Why It’s in Facebook’s Interest to Heed Japan’s Call

Call to boost data protection

Last month, Japan told Facebook (FB) to improve protection of its users’ personal data. The call from Japan came after Facebook disclosed a data breach that affected an estimated 29 million users. That was on top of the data privacy breach linked to the now defunct British political consultancy Cambridge Analytica. Japan was one of the countries that investigated the Cambridge Analytica incident, which affected around 87 million Facebook users including tens of thousands of users in Japan.

Why It’s in Facebook’s Interest to Heed Japan’s Call

Shift to digital advertising

Although Japan’s call for data protection isn’t an administrative order, it would be in Facebook’s best interest to heed it. Japan is a vital market for the company thanks to its expanding digital advertising market. According to eMarketer, marketers in Japan are steadily shifting to digital advertising from television commercials. This year, television commercials are expected to capture 32.4% of media advertising expenditures in Japan, topping spending on digital ads at 29.8%. But by the end of 2020, digital ads are expected to account for 32% of Japan’s media ads outlays compared to 31.2% for television commercials.

Media ad spending in Japan is estimated at around $41.4 billion in 2018. And the market is growing, presenting an attractive commercial opportunity for Facebook.

Facebook’s top line rose 33%

Facebook’s revenue increased 33% YoY to $13.7 billion in the third quarter with advertising sales accounting for 98.5% of the amount. Alphabet (GOOGL) and Twitter (TWTR), two other mostly ad-funded companies, grew their revenues by 21.5% and 28.6% YoY, respectively, in the third quarter. Snap (SNAP) and Yelp (YELP) grew their third-quarter revenues by 43.2% and 8.0% YoY, respectively.