In the social media world, things happen fast, to the extent that market leaders go out of business in a matter of a few months. It is a market defined by the most trending technology that can enhance the user experience over what they already use. Zuckerberg knew this at the beginning of his career. He has always been smart to replicate things and make them trendier.
He put Orkut out of business and was swift in acquiring WhatsApp and Instagram. With billions of active users on his different platforms, he knows how technology works and how to keep social media users engaged. It’s just that he hasn’t been able to get his game right and find an answer to some complex technological questions.
Rebranding the entire Facebook sphere did not help much
By rebranding Facebook to Meta and creating Threads, a Twitter (X) rival, Mark Zuckerberg certainly thought that the company’s fortune would change. He expected the branding and a new launch tactic to increase active users, increase time spent on various Meta platforms, and bring a new lease of life to the company’s functioning with an increase in employee morale and a boost in stock prices. But is it this easy?
So far, nothing has gone right, as seen with the loss in market value, tanking stock price, loss of advertising revenue and massive layoffs. It might be – it has happened in the past with other big brands, tech and non-tech. But the success rate has been much lower than the failure rate.
A brand name change and promoting the idea of Metaverse was expected to do wonders, but it nosedived within a couple of months. The stocks crashed, and Mark Zuckerberg accepted that the Facebook user base is seeing a sharp decline, and the stiff competition with the rise of TikTok and some other factors has put a big dent in future hopes.
Meta stock crashed. Market value nosedived by $700 billion in 2022. It saw the biggest one-day crash in history. The freefall continued, and people are waiting for another strong move from Zuckerberg that is promising and is not hollow like the Meta rebranding strategy. Let’s look at some of the main reasons users are losing interest in Facebook and why Meta is set to face even bigger challenges in the coming times.
TikTok is the new market leader and the biggest threat to Meta
Mark Zuckerberg openly criticized the Chinese app Musical.ly, but in 2016, he went all out to acquire the company. He did not succeed, and Bytedance acquired Musical.ly in a deal worth $800 million. Things would have been quite different if Zuckerberg had successfully acquired it, but it was not meant to be. Today, it is TikTok that is the real giant slayer.
He has openly accepted that Meta’s reduced user base is mostly because of the increasing popularity of TikTok. It’s in trend, and TikTok stats are proof of its popularity. TikTok login numbers are at a new high, and advertisers love it for this. TikTok videos are proving to be the new advertising hotspot for marketers, which means Facebook’s monopoly is being challenged.
TikTok, the short video format social media platform, is the new craze, and it’s this app that has made the deep cut into Meta’s active user base. Zuckerberg pumped billions to make Instagram Reels the top short video app, but so far, he has completely failed to crack the secret codes that make the TikTok video app extremely popular. TikTok algorithms are superior in every regard, and both YouTube Shorts and Instagram Reels have failed to crack the secret codes.
TikTok currently has 1 billion active users and 3 billion installations, with every user spending an average of 850 minutes every month. This is phenomenal, and there’s nobody more hurt than Zuckerberg to see these staggering numbers. For now, TikTok users are in love with the app, no matter what data security it offers or how long it will remain in the market.
Facebook is reaching the ex-growth stage
Facebook has been around for 18 years. Facebook consistently came up with new features that attracted every age group, which helped the social media platform acquire users at a high rate. But in the last year or so, Facebook seems to be reaching the ex-growth stage where new users don’t sign up, and the old ones start becoming inactive.
The king of the social media sphere does not interest the users anymore for various reasons like the availability of other better options (other Meta apps or non-Meta apps), the lack of something extraordinary or something that is simply new, and the security issues which have surrounded Facebook for many years causing mistrust among the users.
Apple’s iOS 14.5 update cost Meta dearly
Apple is the new market leader, and it makes rules. Nobody knows it better than EPIC Games, the makers of Fortnite. The antitrust legal battle is the talk of the town, but in Apple’s courtroom, which is the App Store, Apple decides everything. Elon Musk, the Twitter CEO, faced the heat when he launched a barrage of clash-inciting tweets against Tim Cook and Apple. His controversial tweets and outright intention to take Apple heads-on ended in his unilateral surrender to the smartphone market leader. Apple controls a lucrative market of above $1000 smartphone buyers, with a 78% market share.
When Apple came up with a new update in 2021, it made matters worse for Mark Zuckerberg. Apple’s iOS 14.5 update, released in April 2021, cost Meta around $10 billion in 2022. The iOS update allows users to disable the app tracking feature, which has caused big troubles for Meta. The new security feature in Apple phones means Meta cannot show personalized ads to users who choose not to be tracked on their smartphones. This has caused huge losses in ad sales, which is the primary source of revenue for any app or website.
Apple phones have always had this feature, but the popup prompt makes users choose the option more freely. All the negative news around Facebook user data handling had already created a situation, and the Apple update meant a final blow for Meta.
Meta expansion plans are centralized-oriented
The digital world is adopting blockchain technology at a fast pace, and every idea that centers around decentralization promises a better digital future. Somehow, what Meta promises comes with a centralized approach. Mark Zuckerberg is pumping in a lot of money in Metaverse, with an initial investment of $10 billion.
The major revenue earner will be the ads that will provide a realistic experience in the virtual world. It might be a game-changer in the future, but for now, it is only in the initial development phase. Technology is more about what’s there now or about to come up in the next year or two and not about the next few years.
Although the idea of Meta is dynamic and highly promising, people have not known Zuckerberg to be very liberal and prudent in data handling and have always seen the company functioning on a centralized approach. This has been a huge reason behind people’s disinterest in Meta.
Heightened scrutiny of Meta
Facebook and controversies go hand in hand. In Britain, the regulators fined Meta £1.5m for breaching the online animated GIF maker Giphy merger enforcement order. You would rightly think of this amount as just a flea bite for Facebook. But Facebook’s trouble with different governments does not end here. The regulators also plan to crack down on the company over human trafficking, fraud and revenge porn.
In the US, the FTC charged Facebook with anticompetitive conduct in running the business. The genocide in Myanmar, the Cambridge Analytica scandal, misinformation surrounding the 2016 US Presidential election, the $5 billion fine over user privacy, the failure of cryptocurrency Libra, and energy usage issues, Facebook has had its own large share of controversies. Over a period of time, it has eroded the people’s confidence in many ways and made regulatory bodies alert about every move the company made.
The future of Facebook – And Meta
A large number of advertisers are exploring Pinterest and TikTok. Amazon is becoming the first choice for ad spending by advertisers. Amazon DSP hailed as the next big thing – better than Google Display Network and Facebook Ads
$700 million in fines in 2022 alone
Stock falling to lows of around $90 in 2022, market value loss of $700 billion
Layoffs – more than 11000 employees in 2022 (13% of the workforce.
Massive investment in Metaverse development – something which is not expected to provide any returns in the near future. Meta spent $10 billion in 2021 on the development of Metaverse.
Gen Z continues to exit Facebook and favors TikTok over Instagram. Threads did not impress anyone.
Although not discussed in detail, the pointers here throw light on the future of Meta. Meta, including Instagram and Facebook, is set to face headwinds in the future. For now, it seems Mark Zuckerberg cannot do much about the challenges he faces in keeping Meta on top. Threads app was being seen as a gamechanger but sadly, it died down pretty quickly after the initial euphoria. The only way for him to succeed in the long-term is to come up with something unique, something disruptive.
