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2017 in Tech: When Facebook and Twitter Met in Front of Congress

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When Mark Zuckerberg founded Facebook some 14 years ago, one has to doubt he would have envisaged himself, or his company, testifying in front of Congress in relation to Russia meddling in the US presidential election. The same goes for Twitter’s Jack Dorsey.

However, 2017 saw both companies go far from where they started. Facebook sits comfortably above 2 billion users across platforms, and reported over $10bn in advertising revenues. While Twitter may not have fared equally in terms of financial achievements, it can pride itself as being the main platform of communication for the world’s most powerful leader: Donald Trump. And the two companies did cross paths at one crucial point this year: indeed, in front of Congress.

2017 has also proven equally challenging for other tech giants, such as Uber (the company lost its CEO and was rocked by multiple scandals) and Snap (its long-awaited IPO got off to a very rocky start). However, at the end of the day, stakeholders will agree that it often all comes down to one thing: profits. And as long as companies can deliver – or show significant promise they will in the future – missteps can be overlooked.

For Uber, the news that Softbank is acquiring a 15% stake for some $8bn will give new hope to interested parties – from shareholders to clients who have gotten used to the company’s nimble service and low prices. Facebook, in spite of some potential reputational damage, still brought in billions in revenues.

As such, it was not all gloom and doom. Here’s a what some of the main players did in 2017:

Snapchat

2017 has been a difficult year for Snapchat and its parent company, Snap Inc. After a promising first quarter, the technology and social media company’s net losses increased to $443m in Q3, failing to reach financial expectations. Adding just 4.5 million users between Q2 and Q3, Snap has also underperformed in accruing new unique users – analysts had expected around eight million.

Snap’s initial public offering on Wall Street stirred much enthusiasm and excitement from investors, but the IPO did not live up to expectations. Debuting on the stock market at of a price $17 per share, Snap is currently below its IPO price (sitting at approximately $15 at the time of writing).

In explaining reasons for the slow user growth, Snap CEO Evan Spiegel admitted that the difficulty of using Snapchat’s interface is a flaw of the business.

Another self-confessed mistake of the tech firm had been the overestimation of how many Snapchat spectacles (specially designed spectacles that allow users to take pictures via the application) would be sold, with a meagre 0.08% of Snapchat users purchasing the product. Spiegel aims to carry out a redesign of the Snapchat interface in 2018, in order to make the application more accessible (especially for the older generation) and to consequently increase the number of users.

Spotify

2017 has proved to be a sound year for music streaming company Spotify. It is on course to earn $5bn in annual revenues and exceed 60 million paying subscribers (with an estimated 140 million monthly active users) internationally – twice as many listeners as competitor Apple Music. Spotify is expected to reach 68.6 million paying customers by the end of 2017 – an increase of over 20 million people year-on-year.

Towards the end of this year, the tech giant also purchased online music and audio recording studio Soundtrap, enabling artists to record and release a song directly via Spotify  – 2018 will likely see Spotify take strides towards its goal of not only hosting music, but also helping artists to create it.

With a valuation of approximately $20bn, the company might IPO next year. Imperative to note, however, is that Spotify is not yet making a profit, despite its huge user base and increase in revenues. This is due to the fact that Spotify must pay large licence payments to record labels, diminishing its hope of profitability. In the first half of 2017, Spotify made an operating loss of between $118m and $236m. Analysts, however, comment that the company could become profitable following its IPO.

The decision of Tencent and Spotify to purchase minority stakes in each other (just below 10%) this year suggests a collaboration for both companies going into 2018.

Uber

The company’s user and value growth throughout the year has been impressive. Its losses are gradually narrowing; from $991m in Q4 2016 to $645m in Q2 2017. In Q2 of this year, adjusted net revenue grew $250m from the previous quarter. Ride requests have also increased by 150% from last year.

Uber, however, has seen several challenges. The company has been blacklisted from several countries this year, including Italy, Taiwan and Denmark. Uber also admitted this year that that 2.7 million of its UK users were affected by a large-scale data breach – something it had concealed during the majority of the year.

In December, the European Court of Justice declared that Uber is a taxi service – a label that the company rejects, seeing itself instead as a digital platform that connects people. The main implication of this ruling is that the company will now face much stricter regulation across the EU. It also means that Uber will have to treat its drivers as taxi drivers, providing them with sick and holiday pay. This may significantly increase the company’s costs going into 2018.

Facebook

Despite currently being under scrutiny from the US House Intelligence Committee, Facebook has had a good year.

In Q3, Facebook’s monthly active users increased by 66 million from the previous quarter. Furthermore, its daily active users increased by a sizable 43 million. Today, 1.37 billion people access the site daily – a sizable increase from 1.18 billion one year ago. Notably, its revenue in Q3 reached $10.3bn – exceeding the $9.84bn forecast. Investors will have been pleased by the social media titan’s money-making; it announced profits of $4.7bn in Q3.

Its stock price has also increased considerably since the beginning of the year. From $116 in January 2017, it currently stands at $178. It has also recently reported $10.1bn in advertising revenue for Q3 of this year, seeing year-over-year growth of just under 50%. Facebook-owned Instagram has also been contributory to the success of the company – since launching its ‘Instagram Stories’ feature, the photo-sharing application has added around 200 million daily users this year.

In 2018, Facebook plans to enhance its security; in the words of Zuckerberg, Facebook is “investing so much in security that it will impact our profitability.” The social media giant aims to add 10,000 more employees over the next 12 months in order to achieve this goal. On the alleged Russian meddling in the US election, Zuckerberg stated that  ‘what they did is wrong and we’re not going to stand for it.”

For 2018, the company is planning to release a cheaper VR headset. Oculus VR hopes to release the new headset called the ‘Oculus Go’ in order to make it more accessible to the mass market – its starting price will be $200 and it will not require a phone or PC to use, unlike previous models.

Tesla

Tesla has seen steady growth in 2017, increasing from $216 per share at the beginning of this year to $328 at the time of writing. Announcements of car releases over the calendar year – such as the Model 3 and Roadster – have spurred excitement for investors. Indeed, revenue has increased by 30% compared to 2016 – from $2.3bn to just under $3bn.

Production of the new models has proven costlier than first envisaged, however. Initially expecting to produce 5000 models by the end of 2017, Tesla recently announced that this would be delayed until the end of Q1 in 2018 – Elon Musk has branded the past few months as ‘production hell.’ Tesla will aim to hasten the rollout of the Model 3 as much as possible. According to estimates, the company lost millions of dollars per day in Q3 of 2017 in the rush to begin manufacturing. The company also reported a higher loss per share than Wall Street projections – $2.92 compared to the forecasted $2.29.

Elon Musk also plans to unveil the new Model Y (not the official name of the vehicle, but the term that the company has given to its new release), a crossover all-electric vehicle built on the same generation as the Model 3. Tesla will also be attempting to further disrupt the industry of self-driving vehicles through enhancing its autopilot, vehicle navigation and mapping software; in his well-known flamboyant style, Musk has described it as a ‘major navigation overhaul’ that will be ‘light-years ahead of the current system.’

2018 is expected to be a busy year for the automaker. As Morgan Stanley reports, Tesla’s shares will be ‘extremely volatile’, and could reach highs of $400 before dropping to below the company’s current share price. And as the world doesn’t seem to be enough for the South African-born entrepreneur, Musk is also making inroads in space exploration. The businessman is expanding his aerospace company SpaceX (battling Amazon’s Jeff Bezos and Virgin’s Richard Branson) and he plans to send two citizens on a flight around the moon in 2018, launch 30 rockets into space and send a lander to Mars by the end of 2018.

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