Facebook refutes push into public cloud

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Facebook refutes push into public cloud

As share price smashed.

Facebook CEO Mark Zuckerberg has said the company has no plans to get into the public cloud business.

The prospect of a Facebook cloud emerged on the company’s Q2 2018 earnings call, during which the platform outlined full-year capex of US$15billion, dominated by data centres.

The company flagged even higher spend in future years.

Investment analyst Anthony DiClemente of Evercore Group quizzed Zuckerberg if Facebook had considered “ways to improve the return on investment of those investments in data centre servers, network infrastructure?”

“What I'm thinking is, in order to perhaps service third-parties to maybe just improve those returns, in the way that other tech and internet companies have in terms of investments in infrastructure,” DiClemente said.

The spin-out of a public cloud from a platform far from illogical given AWS was spun out of Amazon.com’s burgeoning in-house infrastructure.

Zuckerberg responded by saying: “I mean the quick answer is that we're not planning on going in to the cloud services.

“We're not planning on doing that. We have to build out all this capacity to serve our community. It's a very computationally and resource-intensive set of services that we provide and we need to build that out.”

Facebook’s CEO added his IT estate will be put to work on AI.

“Part of the advance in AI technology now allows us to use more compute, to use all the data that's in the system to provide better results. So we certainly plan on doing that,” Zuckerberg said.

Facebook’s numbers for the quarter were both good and bad.

Revenue grew 42 percent year-over-year to US$13.2 billion. More than 1.5 billion people now use the site every day and 2.2 billion people use it at least once a month.

At the same time, 2.5 billion people use at least one of the company’s services (Facebook, WhatsApp, Instagram or Messenger) each month. 

Mobile ads accounted for 91 percent of ad revenue for the quarter. 

But the company also revealed that revenue growth has slowed. 

Facebook’s chief financial officer David M. Wehner said: “total revenue growth rate decelerated approximately seven percentage points in Q2 compared to Q1.

"Our total revenue growth rates will continue to decelerate in the second half of 2018, and we expect our revenue growth rates to decline by high-single digit percentages from prior quarters sequentially in both Q3 and Q4.” 

Investors immediately hit the thumbs down button.

Facebook shares hit US$217.50 before its results announcement, but plummeted to US$165.96 in evening trade.

They’ve since recovered to $173.50, but that still represents around 20 percent of the company’s stock value disappearing in a matter of hours. 

Facebook execs also spent a lot of time on the call explaining the company’s approach to preventing trolling – political and personal – on the platform.

They said the lack of incidents in recent French, German and US state elections showed it was on top of the problems that have plagued it in since the US 2016 national election.

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