Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to the Facebook Fourth Quarter and Full Year 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there'll be a question-and-answer session. If you would like to ask a question during that time, please press star then the number one on your telephone keypad. This call will be recorded. Thank you very much. Ms. Deborah Crawford, Facebook's Vice President of Investor Relations, you may begin. Thank you. Good afternoon, welcome to Facebook's Fourth Quarter and Full Year 2020 Earnings Conference Call. Joining me today to discuss our results are Mark Zuckerberg, CEO; Sheryl Sandberg, COO; and Dave Wehner, CFO. Before we get started, I would like to take this opportunity to remind you that our remarks today will include forward-looking statements. Actual results may differ materially from those contemplated by these forward-looking statements. Factors that could cause these results to differ materially are set forth in today's press release and in our quarterly report on Form 10-Q filed with the SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we undertake no obligation to update these statements as a result of new information or future events. During this call, we may present both GAAP and non-GAAP financial measures. A reconciliation of GAAP and non-GAAP measures is included in today's earnings press release. The press release and an accompanying investor presentation are available on our website at investor.fb.com. Now I'd like to turn the call over to Mark. All right. Thanks everyone, for joining us today. I hope you are all staying healthy and well. Our community and business had a strong end of the year. As COVID continued to keep many of us apart and at home, people and businesses continue relying on our services to stay in touch and create economic opportunity. 2.6 billion people now use one or more of our apps each day, and more than 200 million businesses, mostly small businesses, use our free tools to reach customers. Those numbers give a sense of scale, but some of the stories we hear show the impact. Groups have formed where COVID long haulers are helping each other through this scary experience where there's not much else to turn to. Teachers are sending class assignments to students through WhatsApp. Local bookstores and coffee shops are using Instagram to let customers know they're open for curbside pickup. We saw people come together to raise $1.8 billion for nonprofits and personal causes through our fundraising tools last year, including $175 million for COVID-related causes alone. I'm proud of the role that our service has played in helping people support each other during what has been such a hard time. I've spent a fair amount of time on recent earnings calls talking about our election integrity efforts. I'm not gonna discuss them at length today. I do wanna call out that according to our estimates, we easily surpassed our goal to help 4 million people register to vote as part of the largest ever effort to distribute authoritative voting information in recent history. I wanna thank everyone involved in our teams and outside involved with that effort. Today, I'm gonna focus on our product work. Specifically, I'm going to focus on four themes that I'm excited about for the year ahead: communities, private messaging, commerce tools for small businesses, and building the next computing platform. Let's start with communities. I think that helping people build community is one of the most important things that we can do. Our social fabric is made of multiple different layers through which we get our social support. You know, first, we have friends and family. That's the most personal layer. Then we have communities, we're a part of, where we feel a sense of purpose and belonging, explore interests, develop skills, grow as individuals, and meet new people. Then finally, there's the safety net that society and government provide. In many parts of the world, there's been an unfortunate decline in community participation over the last several decades. That's that second layer. This isn't something that we can solve alone, but I think we can help. You know, now that we've helped billions of people stay connected with friends and family, helping everyone find and participate in communities that are meaningful to them has been our next goal. We even updated our mission a few years ago to reflect this, making it give people the power to build community and bring the world closer together. Today, more than 600 million people are now members of a group on Facebook that they consider to be meaningful in their lives. This has grown steadily over time. You know, I hear all the time from people who are in parenting groups that they're a major resource as they navigate raising kids or from people who found a group that shares the same health condition, and they can lean on that community for knowledge and support or from people who've moved to a new place and joined local groups to meet people and get situated. Our product focus now is to develop this community infrastructure beyond feeds and message boards to help people build and run full self-sustaining community institutions. We're building tools to help groups get things done together, and provide support for people that span messaging, video chat, and even communities' own websites. We're exploring different ways to raise funds, including donations, merchandise, and membership fees to help group leaders support their community's operations and hire people for different roles that are needed to build sustainable communities for the long term. As we continue to focus on this, we need to make sure that the communities that people connect with are healthy and positive. That's something that we've been focused on for a while now. One way, of course that we do this is by taking down groups that break our rules against things like violence or hate speech. In September, we shared that we had removed more than 1 million groups in the last year alone. There are also a lot of groups that we may not want to encourage people to join, even if they don't violate our policies. For example, we stopped recommending civic and political groups in the U.S. ahead of the elections. We're continuing to fine-tune how this works. Now we plan to keep civic and political groups out of recommendations for the long term. We plan to expand that policy globally. To be clear, this is a continuation of work we've been doing for a while to turn down the temperature and discourage divisive conversation and communities. Now, along these same lines, we're also currently considering steps that we can take to reduce the amount of political content in News Feed as well. We're still working through exactly the best ways to do this. To be clear. Of course, we're still going to enable people to engage in political groups and discussions if they want to. These can often be important and helpful. They can be ways that people organize grassroots movements or speak out against injustice or learn from people with different perspectives. We want these discussions to be able to keep happening. One of the top pieces of feedback that we are hearing from our community right now is that people don't want politics and fighting to take over their experience on our services. One theme for this year is that we're going to continue to focus on helping millions of more people participate in healthy communities. We're going to focus even more on being a force for bringing people closer together. Next, let's talk about private messaging. As we've discussed before, while people enjoy connecting with friends and communities in the digital equivalent of a town square in apps like Facebook and Instagram, the fastest growing social experiences are about connecting privately in the digital equivalent of a living room in services like WhatsApp and Messenger. That's why we kicked off a big effort two years ago to reimagine what a modern social platform would look like if you built it from the bottom up to be privacy first. We identified several core principles. A private social platform should be built around the most intimate interactions that we have, and that's one-on-one conversations. The most important aspect of privacy and security is that your conversations should stay between you. That means that your conversations should always be end-to-end encrypted, and they should disappear when you're done with them. Safety and reducing spam matter too, that means that we should maintain a minimum amount of metadata to build sophisticated tools to stop bad actors using these services. You should have choice over what services you use. We should make messaging as interoperable as possible across our apps. Finally, no matter what, we should only store people's data in countries where we know we can keep it secure. We should continue opposing data localization in countries with weak records on human rights or privacy. I think that these are the privacy principles that matter most to people. First and foremost, people care that their conversations stay private. After that, people also care about safety and other convenience too. From this perspective, WhatsApp and the direction that we're heading in with Messenger are the best private social apps available. We have a lot of competitors who make claims about privacy that are often misleading. Apple recently released so-called nutrition labels, which focused largely on metadata that apps collect rather than the privacy and security of people's actual messages. iMessage stores non-end-to-end encrypted backups of your messages by default unless you disable iCloud. Apple and governments have the ability to access most people's messages. When it comes to what matters most protecting people's messages. I think that WhatsApp is clearly superior. Since I try to use these earnings calls to discuss aspects of business strategy that I think are important for investors to understand. I do want to highlight that we increasingly see Apple as one of our biggest competitors. iMessage is a key linchpin of their ecosystem. It comes pre-installed on every iPhone, and they've preferenced it with private APIs and permissions. Which is why iMessage is the most used messaging service in the U.S. Now we are also seeing Apple's business depend more and more on gaining share in apps and services against us and other developers. Apple has every incentive to use their dominant platform position to interfere with how our apps and other apps work, which they regularly do to preference their own. This impacts the growth of millions of businesses around the world including with the upcoming iOS 14 changes many small businesses will no longer be able to reach their customers with targeted ads. Now, Apple may say that they're doing this to help people, but the moves clearly track their competitive interests. I think that this dynamic is important for people to understand because we and others are going to be up against this for the foreseeable future. Now, our messaging services continue growing, but it is an uphill battle. Our services just need to be that much better as private social platforms to succeed. To make sure that we remain the best, a couple of years back, we kicked off a number of long-term efforts that have started shipping recently. More of these projects around strengthening encryption, ephemerality, interoperability, and offering other tools are going to be shipping throughout this year. Now let's talk about commerce. Our goal here is to give every individual entrepreneur and small business access to the same kinds of tools that historically only the big companies have had access to. We've always cared about this, but the pandemic has made it more urgent. It used to be the case that only large companies could afford to have analytics or targeted advertising capacity to reach their customers. It was expensive to build these capabilities, and it often required building teams, and storing large amounts of data in-house. Which, you know, most small businesses can't do. One of the things that I'm most proud of that we build the tools so we can offer these same capabilities to small businesses often for free. When you hear people say that we hold a lot of data, that's because hundreds of millions of businesses that would have otherwise had to do this individually, and would have had no easy way of doing so, are now using our services to help them reach customers. When you hear people say that we're connecting data from lots of sources, that's to help small businesses reach customers more efficiently. Big companies often do this themselves, but small businesses can't a lot of times, we do this for them. When you hear people argue that we shouldn't be doing these things or that we should go back to the old days of untargeted television ads. You know, I think that what they're really arguing for is a regression where only the largest companies have this capacity. Small businesses are severely disadvantaged and competition is diminished. With our commerce tools, we've made it so that a business can set up a shop once, and then they will have an online storefront in both Facebook and Instagram immediately, and eventually on WhatsApp and Messenger as well. We recently expanded checkout to all U.S. businesses, making the process of buying a lot more seamless. As the lockdowns have continued, we saw more businesses more small businesses and creators also use paid online events as a way to make money. WhatsApp is also an important part of our strategy here. More than 175 million people message a WhatsApp business account every day. We're building new features to make it even easier to transact with businesses in the app. We introduced carts, which lets people browse catalogs select multiple products, and send the order as a message to a business. The more people that interact with businesses, the better tools that we're going to need to provide for businesses to help them support their customers. You know, many businesses need more than a phone to manage their customer service, so we're building tools to let businesses store and manage their WhatsApp chats using our secure hosting infrastructure if they would like. We're in the process of updating WhatsApp's privacy policy in terms of service to reflect these optional experiences. Now, to clarify some confusion that we've seen, this update does not change the privacy of anyone's messages with friends and family. All of these messages are end-to-end encrypted, which means we can't see or hear what you say, and we never will. Unless the person that you message chooses to share it. Business messages will only be hosted on our infrastructure if the business chooses to do so. We want everyone to know the lengths that we go to to protect your private messages. We are moving the date of this update back to give everyone time to understand what the update means. Finally, let's discuss our work building the next computing platform. This is one of the areas that I'm most excited about our progress heading into 2021. If you look at the history of computing. Every 15 years or so, a new major platform emerges that integrates technology more naturally and ubiquitously into our lives, starting with mainframes and PCs and browser-based computing and then mobile. I believe that the next logical step here is an immersive computing platform that just delivers this magical sense of presence, that you're really there with another person or in another place. Our phones can't deliver this, and neither can any other technology that has come before it. This is going to unlock the types of social experiences that I have dreamed about building since I was a kid. It's what we're building towards at Facebook Reality Labs. We launched Quest 2 in October. It is on track to be the first mainstream virtual reality headset. We designed it so that anyone could jump in with the best and most immersive experience out there. At a price that makes it available to as many people as possible. Now, I think that Facebook has done more than any other company to help bring virtual reality to the mainstream. You know, it's been great to see so many people embrace this. Especially, you know, this year during the pandemic. You know, we're seeing people use it to play games with friends, when they can't be together in person, to do workouts in their living room, or to meet with colleagues while they're working from home. There are a lot of reasons that Quest 2 was one of the hot holiday gifts this year. We're also seeing a growing ecosystem of developers building amazing new experiences for the platform. Right now, more than 60 Oculus developers are generating revenue in the millions and that's nearly twice as many as a few months ago. In previous quarters, I've talked about our long-term future goals when it comes to virtual reality. I think that this quarter's results show that this future is here. Augmented reality glasses are going to be a key part of this vision. We're still working on some of the foundational technology to underpin these. The ultimate product is still some years away. This year, we are excited to deliver a first glimpse of what will be when we launch our first pair of smart glasses from Ray-Ban in partnership with Luxottica. During this pandemic, we've also seen Portal has proven to be a great way for people to stay connected, especially over the holiday as family has had to celebrate apart. You know, this year we're focused on expanding the role of Portal and virtual reality presence into the workplace, bringing more features that can improve remote presence, collaboration, and productivity. 2021 has a lot of unknowns. You know, we don't know when vaccines are gonna be widely available, when our teams will be back in the office. When our lives are gonna start feeling normal again. What I do know is that we're going to keep investing in and innovating on the big themes that I discussed here in order to put more power in the hands of people and small businesses. I personally believe that technology can unlock progress and opportunity, and that the full story of the internet has not yet been written. That's why I'm hopeful for the year ahead and grateful that you are all on this journey with us. Now here is Sheryl to talk about our business. Thanks, Mark. Hi, everyone. Like Mark, I hope everyone is safe and healthy. This was a strong quarter for our business as the acceleration of online commerce we've seen during the pandemic continued into the holiday season. Our total revenue for Q4 was $28.1 billion, which is a 33% year-over-year increase, our fastest growth rate in over two years. After a really difficult year for so many businesses, this holiday period was important. While many businesses are still struggling, the good news is that Q4 was stronger than expected for retail. In the U.S. the National Retail Federation reported that sales in November and December went up 8% year-over-year, and online sales were up 24%. This holiday period was also longer. Compared to previous years, advertisers started spending earlier and sustained that spend well beyond Black Friday and Cyber Monday. We saw robust performance across all regions, as well as an improvement in brand advertising. The strength of our Q4 performance is the result of years of investments in free and paid tools to help businesses succeed online. Even before the pandemic, businesses were going digital, but COVID made this a necessity. Almost overnight, businesses had to create digital storefronts, figure out how to take online orders, and find new ways to reach their customers. For many small companies. These steps or even just setting up a website or a mobile app. Can be difficult and expensive. Our free and paid tools help solve these problems for businesses around the world. With so many businesses struggling when the pandemic hit, we asked our teams, "What do businesses need, and how can we help?" First, they need the tools to get their business up and running online. What can we do to make ours simpler and more effective, and can we build new ones to help them? Second, they need the digital skills and know-how to succeed. How can we help more businesses with training and resources? Third, they need their voices to be heard. Can we use our scale to amplify their voices and tell their stories? We've been asking these questions throughout the last year and into Q4. On the first, we accelerated our work on tools to make it easier for people to find brands and products they love and for businesses to manage their online presence and connect with customers. Mark talked about some of the new tools we've launched, like Shops and paid online events. In the fall, we also rolled out Facebook Business Suite, a new interface to help businesses manage their pages or profiles across our apps. We also continued to invest in making our products as effective as possible so businesses can get more value for every dollar they spend. Personalized ads are privacy-safe and help businesses reach customers where they are, which has been more important than ever during the pandemic. One notable area of progress this past year was in Stories ads, which have become more effective for direct response advertisers. One business that used Stories ads is Carlota Flower Lab, a florist in Los Reyes Mexico. Before COVID, they made 70% of their revenue from face-to-face workshops. When the pand`emic hit, founder Paula Mendoza had to get creative. She used personalized ads on Instagram to reach new audiences and even found her first international customers with campaigns targeting California and Texas. One campaign for Día de los Muertos, the Day of the Dead in November, led to a 24 times return on ad spend, helping Paula triple her annual revenue in 2020 despite COVID. On the second resources and training, we did some big things in 2020. We created a business resource hub a one-stop shop for resources and trainings for small businesses that we've continued to build out through the end of the year. We committed to reach 1 million members of the Black community and 1 million members of the Latinx and Hispanic communities in the U.S. with free digital skills trainings through our Elevate program by 2023. We reimagined our Boost with Facebook events to reach businesses virtually, with 100 million people tuning in throughout the year. This included our 12-week season of support to help businesses across 16 countries prepare for the holidays. A great example of how we amplified the voices of our businesses in Q4 is our #BuyBlack Friday campaign, one of my favorite campaigns ever. In the U.S., Black-owned businesses closed at twice the rate of others after the start of the pandemic. We wanted to help people shop with them over the holidays. We created ways for people to find Black businesses in their local area, a gift guide featuring products from Black businesses across the U.S. and even a #BuyBlack Friday show on Facebook Live that was seen by 15 million people. One of the small businesses we featured is a vegan skincare brand called Redoux from New York City. Its founder, Asia Grant, appeared on the #BuyBlack Friday show, that became one of her most successful sales days ever. The campaign gave her record revenue and web traffic, she was even able to hire more people. Something that's so important given current unemployment rates. Business owners like Aja and Paula have worked hard to adapt and grow online. Lots of businesses will continue to struggle in 2021. We're gonna keep listening to them and building on what we did last year. That means improving our products and tools to help businesses seamlessly manage their online presence, advertise across our apps, and communicate with customers through business messaging. It means making more training available through programs like #SheMeansBusiness for women and Elevate for diverse communities. It means finding more ways to amplify their voices, whether it is sharing the stories of small businesses worried that Apple's iOS 14 changes will hurt their ability to reach customers or showcasing small businesses in gift guides and products like Businesses Nearby. I want to close by saying how grateful I am to all the businesses around the world who work with us. Your partnership helps us build the tools you need so you can continue to grow and hire. As always, I am grateful to our incredible teams who have done so much to help businesses survive this difficult year, including coming up with great ideas like #BuyBlack Friday. I hope that 2021 is a better year for everyone. Now, here's Dave. Thanks, Sheryl, and good afternoon, everyone. Q4 was a strong quarter, capping off a solid year for our business as full-year 2020 revenue grew 22% to $86 billion. We have been encouraged to see improved demand for our ads during the H2 of the year after facing significant headwinds at the onset of the pandemic. Our results reflect the ongoing strength in the digital economy and the value we're providing to millions of businesses who use our services to reach consumers and generate sales. Let's begin with our community metrics. In December, we estimate that approximately 2.6 billion people used at least one of our services on a daily basis, and that approximately 3.3 billion people used at least one on a monthly basis. Facebook daily active users reached 1.84 billion, up 11% or 188 million compared to last year. DAUs represented approximately 66% of the 2.8 billion monthly active users in December. MAUs grew 299 million or 12% compared to last year. Consistent with our outlook, U.S. and Canada DAU declined 1 million sequentially as usage continued to normalize from peak COVID levels experienced earlier in the year. Turning to the financials. All comparisons are on a year-over-year basis unless otherwise noted. Q4 total revenue was $28.1 billion, up 33% or 32% on a constant currency basis. We benefited from a currency tailwind, had foreign exchange rates remained constant with Q4 of last year, total revenue would have been $339 million lower. Q4 ad revenue was $27.2 billion, up 31% or 30% on a constant currency basis. The growth in advertising revenue was largely driven by a strong holiday shopping season for retail, which benefited from the ongoing shift to online commerce. On a user geography basis, ad revenue was strongest in Europe, which grew 35% and benefited from currency tailwinds. US and Canada grew 31%, and Asia Pacific grew 29%. Rest of world growth improved to 25%, but continued to be significantly impacted by currency headwinds. In Q4, the total number of ad impressions served across our services increased 25%, and the average price per ad increased 5%. Impression growth was driven by both Facebook and Instagram. The increase in average price per ad was driven primarily by Facebook Mobile Feed, as well as pricing improvement in Instagram Stories. Other revenue was $885 million, up 156% due to strong Quest 2 holiday sales. We've been encouraged by the positive reception of Quest 2 since its October launch. Turning now to expenses. Q4 total expenses were $15.3 billion, up 25% compared to last year. In terms of specific line items, cost of revenue increased 49%, driven primarily by hardware costs related to Quest 2 sales, core infrastructure investments, and payments to partners. R&D increased 34%, driven primarily by hiring and investments in core products, as well as our consumer hardware efforts. Marketing and sales increased 8%, driven by hiring and marketing spend. Lastly, G&A expenses decreased 13% as we lap charges related to the BIPA legal settlement recorded in the fourth quarter of 2019. In the past year, we added a record 13,600 net employees and reached our goal of adding 10,000 employees in tech and product roles. We ended the year with over 58,600 full-time employees, up 30% compared to last year. We continue to be pleased with our ability to recruit, onboard, and retain talent in this environment. Fourth quarter operating income was $12.8 billion, representing a 46% operating margin. Our tax rate was 14%. Net income was $11.2 billion or $3.88 per share. Capital expenditures were $4.8 billion, driven by investments in data centers, servers, office facilities, and network infrastructure. Free cash flow was $9.2 billion, and we ended the quarter with $62 billion in cash and marketable securities. For the full year, we repurchased $6.3 billion of our class A common stock and had $8.6 billion remaining in our prior authorization as of December 31st. Today, we announced a $25 billion increase in our stock repurchase authorization. Turning now to the outlook. We continue to face significant uncertainty as we manage through a number of crosscurrents in 2021. We believe our business has benefited from two broad economic trends playing out during the pandemic. The first is the ongoing shift to online commerce. The second is the shift in consumer demands towards products and away from services. We believe these shifts provided a tailwind to our advertising business in the H2 of 2020, given our strength in product verticals sold via online commerce and our lower exposure to service verticals like travel. Looking forward, a moderation or reversal in one or both of these trends could serve as a headwind to our advertising revenue growth. At the same time, in the H1 of 2021, we will be lapping a period of growth that was negatively impacted by reduced advertising demand during the early stages of the pandemic. As a result, we expect year-over-year growth rates in total revenue to remain stable or modestly accelerate sequentially in the first and second quarters of 2021. In the H2 of the year, we will lap periods of increasingly strong growth, which will significantly pressure year-over-year growth rates. We also expect to face more significant ad targeting headwinds in 2021. This includes the impact of platform changes, notably iOS 14, as well as the evolving regulatory landscape. While the timing of the iOS 14 changes remains uncertain, we would expect to see an impact beginning late in the first quarter. There is also continuing uncertainty around the viability of transatlantic data transfers in light of recent European regulatory developments. Like other companies in our industry, we are closely monitoring the potential impact on our European operations as these developments progress. Turning now to expenses. We expect 2021 total expenses to be in the range of $68 billion-$73 billion, unchanged from our prior outlook. This is driven by investments in technical and product talent, as well as continued growth in infrastructure costs. We continue to expect 2021 capital expenditures to be in the range of $21 billion-$23 billion, driven by data centers, servers, network infrastructure, and office facilities. Our outlook includes spend that was delayed from 2020 due to the impact of the pandemic on our construction efforts. Turning now to tax. We continue to expect our full year 2021 tax rates to be in the high teens. In closing, 2020 was a unique operating environment that introduced a number of unforeseen challenges. We've been pleased with our team's ability to adapt in order to maintain the reliability of our services, deliver new products and experiences, and support the millions of businesses who use our platforms to reach consumers. With that, Mike, let's open up the call for questions. Your first question comes from the line of Brian Nowak from Morgan Stanley. Thanks for taking my question. I have two. The first one for either Mark or Sheryl. Appreciate the color on commerce. Was curious just for any encouraging quantifiable signposts or learnings that you've seen so far in Instagram shopping that sort of give you confidence you're making progress in building out this opportunity. The second one, Dave, you know, appreciate the comment on the forward outlook and the outlook commentary. I guess the question is, when you sort about this shift in consumer expenditure toward products away from services and how that could potentially be a headwind in the back half as it reverses. The last quarter you mentioned you had 10 million advertisers. Maybe talk to us about sort of some of the segments of advertisers you think that you're missing and what initiatives you have in place to sort of broaden the advertiser base to bring more services on the platform. Thanks. I can take the first. With Instagram shopping, we launched a new Shops tab on Instagram in Q4. This is built on other shopping efforts we've had. We see this as an overall part of our commerce effort. You know, we've always been, I think, a great place for people to discover new products and services, but we are very interested in taking people all the way down that funnel from discovery to purchase to finding products and services to checking out as well. Our shopping efforts are part of that. We're seeing nice uptick. It's still really early days, but we think businesses are having a good experience and people are having a good experience. As always, with our ad products and with our commerce products, we wanna make sure we provide a great experience to the end user so that they can find the things they're looking for. Hey, Brian, it's Dave. Yes, You know, the data that we've looked at there really is that, you know, when you look at the data from the U.S. BEA. It basically showed that in Q3 while the services consumer spend was still down year-over-year, spending on goods actually surged to, you know, record levels or the highest in like 15 years. We don't have the results for Q4, but we expect that sort of trend continued. If you look at the balance of our business, it tends to skew more towards products relative to the overall, you know, GDP or the overall consumer spend, you know, in, for instance, the U.S. We just think we're overall exposed a little bit more to products. We continue to invest in to improve our exposure in travel. Sorry, in service areas like travel. You know, our expectation would be in 2021 we'll continue to have a similar skew towards products as we've had in the past. We'll continue to make investments to make our ad products more relevant for services as well. Your next question comes from the line of Doug Anmuth from JP Morgan. Great. Thanks for taking the question. For Dave and Sheryl, we know you mentioned significant ad targeting headwinds, but has your view on IDFA changed at all over the past few months? Just curious how you're thinking about Facebook's ability now to offset some of the impact just through things like limited login mode and new APIs and other conversion tools and data. If you could just talk a little bit more about how you're thinking about the impact across FAN and then the core products. Thanks. Sure, Doug. I'll take that. You know, I don't think our outlook has changed in, you know, any significant way on iOS 14. We continue to believe that that will be a headwind in the ads business. It's in our view not just limited to IDFA, but broader than that, as we're gonna have to be providing a, you know, a prompt asking people for permission to use third-party data to deliver personalized ads. That's gonna be true whether you're using IDFA or not. We do expect there to be, you know, high opt-out rates related to that, and that's factored into our outlook. You know, we expect that to roll out sometime, you know, we expect later in Q1. The timing is uncertain, and Apple hasn't given, you know, clarity on that at this point. We do expect that will have increasing impact through the year as more users adopt iOS 14 and go through those permissions. When you think about what the mitigations might be, obviously there's going to be mitigation of the impact on us to some extent just because this is a platform-wide change, it'll impact everyone. That's gonna mitigate it to some extent. In addition over time, we hope to help businesses by providing more on site conversion opportunities through initiatives like Shops and also click to messaging ads. As it relates to, specifically the, you know, Audience Network products, obviously that's gonna have a, you know, significant impact on Audience Network on iOS, as we've explained in the past. The broader impact given the size of that business is really to our core advertising business on iOS. Your next question comes from the line of Eric Sheridan from UBS. Thanks so much for taking the question. Maybe two, if I can. Mark, just coming back to your comments, what do you see as some of the key investments, either on the hardware side or the content and application side to unlock the opportunity based on what you recently saw with the success of Oculus in the holiday period, where there's a piece of hardware obviously that sold through quite well? How do you think about aligning investments against the opportunity in the coming years? Then maybe, I don't know if it's for Sheryl or Dave, but maybe I could just follow up a little bit on Doug's question. You know, when you think out to the language you're using about the back half of the year is there any sense you can give us. Quantitatively about how to think about some of the tougher comps you'll see as we move through 21 versus identifying, the degree or the severity of different outcomes from some of the headwinds? Thanks so much. I can take the first one. When we started working on virtual and augmented reality. We basically laid out a path where we knew that virtual reality would be practical to build first. We view that it's kind of all part of one continuous ecosystem for spatial immersive computing and presence. The key things that we're trying to do with VR now, I do believe that Quest 2 is the first mainstream virtual reality product. It is doing quite well, and I'm really proud of what we've been able to do there. The goal there is, you know, we keep on, you know, shipping content and titles and working with developers and shipping new capabilities to the device. Like last year, we shipped the ability to do now hand tracking, which no one expected to be possible yet. The team working on that did some really great work. It just made the device better and increased the value. You know, we're continuing to work on new hardware as well. The new hardware will kind of fit the same platform. The content that works on Quest 2 should be forward compatible. That way we're gonna build one kind of larger install base around the virtual reality headsets that we have. We're building towards a future with some of this, the fundamental technology investments that we're making to be able to provide augmented reality glasses, that hopefully will be able to support, you know, a lot of the same content in this ecosystem over time and take advantage of a lot of these foundational investments that we've made. This continues to be a long-term investment. I think it's very important both for the vision of what we wanna do. Like I said in my script before earlier, it just, you know, some of the things that we're gonna be able to build with VR and AR are the types of social experiences that I've wanted to build since I was a kid. I'm excited to be able to unlock that. I also think strategically it's important for us to have a little more control of our own destiny in terms of the operating systems and platforms that all of our services operate on. Continue to be very focused on this and optimistic about what we're seeing. Yeah, Eric, it's Dave. Just coming back to your question. I think, you know, the context is, you know, we've had a tremendously strong quarter at Q4 this year. You know, a number of factors we talked about driving that. You know, a couple of are pandemic-related, which is just the shift to online commerce as well as the ongoing, you know, the shift to more spend on products versus services. In Q4, we also saw strength with sort of our full range of advertisers. We had seen sort of small and medium-sized businesses come back and start getting strength in, you know, Q2 and Q3 or Q3 specifically. Then, you know, Q4, we also saw strength from some of our largest advertisers as well. As you look out in 2021, you know, I think we're just gonna be facing tougher comps in the back half of the year. Some of those things related to the, you know, related to the pandemic have the potential to revert. Whether it's more consumer expenditure shifting towards services away from products. That'll make it a little bit of a tougher comp. You layer on top of that headwinds to growth related to, you know, privacy-related headwinds. The biggest factor there is iOS 14. You know, we certainly anticipate growth, but, you know, we're just looking at tougher comps as we hit the back half of the year, given really most importantly the strength that we saw this year, and then on top of that the headwinds that we're seeing from some of the privacy changes. Your next question comes from the line of Justin Post from Bank of America. Great. Thank you. I guess I'll ask about regulation. I know it's a tough topic. You know, first, Mark, in your prepared remarks you elevated a little bit competition with Apple. Is there anything going on with iOS 14 besides IDFA that maybe puts you in more direct competition with Apple? Then secondly, obviously the FTC filed their case since the last earnings call. Maybe just open forum any thoughts on that you're able to share? Thank you. Well, in terms of the competition with Apple specifically, you know, I laid out three or four product focus areas. You know, with the exception of the work that we're doing on communities, which I think is quite separate from the work that they do, the other three areas I think are gonna have very significant competitive overlap with Apple. You know, in messaging certainly, you know, iMessage is the most popular service in the U.S. I think because of the fact that they pre-install it and give their app several advantages that other apps don't have. In commerce and supporting small businesses. I think there you have some of the iOS 14 changes that we think are gonna be very problematic, especially for small businesses. Longer term, as we move towards building, the next computing platform, you know, I think we would expect to see them as more of a competitor there as well. I do think that this is sort of shaping up, that you know, we face many competitors, right? There are a lot of competitors in the core, social app work that we do. Excuse me. This is the operator. I apologize, but there will be a slight delay in today's conference. Please hold and the conference will resume shortly. Thank you for your patience. Speakers, we are now connected. Was there another question on that last one that I was supposed to answer? Well, there was a question about the FTC. Hey, guys. We're back. All right. Are we on now through this line? Yes, you are connected. Okay. All right. Where did I lose you? I think you had covered the question of the dynamics related to the competitive landscape, and then there was a follow-on question around the FTC case and any thoughts that we have on that. I don't think we have anything we necessarily are commenting on at this point. Yeah, nothing on the case. I mean on regulation overall, 'cause I think some of the question was focused on that, the point that I would highlight is I actually think it would be very helpful to us and the internet sector overall for there to be clearer rules and expectations on some of these social issues around, you know, how content should be handled, around how elections should be handled, around what privacy norms governments wanna see in place. Because these questions all have trade-offs, right? All the content and elections questions have trade-offs between giving people free expression and a voice. Sometimes there are trade-offs against safety and privacy and other social equities that are all very important. It's, you know, I think very difficult for a private company to balance those. I think it would be much better to have just clearer guidance and clearer rules for the internet. That's gonna be something that we continue to advocate for. Mike, can we go to the next question? Your next question comes from the line of Ross Sandler from Barclays. Hey, guys. Question about the price volume metrics? Can you hear me? Yeah. I can hear you now. Yep. Question about the price versus volume metrics, Dave, that you just mentioned. This is the first quarter in a long time that price. I think, was up year-on-year. I know there's a lot of factors that go into that. You also mentioned that you're seeing strong traction from DR advertisers around the Stories format. Maybe just a little bit more color on, you know, where we are in the Stories versus Feed price dynamic and, you know, what kinds of DR advertisers you're seeing the most traction around these Stories ads. Thanks a lot. Yeah, sure Ross. I mean, as you know, with the auction dynamic, the growth in pricing is, you know, does really depend on impression growth. We saw impression growth slow this quarter to 25% from the Q3 rate of 35%, and some of that is just due to lapping product optimizations on Instagram during Q4 of 2019, as well as just a normalization of engagement trends on Facebook. You know, we would expect that sort of overall story to continue into Q1 with those trends. We're also continuing to make, you know, iterative improvements that, you know, enhance the performance and benefit pricing over time. You know, the one example that we'd give there is Instagram Stories. That, as you know, has been an area we've been focused on to try and make DR performance, you know, through better ads interactivity, work better on Stories, and we've been seeing some good progress there. We called that out as well as being a driver of price improvement. There's still a gap with Stories ads and feed ads. We've been pleased with the progress we've been making on that front. Your next question comes from the line of Colin Sebastian from Baird. Oh, great. Thanks very much. Two quick ones from me. I guess given the ongoing efforts in private messaging, I'm curious ultimately what will differentiate Messenger from WhatsApp other than branding or geography if there's an inevitable consolidation of functionality there. Secondly on Reels, I know it's still early, but any update on performance or uptake as well as the roadmap to monetization. I think, would be helpful. Thank you. Mark, do you wanna take this? Yeah, I can take the first one. I mean, the biggest difference between Messenger and WhatsApp is obviously the connection to Facebook and the same identity and graph that you use on Facebook comes with you to Messenger. Even if you can send messages across the different apps and there's more interoperability, and we bring the same world-class privacy features to both. I think that will still make the apps feel fairly distinct. I also think the kind of aesthetic and focus of the apps on, you know, how much different functionality they include will vary. I think WhatsApp has always had, you know, we've always focused a lot on making it a very utilitarian experience, and placed more of a premium on simplicity there. We'll continue adding new functionality, but we're more focused on keeping that minimal. In Messenger we have a lot more tools and features for expression. I would expect that we'll continue adding more there as well. On the second, with Reels, we're really pleased with the early data on consumption, and we have a bunch of work ahead of us to make it easier for people to create and discover content. We've now rolled out the product into over 50 countries. You know, in monetization of it, we've launched branded content tag in Reels, so that helps creators share the content and monetize. We launched shopping in Reels, and we've said that we will launch ads. The timing is to be determined. We're gonna follow the same pattern we followed on other things like Stories. You know, we launch a consumer product, we make sure there's product market fit and people are using it, then we launch an ad product. We make sure that it's beneficial for consumers. As Dave Wehner answered in, I think, the last question. We work, you know, very diligently quarter by quarter on the basis point improvements that help us scale a product. We will do things to make it easier for people to create the right businesses to create the right ad format. We will do things to make those ads get to the person who might be looking for that product or service. Your next question comes from the line of Youssef Squali from Truist Securities. Great. Thank you very much. two questions please. Mark, I wanna go back to the first theme that you discussed of communities and how you're looking to potentially de-emphasize civic and political groups. How important or how large is civic and political content on the site? Is there a way to quantify it or to quantify the engagement with it to see if this is one of the headwinds that you guys talk about in terms of potentially emerging in 2021? Second, on the regulatory headwinds there is just increasing talk about Section 230 protection. I know it's a thorny subject, but from where you stand how do you see Facebook and not just really Facebook but other social media platforms dealing with it and if it was either to be narrowed or even completely eliminated? Thank you. Sure. I can probably take both of those. Yeah, I don't know if we have any stats to share on the size of civic and political content. But it's, you know, pretty small minority of the content, right? It's, and all the feedback that we have from our community suggests that the vast majority of people would like to, would like it to stay that way. I think there's been this trend, I think, across society where a lot of things have become politicized and politics has kind of had a way of creeping into everything. I think a lot of the work that we're a lot of the feedback that we see from our community is that people don't want that in their experience. You know, they come to our services to connect with friends and family to connect to communities that they care about. I think that we can potentially do a better job of those core jobs that we have and do a better job of helping to bring people together and helping to promote healthier communities if we can reduce the amount of politics on our services. I mean, we'll have to balance this carefully because, you know, we have a deep commitment to free expression. I believe that if people want to be able to discuss this stuff or join groups there, they should certainly be able to do that. I just don't think that it's serving the community particularly well to be recommending that content right now. One thing to mention, just 'cause you were asking about the headwinds and all that is I don't think that this is a factor in any of that. Dave Wehner, can jump in if there's any more that you wanna ad on that. I don't think that that's what he had in mind in any way there. Dave Wehner, I'll skip a beat for you to jump in if you want before going to the next question. Yeah, no, I was just gonna say that exact thing, Youssef. This is not something that's factoring into our outlook. It's not a headwind that is a factor in our 2021 outlook. Certainly on the ads front as well, political is, you know, extremely small. It's low single-digit revenue, even in, you know, an active political quarter like we had. No, it's not factoring in on either the ad side or the engagement side in our outlook. Yeah. Now going to your 230 question, you know, I do think, and I testified this about this in Congress, I do think that Congress should update Section 230 to make sure that it's working the way that people intend, right? It's, you know, after I think, being in place for almost 25 years. You know, Section 230 has been very important. It's helped give rise to the internet as we know it today. It's given internet platforms tools to be able to balance free expression and safety. And I think it's also gone pretty far in terms of helping to ensure that values like free expression are built into the internet's DNA. I think that any changes should be thought through very carefully and should be thought through, not just from the perspective of what a larger company like Facebook or a Google or a Twitter could handle in terms of updating their content moderation policies but also, you know, from the perspective of making sure the new companies can continue to emerge. I think that's very important as well. You know, we've supported changes in this for a while. You know, back in 2018, we supported a change to prevent sex trafficking and, you know, we'll support similar efforts to tackle harms like child exploitation imagery and material and opioids. We'll also support any push to make content moderation systems more transparent. The details on all this of course matter, but we hope to be able to work with the new Congress on this. Operator, we have time for one last question. Your last question comes from the line of John Blackledge from Cowen. Great. Thanks. Two questions. Mark, on community, could you just provide further details on layering more services for Facebook Groups and expectation for uptake of those new services? Could community evolve as a meaningful monetization driver in the coming years? On IDFA, maybe for Dave or Sheryl, how do you think advertisers are prepared for the changes? Will the long tail advertisers be more impacted than the larger, more sophisticated advertisers? Thanks. I can speak to the first point. you know, first for the business, I don't think we look at community separately from friends and family. They're both different types of content that show up in News Feed and that people interact with. My guess is that it's probably already a pretty meaningful driver of the business and the value that people get from the services today. Absolutely, I think as this continues to grow, it should be in the future. The big trend that we're looking at now, and that I tried to call out in my remarks earlier, is that right now, you know, there's a spectrum of different kinds of groups and communities on Facebook. You know, everything from, you know, meme groups that people find very entertaining and fun to groups that people really turn to for support when they have kind of serious issues in their lives. I think that right now, though, most of these communities, you know, they have this backbone of, you know, there's a feed, there are ways to message people. When I think about the physical communities that I'm a part of, you know, in my life. They often have more of an institutional structure, right? There are sub-communities. There are people who, it's their full-time job to basically help, you know, people engage and basically help people navigate them. You know, I'm thinking about things like the synagogue that I'm a member of, right? I mean, there are people there whose job it is to help engage the congregation and help them get basically the most out of everything that the institution has to offer. That's a very important kind of community organization. I would love for more institutions like that to be able to organize and build community more effectively online. There are lots of just different tools that I think that if we provide, you know, spanning messaging, spanning video chat, these organizations' own websites and other things that they do, that if we can help in a lot of those areas, then we can make it so that groups on Facebook are not just, you know, not just a feed and a place where you post some content and maybe engage on a post, but that we can really help more organizations build up community institutions like that. I think that that could be a very big contribution and something that I'm excited about taking on. To your second question, you know, we think it's a really important question and one that, you know, we take very seriously. Small businesses are very reliant on personalized ads, the ability to use data in a very privacy safe way to get the customers who are interested in their products and services. That makes sense. You know, big businesses, we can buy an ad to the whole country. We can buy an ad to a whole region. Small businesses can't. They have to find the precise audiences they want. I think one of the mainstays of our business is we've enabled that targeting in a very privacy-safe way without giving information without permission to advertisers. What's happening with IDFA is that small businesses are really concerned because they're worried that they're not gonna be able to buy effective advertising. If all personalized ads went away, small businesses would see a 60% cut in website sales. We don't think Apple's contemplating going that far that quickly, but that is the general direction of what would happen. You can see that that would be very detrimental to their business. It's also very detrimental to economic growth because so much of our job growth comes from small businesses. I think it's worth noting, it's not just about advertisers. Some of these changes also impact developers and other forms of businesses. We are starting to hear from creators and developers who are worried that some of their free services will have to start charging or shut down, force them into subscriptions or other in payments for revenue. Now, not all small businesses are aware of these challenges, but we are hearing from more and more of them who are very concerned. Great. Thank you everybody for joining us today. We appreciate your time, and we look forward to speaking with you again.