(A blog inspired by the recent losses that Facebook(Meta)
While Reading this blog , don’t pay much attention to figures ,
rather try to understand how established firms get setbacks worth
millions and billions and that too in a day. How difficult it is to sustain yourself in a competitive landscape without constantly
innovating. You would also get an insight into:
• The recent economic losses of Meta.
• Reasons which are constantly decreasing the user base of Meta.
Facebook was founded in the year 2004 by Mark Zuckerberg and it has been renamed as Meta recently.
Do you remember October 5? Yes , the day when everyone was bewildered as social media platforms like WhatsApp, Facebook went down due to a global outage.
Facebook now known as Meta is the parent company of WhatsApp , Instagram among other subsidiaries. Thus when the servers went down the losses piled up. It was reported that Mark Zuckerberg, the CEO of Meta (Facebook) slipped to the 5th spot in the billionaires' list as he underwent a loss of $7 billion in his personal assets. The parent company , Meta also suffered a deterrent loss of $160 million.
Everyone expected the year 2022 to usher in a new ray of hope and
strength, but for Zuckerberg, the destiny seems to treat him like a punching bag.
It was nearly 5 months later that Meta lost nearly $160 billion when the shares went down by 26%. Zuckerberg suffered a loss of $32 billion in his personal fortune , which is nearly the GDP of Estonia(A country in Europe).
Earlier the Market capital of the company was about $900 billion but after the stock-crash the valuation was reduced to $660 billion. This amounts to a loss of nearly \$240 billion . This is the biggest drop. Such a humongous drop was seen previously in the year 2018 , which was about $121 billion.
Knowledge fact: In India,like we have Sensex and Nifty. In the same way all the IT companies in the US are listed in NASDAQ.
1) The crash can be an immediate outcome of the "dismal" earnings report presented in an internal meeting. This report pointed to the fact that the company was facing huge losses and the same trend would continue in the coming future.
The profit of the tech giant declined by 8% to $10.29 billion in the last quarter of 2021.
The Revenue (forecast) is expected to hit \$27 billion-29 billion as against an analyst prediction of 30.15 billion.
2) As Facebook changed to Meta, there were general apprehensions that the social media giant would shift from social media networking to the virtual world of Metaverse.
3) When the crash took place, the subsidiary companies like Instagram, Messenger, WhatsApp recorded modest gain in the number of users, however the parent Company Facebook(Meta) lost about half a million of DUA(Daily Active Users).
This happened for the first time in the last 18 years. Experts are of the point of view that the new customer arrival on Facebook has received it's peak and the tech giant should expect similar user drops in the days to come.
Why is Meta Losing Users?
- Cut throat competition due to the increasing presence of Tiktok
Tiktok claims to have over 1 Billion active users. This online video streaming platform that is used to make short length videos of 30-40 secs has attracted the youth and consequently increased its user base.
For these reasons Tiktok is steadily becoming the first choice of
In order to face this stiff competition posed by Tiktok, Instagram had released a feature known as "reels". But Instagram gets its main monetisation through Story and Direct feed features.
- Youth deems Facebook(Meta) to be a place where old people catch up.
It has also become a general perception that Facebook is now "an old man's apparatus" which means , possibly due to peer pressure or due to the fact their family members are more into Facebook(Meta) , users have moved onto Instagram . Although the subsidiary company is benefitted but the Parent Company ends up making a loss. Young users prefer to interact and play at the same time due to which they either user Fortnite or Discord Servers.
- There is no country left where Facebook(Meta) can expand it's operations.
Leaving aside a few exceptions like Iran and China , there is no country where Facebook(Meta) can think of gaining new Users.
4) Last year Apple had introduced a privacy feature in its operating system known as "App Tracking Transparency" .
This means that iPhone users would now have the liberty to decide
whether they want their online activities to be monitored or not. There are high chances that such permissions would not be granted by the users.
This would be huge setback for Meta as, much of it's business comes from online advertising after it trades user behaviour and data to specific companies.
iPhone users generally have greater spending capacity and they serve as a lucrative Market for advertisers . Thus this adds to the losses of Meta. New iOS rules will make Meta lose more than $10 billion in sales.
Advertisers are slowly moving to other platforms like Google and Tiktok that have large user base.
5) India also serves as a large market for Meta and a rise in tariff prices by Jio, Airtel and VI would be detrimental to it as users would limit their time on social media sites.
All these factors cumulatively played against the fortune of
Metaverse could be a reality in the coming future with the help of
virtual and augmented reality but at present instead of shifting the resources Meta should pay more focus on consolidating it's user base and dominating the advertisement market.
Is Innovation , a worrying issue for Meta?
You might actually know what News-Feed is. This concept revolutionised the way we interact with Internet . News-Feed actually brings the updated content from your friends onto your application. Earlier for applications like Myspace , you had to visit a particular friends profile in order to look what he/she has posted. After this innovation , Facebook(Meta) hasn’t really added some intriguing features. Many concepts are either copied or cloned (like reels from Tiktok). Meta, now should focus on strategies that disrupt the business world and at the same time draws and compels users towards it. Facebook should come up with ideas that aim to change the world.
I hope you not only enjoyed the blog but also understood how important it is to keep your users hooked to your social media networking platform(in this case Meta). How an operating system’s decision to prioritise user privacy can make you lose a big market share(in this case Apple’s decision)
Follow us on all social media platforms to get such amazing content (oops we too are not on Meta, sorry Mr. Zuckerberg). See you in the next blog.
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