Russia’s Instagram, Facebook Bans Will Cost Meta Nearly $2 Billion In Revenue
Russia’s crackdown on Instagram and Facebook will produce a billion-dollar hit on their parent company’s revenue, an unexpected loss that will compound some concerns about Meta’s sales.
Russia accounts for 1.5% of Meta’s advertising dollars, chief financial officer Dave Wehner said Thursday at a Morgan Stanley conference. Last year, Meta pulled in $114.9 billion in sales—with Russia accounting for $1.7 billion, based on Wehner’s comments. It is approximately $4.7million per day.
The Kremlin on Friday announced it would begin restricting Instagram three days from now, the latest escalation in a conflict between the Putin regime and Meta following Russia’s invasion of Ukraine. Russia also said it would officially categorize Meta as an “extremist organization.” This closely follows Meta’s decision to apply warning labels to Russian state media agencies on Instagram—as it had previously done on Facebook—and an additional move by the social network to allow some calls for violence against Russia to be published on its site, an unusual move by the company after several years of criticism over its handling of outrage speech. Russia already blocks Facebook and Meta announced last week that it will restrict Russian advertisers’ ability to buy ads through Facebook.
Meta already faces questions regarding how to continue growing its revenue. This is because of the Russian revenue loss. Like other companies such as Google and Twitter, Facebook has been impacted by a change to Apple’s iPhone software last year, making it more difficult for these businesses to offer advertisers in-depth information about their users. Facebook has already advised investors about the possibility of a $10B reduction in revenue due to Apple’s move.
Facebook and Instagram were hugely popular in Russia, often some of the only portals to the West in a nation where information is tightly controlled by the government—a stranglehold only increasing during Russia’s war on Ukraine. Statista, an information tracking company, reports that Instagram had around 63 million and Facebook had almost 70 million users in Russia. Particularly, Instagram saw strong growth in the period of pandemic. It grew by three million people.
While popular, Facebook and Instagram aren’t as widely used in Russia as YouTube, Russia-based social network VK and WhatsApp. According to Statista, WhatsApp is owned by Meta as well and boasts close to 80 millions users. Meta doesn’t monetize WhatsApp the same way as it does Instagram and Facebook, and, for now, WhatsApp remains available in Russia.