Facebook results + Brazil's "internet constitution

UK: Following the announcement of Facebook's results, Eden Zoller, principal analyst at Ovum provides the following comment:

"The shine on Facebook's strong year on year Q1 2014 results have been dimmed by a slowdown in revenue growth from Q4 2013, and the prospect of lower gear revenue growth for the rest of the year. Mobile continues to be the star of the show in terms of revenues and usage - mobile advertising now accounts for 59 percent of total advertising revenues.

"App Installs showed solid progress with over 350m installs to date, although it was disappointing but not surprising to learn that Facebook's new mobile advertising network is unlikely to have a significant impact on mobile advertising revenues in the near term.

"There was also a muted note from properties that were expected to be performing better by now, notably video adverting and the monetization of Instagram where Facebook is moving slowly, although its caution is understandable.

"Payments continue to be a conspicuous weak spot for Facebook (with the exception of desktop games) and it needs to address this given the complementary, interconnected nature of payments and advertising. Facebook has new payment related initiatives underway such Nearby Friends, a one-click payment feature and also the anticipated move into mobile money transfers, but given Facebook's poor track records in payments to date it remains to be seen whether its new moves on this front will move the needle."

Elsewhere, Ovum's telecom regulation analyst, Luca Schiavoni explains how "Brazil's "Internet Civil Framework" is a further sign of legislators' attention to privacy".

"The approval of what has been labelled as Brazil's "Internet Constitution" this week is a further sign of the trends that have been observed in recent legislation, particularly in Europe, in the wake of scandals that unveiled large scale breaches of online privacy.

"In setting out clear limits for the retention, use, and transfer of data, Brazilian legislators have sent out a clear message and set out an international precedent. It is worth noting that the rules, albeit differently, will apply to both ISPs and content or application providers. Nonetheless, some provisions of the act will need a more detailed specification in the near future; the concepts of "personal data" and of "free, explicit, and informed consent" have not been defined very precisely.

"While this ensures that the rules maintain a certain degree of flexibility, it also requires the legislators to provide more clarity for an effective enforcement of the rules. Defining the concept of "personal data" is a common challenge that regulators have faced in recent years, especially with the increasing pace of technology developments, but still a crucial one for data protection rules to actually work.

"The grip has also been tightened on transfer of personal data. Internet providers will not be able to use third parties to store their customers' record of connections; content and applications providers will be able to store data outside Brazil, although they will have to comply with Brazilian legislation for all the aspects that relate to their customers in Brazil.

"A previous version of the bill, which was eventually amended, had an outright ban on data transfer abroad which would have been hugely disruptive for these businesses. The change in the final version will allow OTTs to carry on doing business in Brazil without significant changes in the short run; however, they will have to enhance their transparency in telling customers what is done with their data, and avoid retaining data outside the scope for which consent has been given."