If U.S. regulators crack down on Facebook's advertising business in the wake of the Cambridge Analytica scandal, Mark Zuckerberg might take more of his direction from 19th-century newspapermen. Those young men went West, but in the case of the Facebook founder and CEO, it's East, or at least anywhere other than Europe and the U.S. where the lion's share of Facebook's future growth runway lies.
The Western world is having its social media privacy moment. Zuckerberg took his grilling on Capitol Hill and, in Europe, new rules are coming in May that require consumers opt-in to sharing information. Zuckerberg has been repeatedly asked by the press and politicians if Facebook will adopt a subscription model so it no longer needs to generate revenue from advertising. He has been clear that Facebook sees that as having some potential in certain markets, but is a limited solution and will not be the social media's company's primary business model.
"We think offering people an ad-supported service is the most aligned with our mission of trying to connect everyone in the world, because we want to offer a free service that everyone can afford. That's the only way we can reach billions of people," Zuckerberg told U.S. senators.
The key to Facebook's response lies in a single set of numbers: The average ad revenue Facebook gets from each user of its services, including Instagram and WhatsApp, each quarter. In the fourth quarter of 2017, those numbers were $26.26 in the United States and Canada, $8.71 in Europe, $2.52 in Asia-Pacific, and sub-$2 in the catch-all category called rest of the world, according to its publicly reported earnings report.
Yet the fourth quarter was also the first time ever that Facebook's daily average users in North America declined. The revelations about the company have soured many investors. Amid recent tech sector volatility there was talk of fund managers