Meta results show impact of data fines and datacentre upgrade strategy

Meta, the owner of Facebook, has posted earnings of $32bn for the second quarter of 2023, an 11% increase compared with the same quarter in 2022.

The company’s chief financial officer, Susan Li, said she anticipated that Meta’s full-year 2023 expenses would be in the range of $88-91bn, an increase of between $1bn and $2bn due to legal-related expenses recorded in the second quarter of 2023.

When asked about the legal costs, Li said the accrued legal expenses of $1.87bn mostly relate to the IDPC fine and “data transfers matter”. The IDPC fine of €1.2bn represents the lion’s share of the legal expense.

“We continue to see increasing legal and regulatory headwinds in the EU and US, and in particular, the adoption of guidelines that require penalties to be assessed on a percentage of global revenue for violations of certain regulations is something that we are certainly thinking about as we think about the appropriate legal contingencies.”

Following the European Data Protection Board’s decision to rule against Meta’s policy of transferring data between the US and EU, Nick Clegg, president of global affairs at Meta, and Jennifer Newstead, Meta’s chief legal officer, wrote a blog arguing that the ruling was not about one company’s privacy practices. “There is a fundamental conflict of law between the US government’s rules on access to data and European privacy rights,” they said.

Li was also quizzed about content moderation on Meta’s social media platforms, an area both the UK and EU are investigating through public consultation. Meta introduced Threads, its rival to Twitter, with a focus on content moderation.

“We have accrued a lot of experience in content moderation, and I think we’re going to apply the things that we’ve learned – especially in service – to differentiate Threads, which is the ability to really foster open and friendly and productive conversation,” she said.

Li added that Meta would focus on community guidelines. “We’re going to have features that are going to help users control their experience, reply and mention controls, hidden words, and actions like unfollow, block, restrict and mute,” she said. “We believe that this is going to help us make Threads into a more productive and creative place.”

Beyond the data fine, Meta said it expected higher infrastructure-related costs next year. “We also expect to incur higher operating costs from running a larger infrastructure footprint,” the company said.

When asked about the potential for longer use of datacentre equipment, Li said: “We have extended the useful lives for our CPU-based servers over the past two years given the slowdown in performance gains.”

Unlike central processing units (CPUs), where the company focuses on efficiency, Li said Meta is able to measure the return on investment of graphics processing unit (GPU) deployments for artificial intelligence workloads.

“We’re still seeing strong performance gains for new GPUs, so those will depreciate in a relatively shorter timeframe, and we’ll just continue to evaluate how to most efficiently use the CPUs and GPUs across our fleet.”