Facebook. Those include:

The Cambridge Analytica scandal: After news reports in March that Facebook user data was improperly obtained by the U.K.-based political consulting firm, Facebook disclosed that info on up to 87 million users was actually in the possession of Cambridge Analytica, which subsequently shut down.

In May, Facebook suspended 200 apps that had access to large amounts of user data prior to 2014, as part of its efforts to clean up the mess from the Cambridge Analytica situation. In June, Facebook confirmed it had data-sharing agreements with Chinese manufacturers including Huawei Technologies and Lenovo, which granted the device makers special access to user data.

In response, Facebook noted that it was already winding down access to such partners. It also said the program was launched a decade ago when app developers (including Twitter and YouTube) “had to work directly with operating system and device manufacturers to get their products into people’s hands,” according to Facebook’s Archibong.

In August, Facebook said it identified and removed several hundred pages and accounts associated with Iranian state media. The company said it also removed content associated with Russian intelligence services and a group of accounts associated with Middle East media organizations that acted in concert while pretending to represent independent entities.

In September, Facebook announced the biggest hack in its history after it discovered a security hole had compromised up to 50 million user accounts. The company later said hackers had successfully accessed data from 29 million Facebook members.

In November, a New York Times investigative report detailed Facebook’s response to scandals over misuse of its platform and data-privacy gaffes, including that it withheld knowledge of Russia’s weaponizing the platform to spread propaganda.

It also revealed that Facebook hired a D.C.-area political consulting firm to push negative coverage of competitors and critics — including urging journalists to investigate ties between billionaire financier George Soros and anti-Facebook groups.

In early December, a U.K. parliamentary committee released a 250-page report, which included numerous internal company emails, detailing how Facebook granted favored partners including Netflix “whitelist” access to user info while it blocked rivals from accessing its data. (Facebook said the documents, obtained through an app developer’s 2015 lawsuit against the company, were “cherry-picked” and lacked context.)

Facebook (on Dec. 14) disclosed that it had discovered a bug in photo-sharing system that may have exposed the private photos of as many as 6.8 million users. (It said it fixed the bug and was notifying affected users.)

Is Facebook going to face other regulatory or legal repercussions?

Other government actions are growing more probable with every new revelation. The year of “bad publicity and significant issues” for Facebook makes it “more likely that the U.S. government will take action to penalize and/or regulate FB,” CFRA Research’s Scott Kessler wrote in a Dec. 19 research note. At the same time, the analyst reiterated a “buy” rating on the company because “we still see its fundamentals as healthy and valuation as attractive.”

On Capitol Hill, both Democrat and Republican lawmakers this week criticized Facebook, with some questioning whether Zuckerberg lied in his testimony during congressional hearings when he said Facebook users have “complete control” over their own data. Sen. Brian Schatz (D-Hawaii), who serves on U.S. Senate committees including Commerce, Science and Transportation, tweeted Tuesday, “It has never been more clear. We need a federal privacy law. [Facebook is] never going to volunteer to do the right thing. The FTC needs to be empowered to oversee big tech.” Analysts expect the U.S. to adopt legislation similar to Europe’s General Data Protection Regulation; Zuckerberg has said Facebook will apply GDPR-compliant controls worldwide.

Meanwhile, the FTC initiated its investigation into Facebook’s privacy practices this spring, which remains ongoing. The agency is expected to specifically examine whether Facebook violated the terms of its agreement with the FTC, approved in 2012, under which Facebook is required to give consumers “clear and prominent notice” and must obtain “their express consent before sharing their information beyond their privacy settings.” (Facebook insists that none of its data-sharing partnerships violated the FTC agreement.) The FTC has the authority to impose fines on Facebook, which Facebook would have the right to appeal. The agency also may seek additional restrictions on the company’s data-handling practices.

Are heads going to roll at Facebook because of these scandals?

It doesn’t seem like anything will change on the senior-management front right now. Despite calls from some investors for Zuckerberg to step aside, when asked in a CNN interview last month if he was going to resign as chairman, he said “That’s not the plan.” (Because he controls 60% of the voting shares in Facebook, only Zuckerberg can decide to exit.) COO Sheryl Sandberg — who acknowledged that she directed Facebook’s communications staff to look into Soros’ financial interests after Soros called internet companies like Facebook “a menace to society” — has the support of the board (which includes, of course, Zuckerberg as well as Sandberg).

Meanwhile, Elliot Schrage, Facebook’s longtime VP of communications and public policy who was already set to leave the company, in a memo just before Thanksgiving took the blame for hiring Definers, the political consulting firm that tried to push journalists to look into Soros’ backing of Facebook critics.

Is Facebook going to see a drop in users?

It’s unclear how big an impact the ongoing privacy problems are having on Facebook’s user growth. Immediately after the Cambridge Analytica erupted in public, Facebook actually boosted its daily active users in the U.S. and Canada. But in Q2 and Q3, daily active users have effectively been flat in the U.S. — and have dropped in Europe. Partly, the leveling-off of growth is because Facebook is already so massive it doesn’t have more runway to add more users. But privacy concerns clearly don’t help.

Is the privacy of Facebook users at risk?

Facebook says it’s doing everything it can to safeguard user data and remediate holes in its systems — but given its privacy track record, an increasing number of users are likely to either cancel their accounts, reduce their usage, or more tightly restrict their privacy settings. Facebook introduced new privacy tools this year, designed to consolidate controls that were previously in separate places. More information is on Facebook’s website at this link. The company also offers instructions on how to deactivate or permanently delete Facebook accounts at this link.

Source: Variety Media

Bloomberg Is Expanding its Social News Network Beyond Twitter

Bloomberg Media thinks its one-year-old TicToc news brand has cracked the code on delivering bite-size chunks of news and analysis to a millennial-skewing mobile crowd on Twitter. Now it is taking TicToc to other platforms and screens — including plans to launch TicToc on dedicated apps and connected TVs.

There was no guarantee when TicToc by Bloomberg debuted in December 2017 that it would be able to get traction with the concept: a reimagining of the 24-hour news channel, with much of the dispatches delivered in 30- to 60-second video bursts.

But Bloomberg says TicToc has hit critical mass. Within the first 12 months, TicToc has topped 500,000 followers (currently, it has 516,000). Today it has around 2.2 million average daily views and 1.5 million average daily viewers on Twitter, according to Bloomberg.

“The aspiration is to be the news network for the next generation,” said TicToc general manager Jean Ellen Cowgill (pictured above). The service is capturing followers among “the new guard of business leaders around the world” in their 20s and 30s, she said: “Dominant news brands haven’t innovated their editorial model fully.”

Scott Havens, Bloomberg Media’s global head of digital, declined to discuss financial results for TicToc. But he said the company’s goal for the initiative was to achieve at least breakeven profitability and that TicToc has “largely hit that mark.”

“When we first launched this, we had aggressive goals – we really wanted it to pay for itself,” Havens said. “Many of the other social-video news guys out there have had trouble hitting scale.”

Next up: Bloomberg is prepping the launch of TicToc’s owned-and-operated digital video platform early in the first quarter of 2019. That will let viewers catch up on the news for longer periods of time on larger screens and include some longer-form programming, according to Cowgill. And there’s potential to build TicToc into an over-the-top streaming network that could be licensed to TV and OTT distributors, and even a direct-to-consumer subscription service in the future, Havens added: “The old cable model is coming undone.”

In addition, Bloomberg this week is launching TicToc on video screens at major airports, under a new partnership with Reach TV. Initially, TicToc news will play on over 500 screens in some 30 airports in the U.S. and Canada, with plans to expand to additional airports in early 2019 including parts of Europe.

TicToc also has launched a daily podcast and a newsletter, and recently began distributing news on Amazon Echo and screens on taxis and ferries in New York. “We want TicToc to be there in all the different moments in your day where screens could provide something of value,” Cowgill said. She joined Bloomberg Media as TicToc’s GM in June, after previously serving as president of Atlantic 57, the marketing consultancy and creative agency of The Atlantic.

The company is keeping TicToc on Twitter (at twitter.com/tictoc) under its multiyear deal with the social network, but also has ramped up its output to Facebook, Instagram, YouTube and other digital platforms. “We’re expanding our wings,” Havens said. “There are other platforms and distribution methods to get the content out there.”

Bloomberg Media has staffed up the TicToc team with 70 producers, editors and social-media specialists across three bureaus — New York, London and Hong Kong. The editorial team is headed by Mindy Massucci, TicToc’s head of global content. In the first year, TicToc posted over 100,000 tweets and 4,000 live-streaming video sessions.

Whereas Bloomberg TV is focused on financial news and markets, TicToc is positioned as a general news source, covering topics including global news, business, technology, sports, culture and entertainment. All of TicToc’s videos are designed to maximize the screen space through data, text, images and video, packing in “nutrient rich” information on the day’s top stories, according to Cowgill.

The service will produce new original short-form series that run longer than the minute-long video length targeted on Twitter and other social platforms. The shows will include news recaps and features that are more evergreen, Cowgill said. But it’s not looking to have anchors for TicToc. “The traditional talking-heads model doesn’t work as well on social and digital platforms,” she said.

For TicToc’s first year, Bloomberg signed seven advertisers to one-year deals: AT&T, CA Technologies, Goldman Sachs, Infiniti, SAS, TD Ameritrade, and CME Group. It has landed about a dozen additional sponsors and is in talks about renewing the pacts with the launch advertisers for 2019.

TicToc in some cases repackages stories and video clips from the other parts of Bloomberg, alongside its original content. Havens said TicToc is reaching a brand-new audience beyond its terminal clientele: “TicToc was based on our hypothesis that we could have broader appeal” than Bloomberg’s traditional media properties, he said.

Source: Variety Media

Instagram Is Purging Fake Followers Obtained Through Third-Party Apps

Instagram launched a new crackdown on users who inflate their follower counts and engagement metrics using unauthorized third-party apps.

The photo- and video-sharing app said it will begin purging fake followers, as well as likes and comments, from user accounts that Instagram has found to have employed third-party apps that violate its policies.

“We will begin removing inauthentic likes, follows and comments from accounts that use third-party apps to boost their popularity,” Instagram said in a statement. “This type of behavior is bad for the community, and third-party apps that generate inauthentic likes, follows and comments violate our Community Guidelines and Terms of Use.”

Instagram didn’t identify third-party apps it’s targeting in the new crackdown. Dozens of companies openly advertise apps and services promising to let Instagram users quickly boost followers and likes, including Skweezer, Incentafan, Mr. Insta, Boostgram, and Turbo Like for Instagram.

Some users try to game Instagram’s algorithms with such tactics, in the hopes that it will result in their content being more widely viewed on the platform.

Instagram’s new crackdown is launching amid a crisis at parent company Facebook, which is fighting to restore its credibility after a New York Times report last week revealed Facebook’s surreptitious attacks on critics and alleged that senior execs ignored and failed to disclose evidence of misuse on its platform.

According to Instagram, the company has built machine-learning tools to help identify accounts that have generated bogus followers and activity. Accounts that Instagram has flagged as using these services will receive an in-app message alerting them that Instagram has removed fake likes, follows and comments. In addition, users will be asked to change their password.

Instagram shared an example of the message a user who has used third-party apps to boost their followings will receive:

Instagram added that “some people may have unknowingly shared their login credentials with a third-party app,” but warned that accounts that continue to use third-party apps to try to inflate their audiences “may see their Instagram experience impacted.”

Source: Variety Media

Facebook Wielded Access to User Data as a Competitive Weapon, Documents Reveal

Facebook’s aggressive business practices are again in the spotlight, after a massive batch of documents released by a U.K. parliamentary committee showed how Facebook has used access to user data to reward friendly partners and punish rivals.

The 250-page report, which includes numerous internal company emails, detail how Facebook granted favored partners — including Netflix — “whitelist” access to user info, while it routinely blocked companies it viewed as competitors from accessing its data.

The documents also reveal that Facebook considered charging developers to access its platform, as well as restricting user-data access only to developers that bought a minimum amount of advertising. In addition, per the documents, one of Facebook’s developers admitted that its use of Android apps to collect users’ call and text histories was a “high-risk thing to do from a PR perspective” and that engineers discussed ways to use Android to automatically track user data without their explicit opt-in.

The release of the documents come after a series of damaging information about Facebook’s practices has streamed out over the course of 2018. Most recently, the New York Times last month published a report revealing how Facebook stalled in response to various scandals and lashed out against competitors and critics, an effort that included enlisting a consulting firm to push reporters to cover billionaire George Soros’ ties to an anti-Facebook group.

Facebook, in response to the release of the documents, said they were “cherry-picked” and lacked context. “The documents were selectively leaked to publish some, but not all, of the internal discussions at Facebook at the time of our platform changes. But the facts are clear: we’ve never sold people’s data,” the company said in a statement.

British lawmaker Damian Collins, chairman of the Digital, Culture, Media and Sport Committee, released the documents on Wednesday. Those came from a lawsuit that bikini-picture app developer Six4Three filed against Facebook in 2015, alleging Facebook’s move to block apps from accessing info on users’ friends represented fraud. Collins last month forced the founder of Six4Three to turn over the documents, which had been under seal.

“The idea of linking access to friends data to the financial value of the developers relationship with Facebook is a recurring feature of the documents,” Collins wrote in a summary.

Facebook said it stands by changes it made in 2014 and 2015 to block users from sharing their friends’ information with app developers. Those were changes it made after a vast trove of info was illicitly shared with political consulting firm Cambridge Analytica, which came to light earlier earlier this year and led to CEO Mark Zuckerberg being hauled before congressional hearings.

Zuckerberg, in a response he posted on Facebook after the documents were released, said the change to limit data access to third-party developers was to counter “shady apps that abused people’s data.” “This was an important change to protect our community, and it achieved its goal,” he wrote.

The document cache, which spans a time period of roughly 2012-15, revealed that Facebook execs — including Zuckerberg — had multiple discussions about potentially charging developers to use the platform. One company executive suggested the possibility of limiting access to user data only to companies that spent at least $250,000 in mobile ads annually.

In Zuckerberg’s response Wednesday, he said that after those discussions, “Ultimately, we decided on a model where we continued to provide the developer platform for free and developers could choose to buy ads if they wanted.” Other models Facebook considered adopting but decided against included charging developers for usage of the platform, “similar to how developers pay to use Amazon AWS or Google Cloud,” Zuckerberg wrote.

Meanwhile, Facebook also used access to data as a punitive measure, according to the documents. According to a 2013 email exchange, Zuckerberg personally approved the blocking of Twitter’s Vine video app from being able to find friends on Facebook using its ostensibly open API.

“Unless anyone raises objections, we will shut down [Vine’s] friends API access today,” Justin Osofsky, Facebook’s VP of global operations and media partnerships, wrote in a January 2013 email the day Vine launched. Zuckerberg replied, “Yup, go for it.”

Prior to the document release in the U.K., Facebook dropped its policy that restricted apps built on its platform that “replicated our core functionality.” While Facebook maintained that “these kind of restrictions are common across the tech industry,” citing YouTube, Twitter, Snap and Apple, it said it was eliminating the “out-of-date policy so that our platform remains as open as possible.”

Facebook critics alleged that its move to block rivals from the friends API represent violations of U.S. antitrust laws. “These internal Facebook documents are a smoking gun that executives — including Zuckerberg — engaged in illegal and anticompetitive actions to grow and protect Facebook’s monopoly power,” Sarah Miller, co-chair of the Freedom From Facebook coalition, said in a statement.

One of Freedom From Facebook’s founding organizations is George Soros’ Open Society Foundations. Facebook COO Sheryl Sandberg personally directed employees to look into Soros’ finances, as the Times first reported last week.

The Facebook board (which includes Sandberg and Zuckerberg) said in a letter to the head of Open Society that it was “entirely appropriate” for Sandberg to inquire about whether Soros had shorted Facebook’s stock after he had publicly called the company a “menace,” the Wall Street Journal reported. Sandberg has maintained she didn’t know Facebook had hired Definers, the firm that pushed the narrative about Soros’ ties to Freedom From Facebook; in a note to employees, the exec also said, “The idea that our work has been interpreted as anti-Semitic is abhorrent to me — and deeply personal.”

Regarding the use of “whitelists” to allow partners including Netflix, Airbnb and Lyft to access data on users’ friends lists, Facebook said, “In some situations, when necessary, we allowed developers to access a list of the users’ friends. This was not friends’ private information but a list of your friends (name and profile pic).” The company also said whitelists are “common practice when testing new features and functionality with a limited set of partners before rolling out the feature more broadly (aka beta testing).”

Facebook maintained that the call-and-text messaging tracking feature in Facebook Lite and Messenger on Android devices was deployed on an opt-in basis. “We use this information to do things like make better suggestions for people to call in Messenger and rank contact lists in Messenger and Facebook Lite,” the company said.

Source: Variety Media

YouTube Warns Creators They May See a Drop in Number of Subscribers

YouTube is enacting a broad purge of spam accounts over the next two days, and it’s warning creators they could see a big drop in subscribers as a result.

The Google-owned video service regularly works to verify the legitimacy of accounts, and its purge of spammy and bogus users has led to steep declines in sub counts in the past.

YouTube, as part of its quarterly report on enforcement of community standards that first launched earlier this year, said on Thursday it deleted 1.67 million channels during the third quarter of 2018, 80% of which were for spam violations. All told, those channels represented around 50 million videos (which were removed along with the channels).

In addition, in the third quarter YouTube said it deleted 7.85 million videos (81% of which were first detected by automated systems) for violations of its guidelines prohibiting spam and adult content as well as “low-volume areas” like violent extremism and child exploitation. YouTube also removed over 224 million comments for violating community guidelines, most of which were for spam.

To identify spam accounts, YouTube says it uses a mix of “industry-leading techniques and proprietary technology.” Spammer accounts tend to subscribe to a variety of channels, instead of just subscribing to channels that bought the spam.

YouTube requires channels to have a minimum of 1,000 subscribers to participate in the platform’s ad-revenue sharing program, called the YouTube Partner Program. If the spam-purge causes a channel to drop below the 1,000-subscriber threshhold, it will no longer be eligible for the rev-share program.

Source: Variety Media

Apple Music Phases Out Connect Social Feed

Apple Music has notified artists that it will be phasing out its Connect social feed. Artists won’t be able to post to Connect anymore effective immediately, and their existing posts will be removed by next May, according to an email sent to artists that was first published by 9to5Mac Thursday.

“Today we’re streamlining music discovery by removing Connect posts from Artist Pages and For You,” that email reads in part. “This means you’ll no longer be able to post to Connect as of December 13, 2018, but all previously uploaded content will still be searchable until May 24, 2019.”

Apple first introduced Connect as a dedicated social feed when it launched Apple Music back in summer of 2015. Connect allowed artists to post music, videos, photos and more to Apple Music, and was billed as a way to directly interact with fans.

However, the feature saw less traction from artists than Apple had anticipated. The company deemphasized Connect in a subsequent Apple Music redesign, moving it from a dedicated tab within the app to a more generic recommendation area.

Source: Variety Media

Facebook’s Smart Display Gets ABC News, CNN, Web Browser & Instant Games

Facebook is expanding the content available to users of its Portal smart display slash video calling device: The company is bringing news content from ABC News and CNN to the device, which can now also be used to browse the web.

The launch of a new web browser to Portal will enable users to visit their favorite sites, check out recipes, and even play videos from YouTube. Facebook is also adding its web-based casual Instant Games to the device, allowing users to play “Words with Friends,” “Draw Something,” “Sudoku” and a handful of other titles.

Facebook launched Portal in October with an emphasis on video calling: The device, which is available with two screen sizes, comes with an integrated smart camera that automatically focuses on users as they move through the room — something that is supposed to enable more natural video calls.

But from day one, Facebook also added apps from a number of content partners, including Food Network, Spotify, Pandora, iHeartRadio and Newsy. The company also tightly integrated Portal with its own Facebook Watch video service.

With Friday’s additions, Portal users will be able to consume additional news content, and also have access to CNN’s Great Big Story video offering. And the company also added a few more video calling features, including additional AR effects.

Source: Variety Media

Snap shares sink as two million users move on

Snap Inc shares plunged 14 percent on Friday after the Snapchat-owner posted its second straight quarter of user losses and forecast further declines, a boost for Facebook Inc’s Instagram ahead of its results next week.

At least four Wall Street analysts cut their price target as Snap’s much-criticized app redesign continued to weigh on daily active user numbers (DAU), particularly in Europe and the U.S.

A revelation for teenage users and twenty-somethings worldwide when its vanishing-post model was first launched in 2011, Snap’s user growth has stalled in the past two years as Instagram mimicked its best features.

Its 186 million users in the third quarter compares to the Facebook-owned app’s more than 1 billion.

JP Morgan and RBC Capital Markets cut their targets for Snap stock by half.

“We believe that Instagram is much more penetrated in these demographics, and it will be challenging for Snap to pull users away from Instagram,” JP Morgan analyst Doug Anmuth wrote in a note.

Shares of the company were down 12.2 percent at $6.14 in trading before the bell.

A redesign at the start of this year aimed at rebooting the app spurred a backlash led by celebrity users including Kylie Jenner, who threatened to boycott the photo-messaging app. “Some users may be leaving the platform because it has lost its novelty, which would prove to be a bigger long-term concern,” Pivotal Research Group analyst Brian Wieser said.

Snap’s DAUs have now declined by five million since the first quarter, which the company blamed mainly on the Android app rollout.

With the company anticipating further declines, Jefferies analyst Brent Thill fears these losses could spill over to 2019.

Snap shares have fallen more than 50 percent this year, while Facebook’s, hurt by the fallout of the Cambridge Analytica privacy scandal, have lost about 14 percent.

Of the 36 analysts covering the stock, 16 now rate it “hold” and 13 rate it “sell” or lower. The median price target on the stock is $10, down 15 percent from a month ago.

Analysts have said the number of advertisers active on Snapchat, though small, have been steadily growing. However, the social media app is still at the mercy of its user count.

“While monetization trends in Q3 are promising, we don’t think the stock can recover until the user base is growing solidly again,” Canaccord Genuity’s Michael Graham said.

Source: Reuters

Twitter monthly usage drops, company warns it will fall again

Twitter Inc on Thursday reported a larger-than-expected decline in monthly users in the third quarter, its second straight quarterly drop, and predicted the figure will fall again in the current period.

The company posted revenue and profit ahead of Wall Street estimates though as advertising sales surged 29 percent.

It blamed the declines in users on efforts to clean up the site from suspicious users, including accounts used in political influence operations, as well as its response to new privacy regulations in the European Union.

Monthly active users fell to 326 million in the third quarter, below the average analyst forecast of 331.5 million, according to FactSet. Twitter said it expects them to drop below 326 million in the current quarter, missing the average forecast of 333.4 million.

Twitter is fighting for its reputation by cutting and blocking fake users, but the toll on traffic is undermining faith in is ability to grow. Recent business progress has focused on getting current users to click on more ads, which has helped Twitter turn to a profit.

Analysts have warned that Twitter needs to stem declines in user growth so it can better compete for ad spending with rivals including Alphabet Inc’s Google, and Facebook Inc . Investors pay close attention to monthly user data because it is seen as a key indicator of future revenue, the bulk of which comes from ad sales.

Twitter’s usage has been stagnant for more than a year, causing analysts to worry that growth may have peaked.

“The lack of meaningful user growth in the last 18 months lends credence to the thesis that Twitter has maxed out on users,” SunTrust Robinson Humphrey analyst Youssef Squali said in an earnings preview note to clients.

Those concerns have been somewhat offset by increases in advertising sales from video which suggest the company is succeeding in efforts to generate more cash from each user.

Quarterly advertising revenue jumped 29 percent from a year earlier to $650 million, boosted by advertiser interest broadcasts from media companies including Live Nation Entertainment, Major League Baseball and Major League Soccer.

That helped push revenue up 29 percent from a year earlier to $758 million, handily beating the average analyst estimate $702.6 million. The company reported adjusted profit of 21 cents per share, beating the average forecast of 14 cents.

Investors are looking to understand the financial impact of Twitter’s moves to clean up its platform by deleting accounts used for fraud, hate speech and election interference.

Twitter has removed millions of suspicious accounts this year including those that belong to Alex Jones and his conspiracy site Infowars.

“We’re doing a better job detecting and removing spammy and suspicious accounts at sign-up,” Chief Executive Jack Dorsey said in a statement.

Twitter said the number of its daily active users rose by 9 percent year-on-year, weaker than an 11 percent jump in the previous quarter and its slowest growth rate in two years. The company does not disclose the total number of daily users.

Twitter shares tumbled 19 percent when the company reported quarterly results on July 27. Its stock has fallen 36 percent since that earnings report, compared to a 6.4 percent decline in the S&P 500 index.

Of the 40 analysts polled by FactSet, 10 have a buy rating on the stock while 24 have a hold rating. Six have a sell rating. The average target price is at $32.91, about 16 percent higher Tuesday’s close of $27.54.

Source: Reuters