Last October, Facebook CEO Mark Zuckerberg announced that Facebook would be undergoing a major facelift to become Meta. The Facebook platform we all know and love would remain as is, but Meta would become Facebook’s parent company with a primary focus of developing the “metaverse,” an immersive online experience that Zuckerberg called “the next frontier” of the internet.
But Meta is off to a rough start.
Facebook’s parent company shed more than $230 billion in market value Thursday, a one-day loss that is the biggest ever for a U.S. company and increases pressure on a stock market long powered by technology shares….
The Facebook parent company surprised investors with a deeper-than-expected decline in profit and a downbeat outlook. The company said it expects revenue growth to slow and shared that it lost about one million daily users globally. Shares declined 26%, their worst daily performance since they started trading in 2012.
The Washington Post pointed out that this was the first time the company lost daily users in its entire 18-year history. “The loss was greatest in Africa, Latin America and India, suggesting that the company’s product is saturated globally – and that its long quest to add as many users as possible has peaked.”
John Naughton writes at The Guardian that this loss in daily users is especially important to pay attention to:
But Facebook has had wobbles before and recovered. As a company, it has vast resources of cash and talent. Given time, it might be able to find a way of luring young adults away from TikTok and of navigating round Apple’s ATT [app-tracking transparency]. But for anyone who takes a longer-term view of these difficulties, the big story is that the company’s user base may have stopped growing. The figures revealed last week show that the number of daily active users fell by 500,000 and that the numbers of monthly active users seems to have levelled off at 2.91 billion. If this is the beginning of a trend, it’s really significant.John Naugton, “For the first time in its history, Facebook is in decline. Has the tech giant begun to crumble?” at The Guardian
There are several factors contributing to this loss. The first is TikTok’s competitive edge with the younger generations, as opposed to the aging users at Facebook. The second is Apple’s recent change in policy that allows users to opt out of being tracked by advertisers, a move that undercuts Facebook’s primary stream of revenue. And the third are the heavy expenses of developing the metaverse and the technology (like virtual reality headsets) required for the metaverse (with $10 billion lost in 2021 alone).
Raj Shah, an analyst at Publicis Sapient (a digital consulting firm), told AP News, “It is time for a reality check on Meta’s position for the metaverse. The metaverse is a long way from being profitable or filling the gap in ad revenue after Apple’s policy change.”
All around, Zuckerberg has hit a challenging time for the company that originally set out to connect the world. It’s the swaying of a giant as everyone wonders if the Tech Goliath will eventually fall.
There’s a lesson in that, even if you aren’t planning to launch a media site, or a social media platform. Our ferocious arguments about who should be kicked off Spotify, or Twitter, are fundamentally about the same problem: So much of our public life takes place on a handful of technology platforms, where what we see and whom we reach is determined by policies set by some faceless programmer in Silicon Valley. We are all of us tenants of the digital manor – even, it turns out, some of the lords.Megan McArdle, “We all learned a painful lesson from Facebook. Now Facebook is learning it, too” at The Washington Post
But then, no one promised them that “Meta”-morphosis was going to be easy (ask an insect) and many of these problems may have been coming to a head all at once anyway.