Should Facebook’s eroding user base worry Meta much?

Photo: @sitthiphong via Twenty20
Feb 10, 2022

Facebook lost daily users in a quarter for the first time in its 18-year history. Mark Zuckerberg, the platform’s founder and CEO of Meta, blamed heightened competition from the short-video platform TikTok, particularly for the younger demographic.

He said last week on Meta’s fourth-quarter call, “People have a lot of choices for how they want to spend their time, and apps like TikTok are growing very quickly.”

The user declines were largest in Africa, Latin America and India, suggesting Facebook is reaching saturation globally.

Mr. Zuckerberg reiterated that Meta is aggressively developing its own short-form video Reels.

“It’s clear short-form video will be an increasing part of how people consume content moving forward, and Reels is now our fastest growing content format by far,” said Mr. Zuckerberg. “It’s already the biggest contributor to engagement growth on Instagram and it’s growing very quickly on Facebook too.”

Reels isn’t generating the advertising punch of older features, such as News Feed and Stories, which allow users to post videos and images that disappear after 24 hours.

However, Sheryl Sandberg, COO, noted that Facebook has managed “successful transitions” before — including from web to mobile as well as Feed to Stories — and that Meta should be able to monetize the shift to video. She said, “We’re not starting from scratch.”

The user decline comes after documents leaked last year by an ex-employee detailed Meta’s problems corralling misinformation and hate speech as well as the harm their platforms cause to teen mental health.

Meta’s shares last Thursday tumbled 26 percent after fourth-quarter results also showed that unexpectedly heavy spending on its metaverse project led to a rare decline in quarterly profit. The negative advertising impact from ad-tracking changes introduced last year by Apple also reduced forecasts.

Among the positives, Facebook’s monthly usage continued to grow, and usage across apps – Instagram, Messenger, WhatsApp – grew modestly. Mr. Zuckerberg also talked up bringing all members to the metaverse. He said, “While the deepest and most immersive experiences are going to be in virtual reality, you’re also going to be able to access the worlds from your Facebook or Instagram apps as well, and probably more over time.”

DISCUSSION QUESTIONS: Is the decline in Facebook’s daily usage a harbinger of difficult times ahead? How should Meta be positioning Facebook alongside its other social platforms and with respect to its ambitions for the metaverse?

Please practice The RetailWire Golden Rule when submitting your comments.
"Meta seems to stand for everything we think young people don't like about the world."
"Facebook/Meta should be very concerned. Their politics and approach to privacy have gotten in the way of being a neutral community platform."
"It’s definitely a concern – I’d argue part of the reason is due to their shift from being an innovator to a follower."

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20 Comments on "Should Facebook’s eroding user base worry Meta much?"

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Bob Amster

It’s a tough question to ask of someone who never thought that Facebook should exist.

Dick Seesel

A combination of more innovative ways to engage (e.g. TikTok), bad publicity (leading to the new corporate umbrella) and the product life cycle may be at work here. Meta ought to be concerned about the slowing growth of its principal cash cow, especially with the collateral impact on advertising revenue.

Rick Watson

Meta is underselling its issues, or “this time it’s different.”

  1. Engagement is their core issue. If top users have churned to other platforms, it doesn’t matter if they fix monetization because they have lost their narrative. Last time they bought Instagram, they didn’t solve it themselves. Zuck has admitted as much.
  2. Their ad platform is less effective than it was before. If they don’t solve their targeting and data issues, their revenue will still suffer even if they solve engagement. Which means they won’t be the company they were before.
Dr. Stephen Needel

Meta seems to stand for everything we think young people don’t like about the world – a lack of authenticity, a lack of accountability, a platform they trust less and less, and an obvious focus on making money over providing (to them) a necessary service. The reaction? Make Facebook less necessary – hello TikTok. Facebook should be very worried – they need a younger demographic to keep it going and they are losing credibility with anyone under 50.

Dave Bruno

Facebook has long been in decline with young people – a harbinger of real trouble for the platform – and it looks like that decline is finally starting to manifest in a meaningful way. I think Reels is too little, too late to attract TikTok users to Facebook, and I am not sure meaningful VR adoption will come along soon enough to reverse the growth trends for Facebook. Not that more than a billion engaged users is necessarily a bad place to be, of course, and I suspect Wall Street with eventually accept Facebook’s new normal.

Michael La Kier

There are lots of headwinds right now for Facebook, but the reports of the social network’s death are greatly exaggerated. Facebook’s decline among consumers ages 12 to 17 is estimated to continue, and just 35.3 percent of internet users in that age group will use the platform in 2022. In 2024, that figure will drop to under one-third. But, Facebook will add nearly 9 million U.S. users between 2020 and 2025 and its user base will get younger (Millennials and Gen X will make up more than half of Facebook’s U.S. user base in 2022).

But all that may not matter if public perception – and privacy issues – continue to drag down the social media giant.

Paula Rosenblum

Well, the problem is that Facebook is skewing older and older, and as users die off the young have moved on to Instagram and TikTok. Also, the company has the truly weirdest algorithm on deciding what posts are within and outside of community standards ever. More than once, I have said they give AI a bad name. They try to handle everything with bots and not people. Unfortunately, bots have no sense of irony.

Even I, who used to love it and am happy to be in touch with people I otherwise would never had seen again, am turned off (and have been suspended for a month for writing the ironic “if I told you, I’d have to kill you.”).

I actually think Facebook will need to become more human. Then maybe it will keep its declining base. It has become known as a faceless platform. Gotta have a human touch at minimum.

Katie Thomas

It’s definitely a concern – I’d argue part of the reason is due to their shift from being an innovator to a follower. The original Facebook and Instagram were the leaders in the space – now they seem to just be copying everything from Snapchat to TikTok.

The Metaverse is a step in the right direction, as they have more innovation there – but it also requires broad consumer adoption in a complicated way, including needing VR glasses, etc.

Melissa Minkow

This is why the company also owns Instagram and WhatsApp. Their portfolio is modern and diversified enough that this doesn’t ultimately matter that much. Facebook has been losing relevance for a while in the states, and the product hasn’t evolved enough in the face of that to grow its base forever. This is a natural progression for the platform.

Gary Sankary

Mark Zuckerberg has developed a bit of a track record around not reading his audience. They’ve made missteps on privacy, misinformation, and now relevant content for younger audiences.

Jeff Sward

Competition is the consumer’s best friend. And market voids get filled a lot quicker these days. What TikTok has accomplished in its relatively short life is pretty amazing. The tendency for the younger, hipper customer to switch from the old and staid to the new and cool has always been a market dynamic. And now that dynamic operates on steroids. Facebook has very real competitive challenges to deal with.

Gwen Morrison

Yes, Facebook/Meta should be concerned. Blaming competition for a slowdown doesn’t sound promising and younger audiences want the latest. Remember the campaign, “Not your father’s Lincoln”?

Mohamed Amer, PhD

Phase transitions can rip your face off. The one Meta is going through fits such a category. The company’s pivot to the metaverse comes amid slowing growth in its core business which puts pressure on Meta’s margins and bottom line. The metaverse is a virtual construct in the making, and those companies that can influence its formation – from technology to user adoption- will reap extreme outsized benefits. The flip side is full of credible down risk should the metaverse takes longer to create, is slow in user adoption, or becomes a cesspool of extremism. Meta is betting on two things: the absolute inevitably of the metaverse and a loyal social media user base that transitions to the company’s next vision of the future.

Meta is undertaking a mega risk mega reward strategy without an apparent safety net. Buckle up, shareholders, the ride is just starting, and the timing couldn’t be worse.

Brandon Rael

The mass migration from Facebook by the younger generations to other more viral platforms is real, and it’s having a meaningful impact on not only the engagement levels but also the 4th quarter results. Unfortunately for Facebook, rebranding the social media giant as “Meta” is simply not enough to resonate with Gen Z or Millennials.

While the company has rebranded itself as Meta, and has gone all-in on their Metaverse investments, there is a question of the Facebook brand equity, and what does Facebook-Meta stand for in a world where social, political, and progressive stances matter? The negative publicity of the past few years isn’t helping. TikTok and Instagram have been able to capture the mindshare and the screen time of the younger generations, as their platform provides the opportunity to connect and build communities, which was the mission statement of Facebook.

Ryan Mathews

In a word — yes. Meta has had multi-age problems for years, but where they use to run parallel to each other, they are starting to converge. First, there is the MySpace problem. People get bored with one social media network and younger people don’t want to share a social network with their grandparents. Then there is the issue of Zuckerberg’s ego which (incorrectly) made him believe he was the smartest guy on Earth and therefore capable of blowing smoke and out-gaming regulators, analysts, critics, competitors, and – ultimately – users forever. And then there are small issues like that whole data privacy thing and being a stooge for foreign governments, conspiracy theorists, etc. And, there is no metaverse. It’s a con. Yes there is, or will be, Web3, and VR, and AR and — as Second Life proved years ago — if you digitally build it they will come, and bring cash, but there is no “metaverse,” at least not yet.

Lucille DeHart

Facebook/Meta should be very concerned. Their politics and approach to privacy have gotten in the way of being a neutral community platform. Not only have they lost users, their current users appear to be less engaged. I have personally seen my network go silent and transition to other platforms even though they still have FB accounts. This may actually be a good thing for big tech; the consumer in our society will define with whom and what business they engage and the advertising dollars will follow. Wake up Woke.

Craig Sundstrom

My thought is: as a retail forum, why should we care? Presumably its advantage(s) to retailers was much like network television of old, a single platform that could reach as many people as possible; so if some other single platform (simply) replaces it, I think it would be a non-issue. Fragmentation would be more complex, but at least from the perspective of advertising, it’s not much of a burden reaching users — and prospective customers — on a multitude of sites. If we can put a car into outer space, we can overcome the loss of “Facebook.”

Kai Clarke

This is clearly an overreaction by the stock market, not supported by a similar drop in profits, users, or advertising. At no point did FB lose 30% of its profits, users or advertising. In fact it continued to grow in all areas, on all platforms. The real truth will be revealed over the next 6 months as FB bounces back and market pundits (as they often do) demonstrate how little they know or understand the dynamic in a specific market.

James Ray

Worry is probably the wrong word; they are well aware and know/knew it was coming. Like too many shopper loyalty programs I’ve known, once the scheme begins to mature and customer acquisition is no longer the primary concern, management reduces the value proposition for their loyal customers and instead start focusing on monetizing the customer’s visits. As advertisements and thinly veiled marketing questions masquerading as legit users increasingly disrupts the real Facebook “customer” experience, I predict their users will continue to abandon the platform in ever increasing numbers. My guess is a stale Facebook is now in the cash cow category and Meta management plans to milk it until it’s dry or dies, and by then they will have other cows in the dairy producing milk.

Anil Patel

No, I don’t think the decline in FB’s usage is going to last longer. The catalyst here is the change of ways in which viewers get influenced. Earlier it was through creative advertising. Micro-influencers have now taken the center stage and TikTok is doing a good job at encashing it. As soon as FB identifies and sorts how to leverage influencer marketing for its users, it will start generating revenue again. Meta has always been an expert in delivering experiences that are relevant to its users. I strongly believe it will tailor its platform accordingly to retain and acquire new users.

"Meta seems to stand for everything we think young people don't like about the world."
"Facebook/Meta should be very concerned. Their politics and approach to privacy have gotten in the way of being a neutral community platform."
"It’s definitely a concern – I’d argue part of the reason is due to their shift from being an innovator to a follower."

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