Cyberspace: Is Meta losing its way as tech giant’s revenue, user growth are stalling?

*The global tech giant is pouring billions into its virtual reality division in hopes of ‘Big-Banging’ the Metaverse into existence, but back in the real world, revenue and user growth are stalling, says report

Gbenga Kayode | ConsumerConnect

One of the global technology giants, Meta, has reported its first ever yearly drop in revenue earlier last week.

ConsumerConnect learnt some industry analysts observed the development as the latest sign of trouble at the social media behemoth, which is said to have tethered its future to the fate of the theoretical ‘future of the Internet’.

Meta Platforms Incorprated, doing business as Meta and formerly named Facebook, Inc., and TheFacebook, Inc., is an American multinational technology conglomerate based in Menlo Park, California, in the US.

The company owns Facebook, Instagram and WhatsApp, among other products and services in the globa tech space.

The company is pouring billions into its virtual reality division in hopes of Big-Banging the metaverse into existence, but back in the real world, revenue and user growth are stalling, ETtech report said.

The Big Tech, February 2022, said its flagship platform Facebook lost about half a million users over the fourth quarter from the previous one – the first such decline in its 18-year history, report noted.

The news caused Meta’s stock to crash 26 percent – the biggest ever one-day loss for a US company — wiping out more than $230 billion of its market value.

Then, Meta July 28, reported a revenue of $28.82 billion in April-June this year, a 1 percent decrease from $29.07 billion in the second quarter of 2021.

It was the company’s first year-over-year drop in revenue since going public in 2007, and caused the stock to shed another 5 percent.

Having brushed off scandals that would have wiped out smaller companies, Meta now faces a trio of existential threats that one analyst has described as “the perfect storm”.

Apple is killing Meta’s main business and driving advertisers to Google

Apple, in 2021, introduced ‘App Tracking Transparency’, a feature that lets iPhone users choose whether apps like Facebook can monitor their online activities to serve up more relevant ads.

In February, Meta said Apple’s changes would cost it $10 billion in revenue over the next year. The former railed against the move, but as the little dog in this fight – for once – there’s little it else could do.

David Wehner, Meta’s Chief Financial Officer, said many advertisers had started shifting their ad budgets to Google and other platforms that are less dependent on Apple for user data.

Instagram wants to be more like TikTok, and users hate it.

Not exactly shy of copying its competitors’ best features, Meta has been desperately trying to turn Instagram into a TikTok clone for several months now, report said.

The company has been doing this over the protests of its users, especially the younger crowd.

Last week, though, the ‘Make Instagram Instagram again’ campaign got a thumbs up from Kylie Jenner and Kim Kardashian, who are all but synonymous with the platform, with almost 690 million followers between them.

The following day, Instagram Head, Adam Mosseri, seemed to directly address their concerns in a video, saying these feed changes were all just tests.

However, Meta seems determined to press ahead with them anyway, with  Mark Zuckerberg, Chief Executive Officer (CEO) saying during the company’s earnings call last Wednesday that the changes would not only remain, but intensify.

Zuckerberg stated: “One of the main transformations in our business right now is that social feeds are going from being driven primarily by the people and accounts you follow to increasingly also being driven by AI recommending content that you’ll find interesting from across Facebook or Instagram, even if you don’t follow those creators.”

What’s prompting this shift? Needham analyst Laura Martin said earlier July that consumer behaviour shifted towards video during the COVID-19 pandemic.

Martin wrote in a note to clients, that “Meta is losing the fight for attention on mobile devices to video content, including streaming, video games, TikTok and YouTube, as evidenced by its anaemic revenue growth versus these competitors.”

Nonetheless, by taking on Jenner and Kardashian, Meta would be playing with fire, according to report.

In February 2018, Jenner tweeted to her then 24.5 million Twitter followers that she no longer used Snapchat after it was redesigned in an update.

“sooo does anyone else not open Snapchat anymore? Or is it just me… ugh this is so sad,” she wrote.

Snap lost a stunning $1.3 billion of market value over the next week and forever lost favour as the social network of choice for 20-somethings.

Antitrust headache just won’t subside

Meta faces several investigations over anti-competitive behaviour in the United States (US), at both the Federal and state level – not to mention myriad probes outside its home country.

Zuckerberg has argued that Meta is not a social networking monopoly.

The company CEO acknowledged the tech giant also faces “unprecedented levels of competition” from the likes of TikTok, Apple and Google.

But even if Meta isn’t broken up, the mere threat of antitrust action has made it harder for the company to buy its way to success, report stated.

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