Good morning. It’s the time of the year when companies show off their big report cards — revenues, users, sales. So we’ll start with analysing what’s behind those numbers and what’s ahead of ‘em.
All the ways the Chinese helped Apple make a big profit
Facebook’s numbers and its number of headaches
FB, Twitter go where most creators have gone before
Need to Know
1/ Bye Dance: ByteDance, the company behind TikTok, is wondering why the hell are they still in India right now. TikTok is banned. And there’s no sign of it coming back. So, ByteDance is closing it’s India business and dropping 90% of staff (over 1800 people).
2/ Labels gone wrong. Quite literally. Apple last year announced that apps on its App Store will now have privacy nutrition labels that tell you what data the app tracks and stores. But app makers lied. Many labels were false. They under-reported how much data they tracked.
3/ Oversight Board, Facebook’s personal Supreme Court, is taking a tough decision on whether to keep trump or remove him permanently off Facebook. And it needs your comment. Go drop your opinion here. (I wrote about why it’s a tough decision here)
Apple’s big numbers, thanks to the pandemic
Apple launched the iPhones late. Had to close some of its retail stores. Priced products higher. And Apple still earned an all-time high $111.4 billion, up 21%. Compare that with 2019’s numbers: $91.8 billion, up only 9%.
So just nod your head when I say the pandemic did wonder for Apple. iPhones did $65 billion. iPad sales up 41%. Mac sales up 21%. Apple now has 1B customers using 1.65B Apple devices.
But why exactly?
Mac and iPad sales went up because all of a sudden students threw out their notebooks and pens and asked for an iPad with Apple Pencil instead.
The Chinese bought iPhones in record numbers, thanks to the new 5G ones. Tim Cook: “We had two of the top three selling smartphones in urban China.”
Aaaaand, Apple did bring out some cool new products. Like the M1 Macs, Macs with Apple’s own processors, which are faster and more efficient. Plus, Apple launched more products this year than usual.
While we’re on it: Although the Chinese virus did increase Apple’s sales and China’s a big market, China is not a great place to make devices, Apple thinks. Mostly because Trump, who definitely hated China and thus US-China relation isn’t working out. President Biden will likely ease out the tension. But still, Apple’s done with Making in China. That means Apple will slowly bring its plants out of China to — you guessed it — India and Vietnam.
Facebook’s numbers, headaches and plans
The pandemic means both good and bad things for Facebook: People are using social media more often. But advertising revenue is down.
So Facebook’s milking its cow (the users) to the fullest. That means people are shown more ads and Facebook’s average revenue per user is up to $2.34.
But that’s the least concern for Facebook. The main problem is Apple. Why? Apple’s increasing privacy controls on Apple devices. That means Facebook can track less data about people, which means ads will be less personalised. And ad revenue will be hit hard.
Now, it important to know that Apple’s not doing it only for its customers’ good. If FB’s ad revenue drops, it’s forced to ask people to pay for a Premium subscription with no ads. (Like YouTube Premium). And Apple’s policies dictate it can take a direct 30% cut from the money FB makes this way on Apple devices.
#2 on Facebook’s headache list are people and groups who incite violence or fight over politics. This is much easier to deal with. FB’s just stopped to recommend such groups to people.
Ending on a positive note: Facebook’s new revenue focus, e-commerce is getting bigger and should soon be a back-up plan for Facebook. You know, just in case something happens to the ad business.
They go where creators go.
Facebook and Twitter now want their share of profit from the newsletter boom — the rise of Substacks and other newsletters. Here’s how they’re doing it:
Facebook is making its own Substack alternative. The main difference here is Substack earns when fans pay for good writing. But Facebook, an ad company, can put ads on newsletters and share money with writers.
This is good for writers who have a hard time figuring out ads on Substack, which doesn’t have any native ad support. And this is also good for Facebook, which can track which newsletters a user reads and show more ads based on it.
The same goes for Twitter, which instead of making a newsletter platform, bought one: Revue. But there are no ad options yet.
The Big Picture: Newsletters and podcasts are things traditional social media platforms don’t support natively. You can post your entire newsletter or podcast on FB/Insta. But things are changing. Why? because creators are flocking to newsletters and they’re following them.
My bet: Something similar might happen for podcasts. The only reason why it isn’t happening is that markets crowded with big players throwing loads of money: Spotify, Amazon and perhaps Apple in the future.
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