Facebook plans to pay creators $1 billion to use its products.
Influencers will be able to earn money by using specific Facebook and Instagram features or by hitting certain milestones.
Facebook has been trying to pry influencers away from TikTok and YouTube.Credit…Jim Wilson/The New York Times
Facebook is setting up a program to pay $1 billion to creators through the end of 2022, Mark Zuckerberg, Facebook’s chief executive, said on Wednesday, part of an effort to woo influencers onto its platforms.
The $1 billion will be allocated among creators of all types, giving influencers an incentive for creating and posting original content to Facebook, the social network said. Influencers will be able to earn money by using specific Facebook and Instagram features or by hitting certain milestones. If creators livestream on a regular basis, for instance, they can earn cash.
In the past year, an arms race has emerged among tech companies seeking to court online content creators who can generate enormous engagement and bring their young fans and cultural relevance to a platform. TikTok and YouTube have cultivated deep relationships in the creator community by helping creators make money and by building features to serve their needs.
Under Facebook’s new program, which is invitation-only for now, eligible creators will see alerts encouraging them to join the effort when they open the app. Facebook said it planned to create a dedicated place for creators to track their bonuses on Instagram and Facebook by the end of the year.
This is not the first time that Facebook has given money to creators in exchange for using its products. The company previously paid TikTok influencers and YouTubers to use features of Instagram such as IGTV, a long-form video feature similar to YouTube, and Reels, a feature that functions similarly to TikTok. In December, Facebook pledged to invest $10 million over the next two years in the Black gaming community, offering some creators guaranteed monthly payments for using Facebook Gaming, a streaming platform similar to Twitch.
Direct payments are becoming an increasingly common way to try to pry creators away from TikTok. In November, Snapchat began giving away $1 million a day to content creators who posted to the app’s Spotlight feature, which functions similarly to TikTok. Those payments have recently dried up, making Facebook’s bonus program potentially enticing.
At least 50 million people around the world now consider themselves content creators, and it is one of the fastest-growing segments of small business, according to a report by the venture capital firm SignalFire.
On Wednesday, the mobile insights firm Sensor Tower said TikTok was the most-downloaded app globally in the first half of 2021. TikTok also surpassed three billion installations globally, SensorTower said, making it the first non-Facebook app to exceed that figure.
Twitter hoped its Fleets feature would lower the barrier to posting. Instead, the company said, people mostly used it to amplify their own tweets.Credit…Twitter
Twitter plans to remove an ephemeral-stories feature from its app after it failed to attract users, the company said in a blog post on Wednesday. The feature, Fleets, automatically deleted images or text after 24 hours.
Snapchat introduced the so-called stories format in 2013 as a bridge between its core private messaging features and the public sharing that most people expected from social media platforms. Instagram copied the feature in 2016, and ephemeral stories quickly spread across social media, including Facebook and LinkedIn.
Twitter arrived late to the trend, rolling out Fleets in March 2020. The company believed that the format would help new users become comfortable posting on Twitter by relieving the pressure that comes with making a permanent public post. But Fleets didn’t cause new users to flock to the platform, Twitter said.
“We hoped Fleets would help more people feel comfortable joining the conversation on Twitter,” Ilya Brown, a Twitter vice president of product, wrote in the blog post. “Although we built Fleets to address some of the anxieties that hold people back from Tweeting, Fleets are mostly used by people who are already Tweeting to amplify their own Tweets and talk directly with others.”
Twitter will remove Fleets from its service by Aug. 3, Mr. Brown said. It is the only major social media company to deactivate a stories feature.
The company will look into other ways to reduce the anxiety of tweeting for new users, Mr. Brown added. Twitter executives also said the company would continue to research the impact of its features and would not hesitate to move on from projects if the features did not resonate with users.
“Big bets are risky and speculative, so by definition a number of them won’t work,” Kayvon Beykpour, Twitter’s head of product, said in a tweet about the change. “If we’re not having to wind down features every once in a while, then it would be a sign that we’re not taking big enough swings.”
Lina Khan, chair of the Federal Trade Commission, Facebook demanded that she recuse herself from the agency’s lawsuit against the companyCredit…Pool photo by Saul Loeb
Facebook on Wednesday demanded that the new chair of the Federal Trade Commission, Lina Khan, recuse herself from the agency’s lawsuit against the company, saying her prior criticism of the company meant she could not be impartial in the case.
In a petition filed with the F.T.C., the company said that allowing Ms. Khan to play a role in deciding the future of the case would violate its due process rights. As evidence of her bias, it pointed to critical statements that she had made about Facebook, her work on a congressional investigation into the company and her previous role at the Open Markets Institute, a group critical of the tech giants.
The F.T.C.’s lawsuit against Facebook, which argued that the company had broken antitrust laws while buying its nascent rivals Instagram and WhatsApp, was thrown out by a federal judge in June. The agency has 30 days from that ruling to file a new version of its complaint that addresses the judge’s concerns.
“Chair Khan has consistently made well-documented statements about Facebook and antitrust matters that would lead any reasonable observer to conclude that she has prejudged the Facebook antitrust case brought by the F.T.C.,” Christopher Sgro, a spokesman for Facebook, said in a statement.
Amazon made a similar argument last month, requesting that Ms. Khan recuse herself from any antitrust investigations into the company, citing her longstanding critiques of the company’s practices.
An F.T.C. spokeswoman, Lindsay Kryzak, declined to comment.
Jerome Powell, the Fed chairman, attributed high inflation numbers to factors tied to the economy’s reopening from the pandemic.Credit…Pool photo by Graeme Jennings
Jerome H. Powell, the Federal Reserve chair, told House lawmakers that inflation has increased “notably” and is poised to remain higher in coming months before moderating — but he gave no indication that the recent jump in prices is pushing central bankers to rush to change policy.
The Fed chair attributed high inflation numbers to factors tied to the economy’s reopening from the pandemic, and indicated in response to questioning that Fed officials expect inflation to begin calming in six months or so.
Mr. Powell’s testimony before the House Financial Services Committee on Wednesday, comes at a fraught moment politically and economically when it comes to inflation. The Consumer Price Index spiked by 5.4 percent in June, the biggest jump since 2008 and a larger move than economists had expected. Price pressures appear to be poised to last longer than policymakers at the White House or Fed had expected.
“Inflation has increased notably and will likely remain elevated in coming months before moderating,” Mr. Powell said in his opening remarks.
He later acknowledged that “the incoming inflation data have been higher than expected and hoped for,” but he said the gains are coming from a “small group” of goods and services directly tied to reopening.
Mr. Powell attributed the current pop in prices to a series of factors: temporary data quirks, rising prices on goods and services facing supply constraints that ought to “partially reverse” and climbing costs for services that were hard-hit by the pandemic and are now experiencing a demand surge. He noted that longer-run inflation expectations remain under control — which matters because inflation outlooks help to shape the future path for prices.
Expectations “have moved up from their pandemic lows and are in a range that is broadly consistent with the F.O.M.C.’s longer-run inflation goal,” Mr. Powell said, referring to the policy-setting Federal Open Market Committee.
“We are monitoring the situation very carefully, and we are committed to price stability,” Mr. Powell said. He added that “if we were to see that inflation were remaining high and remaining materially higher above our target for a period of time — and that it was threatening to uproot inflation expectations and create a risk of a longer period of inflation — then we would absolutely change our policy as appropriate.”
For now, the Fed chair made no indication that the path for policy is poised to change based on the hotter-than-expected price data. He said that labor market conditions are improving but that “there is still a long way to go” and that the Fed’s goal of achieving “substantial further progress” toward its economic goals before taking the first steps toward a more normal policy setting “is still a ways off.”
Fed officials are debating when and how to slow their $120 billion of monthly government-backed bond purchases, which would be the first step in moving policy away from an emergency mode. Mr. Powell said those discussions will continue “in coming meetings.”
The central bank is also maintaining its policy interest rate at near-zero, which helps to keep borrowing cheap for consumers and businesses. Officials have set out a higher standard for lifting rates: They want the economy to return to full employment and inflation to come in on track to average 2 percent over time.
Their guidance says they want to see inflation “moderately” above 2 percent for a time, and Mr. Powell was asked on Wednesday what that standard means at a time when price pressures are so strong.
“Inflation is not moderately above 2 percent, it’s well above 2 percent,” Mr. Powell said of the current data. “The question will be, where does this leave us in six months or so — when inflation, as we expect, does move down — how will the guidance work? And it will depend on the path of the economy.”
Raising rates is not yet up for discussion, officials have said publicly and privately.
Shoppers in Manchester, England. Analysts noted that price increases in Britain reached across food, used cars, clothing and footwear, eating and drinking out and fuel.Credit…Phil Noble/Reuters
Britain’s annual rate of inflation climbed to 2.5 percent in June, data published on Wednesday showed, exceeding economists’ expectations. The British pound and government bond yields rose as investors weighed how the central bank might eventually react to the continued increase in prices.
The pace was the highest since August 2018. After the 2016 Brexit referendum, Britain went through a period of high inflation set off by the slump in the pound. Inflation rose 0.5 percent in June from the previous month, the fifth-consecutive month of increases.
Analysts noted that the price increases were broad-based, reaching across food, used cars, clothing and footwear, eating and drinking out, and fuel. Last month, Bank of England policymakers said they expected the inflation rate to temporarily rise above their 2 percent target, and even exceed 3 percent, before falling again.
Price rises are mostly contained to items that either fell a lot the previous year or are part of sectors reopening from the winter lockdown. This should allow the Bank of England to “continue to judge that rising inflation will prove temporary,” analysts at Royal Bank of Canada wrote.
The potential path of inflation has gripped investors and economists globally as they debate whether the increase might be sustained and force central banks to take action. On Tuesday, data showed the annual rate of inflation in the United States climbed to 5.4 percent, the fastest pace in 13 years. On Wednesday, Jerome H. Powell, the Federal Reserve chair, told House lawmakers that inflation has increased “notably” and is poised to remain higher in coming months before slowing down again.
The pound rose 0.3 percent against the U.S. dollar and 0.2 percent against the euro. The yield on 10-year bonds fell six basis points, or 0.06 percentage points, to 1.36 percent.
Elsewhere in markets
Stocks on Wall Street climbed, with the S&P 500 up 0.2 percent.
Most European indexes were lower. The Stoxx Europe 600 index fell 0.1 percent. London’s FTSE 100 fell 0.5 percent.
Oil prices dropped. Futures of West Texas Intermediate, the U.S. crude benchmark, fell 3.8 percent to $72.38 a barrel.
Bank of America said consumers’ emergence from the pandemic showdown drove a successful quarter.Credit…Carlo Allegri/Reuters
Americans are ramping up spending. That’s good for big banks’ bottom lines.
Bank of America said on Wednesday that its profit rose to $9.2 billion in the second quarter — more than double its earnings of $3.5 billion a year earlier, thanks in part to releasing some of the money it had set aside last year. Two other major lenders on Wednesday, Citigroup and Wells Fargo, reported profit and revenue that beat analysts’ expectations.
“Our customers are seeing good growth opportunities in a recovering economy,” Brian Moynihan, Bank of America’s chief executive, told analysts on a conference call. “The important thing is we’re seeing increased activity,” he said, citing consumer spending and rising deposits since the first quarter, when the country was still emerging from a worrisome winter and vaccination programs were just ramping up.
The company’s losses from consumers not paying back their debts fell to the lowest rates in 25 years, while balances on loans grew for the first time since the beginning of last year, according to the bank’s chief financial officer, Paul Donofrio. It also released $2.2 billion from a rainy-day fund that it had set aside for a predicted wave of defaults that never emerged, thanks to robust government stimulus efforts that helped keep many Americans afloat.
Still, the results weren’t entirely rosy: Revenue was $21.5 billion, down 4 percent from the same period a year ago and short of analysts’ expectations. In its consumer business, its average total outstanding loans was off 12 percent, to $282 billion, from last year — taking some shine off the increase in profits.
Bank of America’s shares were down more than 3 percent Wednesday afternoon as investors looked past the immediate results, weighing whether the company could boost the number of loans on its books and earn more from charging interest on those loans.
Even with robust earnings reports — JPMorgan Chase and Goldman Sachs reported solid quarters on Tuesday — investors are questioning whether the economic rebound that has buoyed the banking giants is starting to lose its momentum.
Executives’ optimistic comments this week haven’t allayed those concerns, sending bank stocks generally lower. Citi initially rose after it reported results, but had given back those gains by midday — even with a better report than Wall Street had expected.
Wells Fargo’s shares rose nearly 4 percent, although that may have been more a reflection of the bank’s regulatory future as much as its economic fortunes. During a call with executives, analysts repeatedly raised the prospect of the Federal Reserve removing the asset cap put in place after a series of problems at the bank, including a fake-account scandal that badly bruised its reputation.
Citi reported a profit of $6.2 billion on revenue of $17.5 billion; analysts had expected slightly lower revenue of $17.2 billion, and Citi’s per-share earnings of $2.85 exceeded analysts’ expectations by 89 cents. Wells Fargo beat expectations with earnings per share of $1.38 — a vast improvement over its loss of $1.01 per share a year earlier — while revenue increased to $20.3 billion, up 11 percent from 2020.
Like Bank of America, Citi and Wells Fargo released some of the money they had set aside to brace themselves for loan losses as a result of the pandemic. Citi pared back its reserve by $2.4 billion and Wells Fargo reduced its reserve by $1.6 billion.
Citi’s chief executive, Jane Fraser, said the company was benefiting from a faster-than-expected economic recovery.
Revenues from its global consumer banking business were down 3 percent from the first three months of the year and 7 percent from the same period a year ago, partly the result of a decrease in the average size of credit card loans. Even so, that unit swung to a profit from a loss a year earlier: Back then, the bank
had to set aside a big chunk of money to cover future losses. With the economic outlook improved, it joined other banks in releasing some of that reserve.
Wells Fargo’s chief executive, Charles W. Scharf, also cited the strength of the recovery as a boon.
“The outlook for the economy for the rest of the year is promising,” he told analysts on a conference call. “However, risks remain. Interest rates have been volatile,” he said, which could weigh on how much the bank could earn from charging interest.
Even as the banks’ consumer divisions showed strength, their trading divisions — which drove business during the wild market volatility a year ago — have slowed down. Overall, revenue for the three banks’ markets divisions fell compared with last year, when traders handled an avalanche of activity from clients reacting to pandemic-fueled turmoil.
Citi’s second-quarter trading revenues fell 30 percent to $4.8 billion as the markets for bonds, commodities and other financial products cooled. At Bank of America, total trading revenue dropped 19 percent compared with a year ago, to $3.6 billion.
At both banks, stock traders increased revenue by more than 30 percent, but it wasn’t enough to offset a weaker performance from their bond-trading counterparts.
Emily Flitter contributed reporting.
— Lananh Nguyen
Zomato, a food-delivery company based in India, received over $562 million from a mix of foreign and domestic institutions ahead of its initial public offering on Wednesday, out of $1.3 billion it had planned to raise in its market debut.
The first batch of shares it sold to the public was oversubscribed, with strong interest from retail investors. That was despite some financial analysts saying that the loss-making company’s offering was expensive compared to its global peers.
The share sales thus far imply a company valuation of more than $8 billion. The company is selling shares through Friday, in an offering that’s set to be the biggest in the country this year. Zomato was valued at $5.4 billion in a funding round in February.
Deepinder Goyal, Zomato’s founder and chief executive officer, tweeted on Wednesday that he had “ordered a triple breakfast” and was “stress eating” before the start of the public offering.
Zomato, founded in 2008, has quickly grown into one of the largest food-delivery firms in the world. The company acquired Uber’s food-delivery business in India and maintains a presence in 24 countries and in over 10,000 cities.
As pandemic lockdowns have bolstered the popularity of online platforms and led people to order more food online, analysts said Zomato has strong growth potential.
“Zomato is in a sweet spot, as the online food delivery market is at the cusp of evolution,” said Sneha Poddar, a financial analyst. “With economics of scale playing out, the losses have reduced substantially.”
India’s other digital start-ups will be watching this week’s I.P.O. closely. In the coming months, more of the country’s tech unicorns — as firms valued at over $1 billion are known — are likely to make their market debuts, including the mobile payments app Paytm and the online beauty retailer Nykaa.
Delta Air Lines said there were promising indications that the travel business was returning to normal.Credit…Elijah Nouvelage/Reuters
Delta Air Lines on Wednesday reported a $652 million profit in the second quarter of the year, its first since the pandemic began and the latest sign that the airline recovery is well underway. The carrier reported $7.1 billion in revenue.
There were also promising indications that the business is returning to normal, Delta said, noting that booking trends recovered as customers bought tickets further out, with average daily sales beating Delta’s internal expectations by 20 percent.
“Domestic leisure travel is fully recovered to 2019 levels, and there are encouraging signs of improvement in business and international travel,” the airline’s chief executive, Ed Bastian, said in a statement.
Corporate travel recovered as offices reopened throughout the quarter, with the number of business travelers down 60 percent in June compared with 80 percent in March, according to the airline.
Despite those encouraging signs, Delta’s quarterly profit, which was buoyed by $1.5 billion in federal stimulus money, was still down 55 percent from the same quarter in 2019. Its revenue was down 43 percent from two years ago.
The number of people flying for vacation or to visit friends and family within the United States has recovered to prepandemic levels, but Delta’s revenue from domestic travel was down 45 percent from 2019 because of the drop-off in business travel.
Revenue from travel to Latin America was down only 36 percent, while longer flights across the Atlantic or Pacific Ocean brought in about 85 percent less revenue. Cargo revenue, on the other hand, was up 35 percent.
Delta also offered a preview of how it expects to fare during the quarter encompassing July, August and September: Passenger capacity will be down 28 to 30 percent and revenue off 30 to 35 percent, compared with the same period in 2019.
Delta has announced plans to buy 29 used Boeing 737 planes and lease seven used Airbus A350s, some of which will replace older aircraft that the carrier had removed from its fleet. That decision drove improvements in fuel efficiency, which was up more than 7 percent in the second quarter compared with 2019.
Delta is the first major airline to report financial results for the second quarter. American Airlines, United Airlines and Southwest Airlines are all expected to announce earnings next week.
American offered a preview of those results, saying in a securities filing on Tuesday that it expected to announce earnings between a $35 million loss and a $25 million profit for the quarter.
“We are clearly moving in the right direction,” the airline’s chief executive, Doug Parker, and president, Robert Isom, said in a staff memo on Tuesday. “Our revenue and expense performance in the quarter came in better than expectations, and this was achieved while bringing the operation back up to full capacity and safely transporting a record number of travelers.”
Travel within the United States is down about 20 percent from the same period in 2019, according to Transportation Security Administration screening data. Summer is the industry’s busiest season, but it’s unclear what the fall will look like, when corporate travel typically picks up.
A planned merger involving an upstart space transportation company may not get off the ground after securities regulators brought one of the first major enforcement actions targeting special purpose acquisition companies, or SPACs. The Securities and Exchange Commission said on Tuesday that it had reached a settlement with several parties involved in the planned merger of Momentus, a company that said it had developed a unique propulsion technology, and Stable Road Acquisition, a SPAC. Investors were misled into believing the propulsion system had been successfully tested in space, when the test had failed, regulators said. “This case illustrates risks inherent to SPAC transactions, as those who stand to earn significant profits from a SPAC merger may conduct inadequate due diligence and mislead investors,” the S.E.C. chairman, Gary Gensler, said in a statement.
The United States is hopeful that Ireland will drop its resistance to joining the global tax agreement that it is brokering, as Treasury Secretary Janet L. Yellen made the case to her Irish counterpart this week that it is in its economic interests to join the deal. Ms. Yellen held high-stakes meetings in Brussels this week with Paschal Donohoe, Ireland’s finance minister and president of the Eurogroup, a club of European finance ministers. She needs Mr. Donohoe’s support because the European Union requires unanimity among its members to formally join the deal, which will require changes to domestic tax laws. After meeting with Ms. Yellen on Monday, Mr. Donohoe struck a positive tone and said he would continue to engage in the process.