Facebook's expenses rocketed by a massive $US10 billion, partly because it's costing so much to clean up its platform

Chip Somodevilla/Getty ImagesFacebook co-founder, Chairman and CEO Mark Zuckerberg.
  • Facebook’s costs rose by $US10 billion in 2018, partly thanks to its increased spending on keeping disinformation, harassment, and fake ads off its platform.
  • That increase is roughly equal to the size of a company like Slack, which is worth about $US7 billion.
  • Facebook on Wednesday said it spent $US31 billion in 2018, up from $US20.4 billion in 2017.
  • Other costs include marketing Facebook’s smart speaker, the Portal.

Facebook’s spending increased dramatically last year, in part thanks to the firm’s increased efforts to keep disinformation, harassment, and fake ads off its platform.

On Wednesday, the company announced that its expenses for 2018 totaled $US31 billion. That’s an increase of 51%, or about $US10 billion, from 2017, when its expenses were $US20.4 billion.

These feel like abstract, large figures, so to put it into context: The hot workplace-chat app Slack is worth about $US7 billion. Facebook’s costs alone this year rose by roughly the equivalent of a Slack. The total costs are equivalent to an Airbnb, which is worth about $US31 billion.

In a call with analysts on Wednesday, CFO David Wehner and CEO Mark Zuckerberg attributed these rising costs to increased spend on “safety” – essentially the costs spent trying to improve security and privacy and limit the spread of disinformation on the platform.

That’s in the wake of multiple crises including the Cambridge Analytica data scandal, which highlighted how Facebook failed to police third-party developers on its platform; fake political ads; and the exacerbating of hate speech in Myanmar.

Read more: Facebook’s stock soars 12% after beating on top and bottom lines for Q4 2018 earnings

“The reality is that we’ve had a number of substantive issues that we needed to address, and the investments we made in safety, security, privacy and well-being both increased our costs and, in some cases, reduced our revenues,” Zuckerberg said in the call.

“We’ve changed how we build services to focus more on preventing harm. We’ve invested billions of dollars in security, which has affected our profitability,” he added.

The bulk of the security costs have arisen, it seems, from hiring new workers. Facebook ended the year with substantially more full-time employees, with the number rising 42% to 35,500. Zuckerberg indicated in the call that 30,000 of those new hires were people working on safety and security, though it wasn’t clear that all of those 30,000 were full-time staff members.

Facebook is a huge business, and not all of its expenditure was about security. The company also spent money in the holiday quarter promoting its smart speaker, Portal, and the Oculus Go virtual reality headset. And $US10 billion of that $US30 billion expenditure was on research and development.

Wehner said costs could rise by another 50% this year. He said the company planned “to continue to invest aggressively in the priority areas, including on the innovation side with AR/VR and AI and continuing to invest in the safety and security programs that we’re undergoing.”

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