Should Facebook’s eroding user base worry Meta much?
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.”
- Meta Reports Fourth Quarter and Full Year 2021 Results – Meta
- Meta Platforms, Inc. (FB) Fourth Quarter 2021 Results Conference Call – Meta
- Facebook loses users for the first time in its history – The Washington Post
- Facebook’s Stock Plunges After Profit Declines – The Wall Street Journal
- Are people leaving Facebook? It depends, but some young users call it ‘cluttered’ and ‘dated’ – USA Today
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?