In certain ways, Meta Platforms Inc. is a complicated company. It runs an ever-growing collection of social media apps—Facebook, Instagram, WhatsApp, Messenger, Threads—and the virtual-reality app Horizon Worlds. It sells gaming headsets, smart sunglasses and business productivity software. It also operates advanced research labs developing next-generation artificial intelligence and new types of computer interfaces. But when it comes to how Meta actually pays for all this, the story is a lot simpler. Almost all the company’s revenue—98.4% in the most recent quarter—comes from a single source: personalized advertising.
Targeted advertising revolutionized the media business, made Meta one of the most valuable companies in the world and gave co-founder Mark Zuckerberg the kind of disposable income (net worth, according to the Bloomberg Billionaires Index: about $120 billion) that’s allowed him to fashion himself into a leading philanthropist and part-time cage fighter. Users regularly complain that this type of advertising is creepy and distracting and that the data-hungry operations supporting it come with some downsides. Ad tracking causes users to disclose private information, often without realizing it, and the content recommendation algorithms that keep everyone scrolling through ads tend to also leave them angry and misinformed in the process. And so, for pretty much as long as there’s been social media, a steady stream of criticism has argued the entire system would work better if people could pay for the services they use instead of agreeing to tracking and targeting.