In its quest to bring the entire world closer together, Facebook (NASDAQ: FB) has always had a small problem: small people. In many countries, children are not allowed to join the company's eponymous site. For example, in the United States, the Children's Online Privacy Protection Act dictates that sites that collect user information cannot sign up users under 13. Understandably, Facebook CEO Mark Zuckerberg has spoken out against this restriction.
Facebook's newest app may present a win-win solution. After consulting the National Parent Teacher Association and online security experts, the company is launching Facebook Messenger Kids, a stand-alone app that allows children ages 6 to 12 to message parent-approved contacts. A key selling point: There will be no advertising on Messenger Kids.
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Patience is a virtue
What's separated Facebook from other social-media failures like MySpace is Zuckerberg's patience. Early in the product's existence, the young CEO resisted calls for immediate monetization, instead focusing on user growth. In the book The Accidental Billionaires, notably adapted into the film The Social Network, Zuckerberg is portrayed as rebuffing fellow founder Eduardo Saverin's attempts to heavily monetize the site, and the two fell out over Saverin placing unauthorized ads on the site.
Zuckerberg's patience was also noted in his handling of Instagram. Before Facebook's initial public offering, in 2012, Zuckerberg announced a deal to pay $1 billion for the photo-sharing site, a surprising figure for a company with no revenue. Instead of placing ads on Instagram or incorporating the app into Facebook, Zuckerberg allowed Instagram to continue to grow its user base unimpeded before slowly introducing ads on the site.
Facebook addresses concerns
Facebook has long faced concerns about user privacy. These concerns are heightened with pre-teen users, who often are unaware of the impact of their online activity. The company appears to have addressed many of these concerns by incorporating the following privacy and family-friendly features:
- Parental control (including contact approval)
- No advertising
- No auto-migration to Facebook or Instagram
Playing the long game will pay off
Facebook has seen strong competition for youngsters from new entrants, most notably from Snap Inc.'s Snapchat. Facebook has continued to grow its considerable monthly and daily active users, but much of this growth is coming from older adults and seniors, while most advertisers prefer younger demographics.
Understandably, Messenger Kids is an attempt to introduce children to the social network's sticky ecosystem before they're able to open a Snapchat account. The Wall Street Journal notes Messenger Kids mimics Snap by incorporating many of the popular features of the photo-sharing app, such as the filters that overlay graphics onto a user's face.
For investors, this will not show up in Facebook's results. If anything, this is a short-term expense that will weigh against earnings, albeit slightly, as the costs of developing and maintaining the application are expensed while there'll be no discernible revenue source. However, Zuckerberg has shown a willingness to be patient with monetization while growing the company's user base. Messenger Kids would probably be no different in this regard.
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