“In the near-term, this is a drag on revenue because Reels monetization is less than feed or Stories, but I expect that will improve over time.”

In context

“them, teach them things, and connect them with people who share their interests. I believe our investments in AI, all the different types of content we support, and our work to build the best platforms for creators to make a living will increasingly set our services apart from the rest of the industry and drive our success. We're also finding that having an ambitious vision around building the world's Discovery Engine is attracting a lot of the most talented AI folks to work on this program. Next, let's talk about Ads. Sheryl will discuss this in more detail, but I want to highlight that this is also a large AI investment for us. There are three main trends to highlight in our ads business right now. First, we're managing headwinds from the shift to short-form video that I just mentioned. In the near-term, this is a drag on revenue because Reels monetization is less than feed or Stories, but I expect that will improve over time. We've seen this type of media format transition multiple times before. Back in 2012 when we transitioned from desktop feed to mobile feed, we saw mobile feed growing massively but not monetizing well yet, and we leaned into it, went through some tough quarters, and then it became the foundation of our business today. Similarly, in 2018, when people started using Stories more instead of Feed, but Stories didn't monetize as well as Feed yet, we still doubled down on Stories, had another tough period, but came out stronger than ever. So we've run this play before and we're running it again now. We're focused on growing Reels as a major part of the Discovery Engine vision, and we expect that this expansion in engagement to shift from a short-term headwind to a tailwind at some point. Now whil”