Image: Roman Martyniuk/Unsplash
Facebook is dying. The signs have been out there for a while, of course: slowing growth around the world, an increased focus on Instagram and WhatsApp and Messenger and then a hard pivot toward the metaverse, including a whole-ass name change so that Meta's potential might not be brought down by Facebook. But all we saw until now was slow growth, not decline.
Facebook users have now declined for the first time ever, Meta announced on its earnings call yesterday. The numbers are still ludicrous, obviously — 1.929 billion people still log on to the Facebook app every day, and Meta turned nearly $40 billion in profit last year, so don't pour one out for the blue app just yet — but the number is down about a half a million users from the previous three months.
• Meta's overall product portfolio — which includes WhatsApp and Instagram — was up a hair, to 2.82 billion per day. But it's pretty clear that after nearly two decades of literally unprecedented growth, Facebook's flagship app has plateaued.
• The largest culprit is almost certainly that there just aren't enough people in the world for Facebook to grow forever. No wonder Mark Zuckerberg is so interested in appealing to youths.
Meta's stock has dropped about 20% since the earnings call. Big price swings have come for Meta before, but this one's particularly problematic: Zuckerberg needs time, money and patience to pull off his metaverse play, and he may not have as much of any of the three as he thought.
Facebook is playing with both hands tied behind its back right now. TikTok is a formidable competitor, but Facebook can't even buy a GIF company without getting antitrust scrutiny. Apple's privacy moves continue to hurt, too: “The accuracy of our ads targeting decreased, which increased the cost of driving outcomes,” Sheryl Sandberg said on the earnings call, and Zuckerberg added that the company has had to rebuild "a lot of our ads infrastructure." Ultimately, CFO Dave Wehner said, that could cost the company about $10 billion in lost revenue — which is about as much as Meta lost on all its metaverse projects last year.
Reels is the bright spot, at least until the metaverse becomes a thing. Zuckerberg underscored how important Reels is to the company as it tries to take on TikTok, and called it "our fastest-growing content format by far."
• That's the other shift that's becoming clear: While Meta shifts to the metaverse, its social apps are becoming entertainment apps. Adam Mosseri said as much last year, but the change is already upon us.
Meta has been the most interesting company in earnings season so far. The sun rises, Big Tech makes money. But here are a few things we've learned from the other companies reporting:
• Google's ad business is doing just fine. Some think it's actually benefiting from Apple's privacy push, as advertisers look for a new way to reach and target people. In general, there are few companies better positioned than Alphabet — which is increasingly vertically integrated, controls multiple massive properties and holds vast quantities of first-party data — for the next few years.
• TikTok is the future of everything. Sundar Pichai said that Shorts is growing fast, even as YouTube's momentum fell short of expectations (partly thanks to TikTok). If you're not in the vertical-video game, you're apparently nowhere.
• Streaming services may be headed for a slowdown. Netflix's subscriber growth has slowed recently, as has Spotify's. Both may be running up against the same sort of total-addressable-market ceiling Facebook is, and they won't be the only ones.
• Spotify led its earnings call with the Joe Rogan controversy, in case you're wondering whether Spotify's actually worried about the blowback there.
• Supply chain problems hurt everyone, but the chip shortage continues to be good to chip companies. Qualcomm had a big quarter, as did AMD, and both predicted even better things to come. And Apple, which definitely counts as a chip company at this point, was optimistic as well.
• Absolutely everybody is in the creator business now. You can hardly tune in to an earnings call without a CEO talking about how they're building tools for creators, helping creators monetize, giving creators new ways to make content. Why? Because creators bring audiences more reliably and cheaply than any other mechanism. If you're in the content biz, it's as simple as that.
This year, it seems, is going to be a year full of transition. The ad market continues to change; the supply chain should improve eventually; the digital transformations of so many industries continue apace; regulation is coming; the (hopefully, please, seriously) end of the pandemic will bring a sweep of change in everyone's lives. Even the biggest companies won't be immune to the change. But all that money they keep making will surely help.
Source: Protocol
Meta's revenue has fallen for the first time. Are we so over Facebook and Instagram already?
SINGAPORE: After a decade of endless upward growth, the parent company of Facebook, Instagram and WhatsApp reported its first-ever quarterly revenue drop on Wednesday (Jul 27).
Meta Platforms' total revenue fell 1 per cent to US$28.8 billion in the second quarter ending on Jun 30, from US$29.1 billion last year.
One per cent might not sound like much but this is its first such slip since the firm formerly known as just Facebook went public in 2012.
Meta expects growth in the third quarter to dip even more, and on Wednesday it also reported a 36 percent drop in profit to US$6.7 billion.
What does this mean for everyone and their uncles' favourite social media apps? Is it the beginning of the end of Mark Zuckerberg's plans for world domination?
Meta only owns the world's biggest social media sites. What's to worry?
Like many other companies, Meta is facing economic headwinds as sales in foreign currencies amount to less in dollar terms, Reuters reported.
Meta’s total revenue consists almost entirely of ad sales, and recession fears are forcing advertisers to cut back on marketing budgets.
On top of that, Apple's new privacy controls rolled out last year have limited advertisers from tracking iPhone users and reduced the scope for ad personalisation.
And then there is TikTok, the vastly popular Chinese-owned short-video app which is increasingly threatening Meta's primacy and share of users' time.
In an attempt to compete with - imitate? - TikTok, the Silicon Valley giant this year rolled out sweeping redesigns of its key platforms.
What's this about making Instagram Instagram again?
Noticing more short videos or Reels on Facebook and Instagram these days?
That's Meta increasingly inserting them into your feeds, to match the format which TikTok runs on which is especially popular with younger folks.
The firm has also revamped both Facebook and Instagram to prioritise algorithmic "discovery" and recommendations of new content, instead of posts from accounts which users follow.
On Instagram - which has announced plans for a more "immersive" TikTok-style layout that fills the entire screen - users have been especially frustrated by a newfound difficulty in finding content posted by friends, family and creators they follow.
Two of Instagram's biggest users, celebrities Kim Kardashian and Kylie Jenner, on Monday shared a viral post calling on the company to "Make Instagram Instagram Again".
"Stop trying to be TikTok I just want to see cute photos of my friends," it said.
Instagram chief Adam Mosseri on Tuesday tried to address the complaints by insisting that the platform will continue to support photos as part of its "heritage".
"That said I need to be honest, I do believe that more and more of Instagram is gonna become video over time," he added, in a video that attracted thousands of negative comments.
Despite the growing fallout Zuckerberg does not appear to be swayed.
He told employees last month that Reels, while generating more than US$1 billion annually in revenue, was "still only around 15 per cent of the size of TikTok."
The Meta chief also told investors that about 15 per cent of content on Facebook and Instagram is currently recommended by artificial intelligence from accounts users do not actively follow, and that this percentage would double by the end of 2023.
So are there fewer people on Facebook now?
It's a mixed picture.
Monthly active users on Meta's flagship network Facebook fell about two million and came in slightly under analysts' expectations at 2.93 billion in the second quarter.
But daily active users defied predictions of a drop and increased to 1.97 billion, reversing a first-ever decline - of around 1 million daily active users - reported earlier this year.
Is the Metaverse still happening?
Meta is betting heavily on its vision of an interactive virtual world as the future of the Internet.
Its Reality Labs unit, which is leading this Metaverse project, reported sales of US$452 million, down from US$695 million in the first quarter, after reporting a loss of US$10 billion last year.
US regulators also announced this week they would try to block Meta's acquisition of a VR fitness app maker, citing "reasonable probability of eliminating both present and future competition".
Meta says it's still on track to release a mixed-reality headset called Project Cambria later this year.
But for now, at least, the Metaverse part of Meta's business remains "largely theoretical", as reported by Reuters.
How are the rest of Big Tech doing?
Analyst Debra Aho Williamson told AFP that while Meta's year-over-year drop in quarterly revenue signifies just how quickly its business has deteriorated, "the good news... is that its competitors in digital advertising are also experiencing a slowdown".
Social media players appear to have been impacted more severely than search firms as ad buyers reel in spending.
The world's largest digital ad platform Alphabet reported a rise in quarterly avenue on Tuesday, with sales from its biggest moneymaker, Google Search, topping investor expectations.
However Alphabet-owned YouTube posted its second difficult quarter in a row, with quarterly ad sales growing at the slowest pace.
Snapchat parent company Snap and Twitter both missed sales expectations last week, and warned of an ad market slowdown in coming quarters.
After bleak results wiped some 30 percent off its stock price, Snap also announced plans last week to "substantially" slow recruitment, mirroring Meta's move to reduce the number of engineers it hires this year.
Zuckerberg had told employees then that the company was "turning up the heat" to weed out staffers unable to meet more aggressive goals.
One expects the pressure dial to be cranked further: After Meta reported its historic revenue dip this week, Zuckerberg said: "This is a period that demands more intensity, and I expect us to get more done with fewer resources."
https://www.channelnewsasia.com/business/meta-facebook-revenue-falls-first-time-instagram-tiktok-competition-2841401
As Stock Continues to Fall, Facebook Cancels Employee Perks
Back At It
Facebook’s parent company Meta is bringing workers back to the office, but it won’t be providing all the benefits it used to.
According to a new report by the New York Times published this morning, seven anonymous employees said most workers are expected to return to the office by late March but won’t have the same perks they enjoyed previously because of falling stock prices.
The new free dinner meal will be provided after the last shuttle for commuting workers leave the office, and services like laundry and dry cleaning will be eliminated. The Times says that Silicon Valley companies typically provide perks in exchange for long hours, but that may be coming to an end.
“As we return to the office, we’ve adjusted on-site services and amenities to better reflect the needs of our hybrid work force,” a Meta spokesman told the Times. “We believe people and teams will be increasingly distributed in the future, and we’re committed to building an experience that helps everyone be successful.”
Stock Up
Although reps told the paper cuts weren’t related to stock drops in the last few months it’s hard to believe so. Tik Tok has taken a chomp out of Facebook’s user base and relevancy, and its market capitalization was cut in half to $515 billion.
In fairness, the Times also reported that Meta expanded employees’ wellness stipends from roughly $700 to $3,000 to make up for the perk losses. But employees complained in the comments of a company post trying to explain the move.
There are certainly workers out there with fewer benefits and less pay, but comparison doesn’t lessen the stressful situation Meta employees find themselves in. In 2019, the Verge reported on the mental health crisis many Facebook moderators experienced while handling violent, depressing content for hours on end. Others work until exhaustion and relied on perks to improve their lives, according to the Times.
If companies want to ask a lot of their employees, fine. But when they rake in billions of dollars in profit, they ought to give back as much as they take.
https://futurism.com/facebook-stock-employee-perks/amp
TikTok’s secret algorithm is its greatest strength – and could also be its undoing
I have a ten-year-old niece named Divya (not her real name) in rural northern India. Two years ago, I visited and she came running to hug me. I asked what was the best gift I could give her, and all she wanted was for me to follow her on TikTok.
Divya posts videos of her Bollywood dances and loves receiving likes for them. With around 10,000 followers, she already thinks she is a superstar. I didn’t have a TikTok account when she asked me to follow her, but, naturally, I signed up and have been enthusiastically supporting her ever since.
On seeing the news that Meta’s share price lost US$200 billion (£148 billion) in a day, and that Mark Zuckerberg was blaming TikTok, I must admit that my first thought was that Divya must be doing really well with her Bollywood dance videos. But joking aside, after more than a decade in which Facebook (now rebranded as Meta) has seemed impregnable as the superpower in social media, with nearly 3 billion monthly active users, it suddenly looks possible that this may not continue forever.
TikTok has over 1 billion monthly users, and its user base has virtually doubled in the past year. As my niece Divya exemplifies, it’s heavily skewed to younger users, with under 19s making up 25% of the total, potentially giving it a major advantage for the future.
The average Facebook user is roughly a decade older. Even Instagram, Meta’s other huge social platform, with 2.1 billion users, has a slightly higher age range to TikTok. And although Instagram is adding comparable numbers of users, it is losing younger ones. So is TikTok likely to keep doing as well in the future, and what will be the deciding factors?
Facebook’s user problem
Strange to think that Facebook was once the Gucci of social media platforms. It was an exclusive club, with membership via invitation, for students of elite universities only. This helped to generate the buzz that carried it into the mainstream.
The platform exploited some of the basic principles of human psychology, not least that people feel connected to their friends when they feel close to them. Thus Facebook harnessed the power of pictures, along with other early options like the “poke” to make the whole interaction feel as tangible as possible.
Instagram was also built around pictures, but TikTok’s focus since launching in 2016 has been on building long-lasting connections via short, fun videos. Initially, these were a maximum of 15 seconds long, though now they can run to three minutes. After launching outside China in 2017, it also grew quickly because its technology seemed to understand users’ behaviour and preferences so well. Meta responded by launching the video-sharing service Instagram Reels in 2020, but this has not slowed down TikTok’s massive growth.
For TikTok, which is owned by China’s ByteDance, it didn’t take long before network effects kicked in, where each additional user attracts a multiple of other users: if all my friends are on there, I need to be there too. The reverse has happened to Facebook, probably aggravated by its flawed privacy policies and the way it drives users to extreme content for profit – as highlighted by whistleblower Frances Haugen. It has just reported the first loss of daily users in its history.
What next?
Like other platforms, TikTok has faced concerns over users’ privacy, the spread of misinformation and scrolling addiction. But its biggest risk for the future is probably also its greatest success – a secret algorithm that understands the deepest intricacies of users’ behaviour without asking any personal information. It simply looks at the amount of time they spend on any video and uses this to drive more content towards them.
Yet this also gives TikTok the ability to exploit human vulnerabilities to maximise our screen time. And the fact that it is so embedded with the youngest web users worldwide makes this potentially even more controversial.
The same algorithm that can make a video viral by targeting a very specific cross-section of people can also, say, make young users more conscious of their body image by pushing them content that plays on these insecurities. For similar reasons, I worry about Divya, who thinks that unless she gets ample likes for her TikTok videos, she is not good enough and her dancing is not worthwhile.
TikTok uses both human and algorithmic moderators to try and prevent harmful content from being spread by users. Nonetheless, it has at times been banned in numerous countries over obscene or vulgar content, and is still banned in India (though many people manage to use it). It has also faced lawsuits over how it uses children’s data.
Clearly, TikTok has the potential to become the world’s biggest social media platform. It also faces newer rivals such as Likee, Clash and Triller, but they all have fewer users.
But if TikTok becomes two or three times bigger, it will have the potential to cause more and more harm. Handled wrongly, it will become increasingly vulnerable to the sort of long-term reputational damage that is arguably now an issue for Facebook.
It should therefore definitely find ways to protect user privacy more aggressively, and design even more sophisticated solutions for enhanced content filtering via advanced artificial intelligence. If TikTok doesn’t do it, rivals will, which could quickly make them a more serious threat.
As for Meta, it could potentially buy TikTok in the same way as it bought Instagram and WhatsApp, but the mood in the US is against allowing big tech to become more dominant. The other potential saving grace for Meta might be the metaverse, an immersive online world that Zuckerberg believes is the future of the internet.
If his bet is right, one important question will be how digital avatars will socialise with each other. I’m pretty sure that at least as far as Divya is concerned, she would want to use TikTok.
Meta might therefore want to think about how to incorporate TikTok into the world it wants to create. If it can’t control the communications interface itself, that would surely be the next best thing.
https://theconversation.com/tiktoks-secret-algorithm-is-its-greatest-strength-and-could-also-be-its-undoing-176605
Good riddance. Facebook was more fun during the era of Farmville and similar games, when the option to 'poke' someone was available, and when libtards didn't censor anyone guilty of wrongthink.
I shall fervently pray for Meta and its entire catalogue of offerings to go belly up in the near future.
Oh well, what goes up must come down someday, that's the inevitable law of Physics.