Will Meta's big metaverse push be enough to keep it relevant among masses?
Meta founder Mark Zuckerberg saw $30 billion of his worth being wiped out in an instant last week, throwing him off the list of the top 10 most wealthy people in the world.
Published:Mon, February 07, 2022 8:40pm
Mark Zuckerberg's Meta earlier this week announced the quarterly earnings report for the fourth quarter of 2021. In the quarterly report, the company reported a total revenue of $33.67 billion, which is significantly up from $29,010 that the company reported in the third quarter of 2021 and $28,029 that it reported in the final quarter of 2020. In addition to this, the company reported a rise in revenue from various streams including advertising and its family of apps. Overall, Meta reported a strong growth trend quarter-on-quarter and year-on-year.
Yet the company founder saw $30 billion of his worth being wiped out in an instant, throwing him off the list of the top 10 most wealthy people in the world, Forbes reported. Not only Zuckerberg, but Meta too saw a drop of $200 billion in its market cap following a 26% drop in share value.
Facebook the Blue app, which is no longer the centre of Zuckerberg's universe lost daily active users for the first time since its inception almost 18 years back. Facebook's daily active users dropped from 1.93 billion to 1.929 billion compared to the previous quarter, even as its monthly active users increased a bit.
But that's not the only concerning trend that Meta (formerly Facebook) shared. There are several other red flags as well. Here's a quick break up of numbers for you:
While Meta's advertising revenue from its family of apps increased by 13% across the globe, the revenue from advertising in North America declined by 6% year-over-year.
Meta's revenue from its family of apps stood at $155 million, which is 8% down from last year.
Reality Labs, which includes augmented reality (AR) and virtual reality (VR) based technologies both hardware and software and of course, Meta's north star metaverse, lost $3.3 billion in Q4 2021. Not just that, the division has been losing money all throughout the year and its losses have been widening quarter-on-quarter and even year-on-year since 2019. For reference, Reality Labs lost $4.5 billion in 2019 and $6.6 billion in 2020.
These losses are expected to continue in 2022 as well. And Zuckerberg attributes a large part of this downward trend especially in the past year to Apple's change of policy and stiff competition from TikTok.
"Like others in our industry, we faced headwinds as a result of Apple iOS changes We're working to try and improve things These efforts will help to mitigate some of the challenges. But we expect the overall targeting and measurement headwinds to moderately increase from Apple's changes and from regulatory changes in Q1 and throughout 2022," Zuckerberg said during the company's earnings call.
"TikTok is so big as a competitor already and also continues to grow at quite a faster rate off of a very large base Even though we're compounding extremely quickly, that's -- we also have a competitor that is compounding at a pretty quick rate, too," he added.
The Meta chairman may have blamed Apple and TikTok for this change in whirl winds, but the truth is this change has been in the making for a long time now. And there are several reasons for that.
Meta's platforms are marred with misinformation, hate speech
Misinformation and hate speech are some of the most challenging issues that Meta's family of apps, which includes Facebook, Instagram, and WhatsApp, have been struggling to deal with. Be it in the form of forwarded messages on WhatsApp or posts containing misleading information, these issues have left the company red faced several times in the past couple of years.
Take the example of the persecution of Rohingya Muslims in Myanmar in 2017. In the following year, the UN accused Facebook of being "slow and ineffective" in its response to the spread of hatred online. And last year Rohingya refugees in the US and the UK sued the company for allowing hate speech to spread against them.
Meta, on its part, has taken steps, which includes deploying more content moderators and strengthening its artificial intelligence (AI)-based algorithms to detect such content faster and more accurately. It has also deployed algorithmic tools that place information from credible sources, such as news organisations at a higher ranking in the News Feed compared to information from non-credible sources. Additionally, it has partnered with industry experts and news organisations under various projects such as the News Integrity Initiative and the Facebook Journalism Project, but so far none of them have proven to be effective enough.
Another issue that has been a cause of concern among users and regulators alike is Meta's aggressive data collection and personalisation tactics and its use of users' personal data. Reports and whistleblowers have said it, books have documented it and just how well the company knows its users and how it makes them stay on its platforms by feeding them with addictive content. If anything, Facebook whistleblower Frances Haugen's revelations are proof of how the company priorities its own profits over its users' security.
Ageing user base
But safety and misinformation aren't Facebook's only issues. It is also battling an ageing user base. As per a report by The Verge dating back to October 2021, the teenage users of the Facebook app in the US had declined by 13% since 2019 and they were projected to drop 45% by 2023. The report also noted that young adults between the ages of 20 years to 30 years were expected to decline by 4% by 2023 and that they were expected to flock to TikTok and Snapchat instead. It wouldn't be too far-fetched to say that a trend that is being witnessed in the US is also likely to be witnessed in other parts of the world as well.
Push from regulators
Add to this the intense pressure from the regulators to reign in Meta and Facebook. The call for breaking up (and other big tech companies) has gained momentum over the years. While Meta and its founder have placed safeguards to ensure that all platforms under its family of apps are technically inseparable, that hasn't stopped regulators and governments from across the globe to punish Facebook for being a monopolist and for its handling of user data.
All of this, to some extent, has resulted in people losing faith in the company.
So why don't more people #DeleteFacebook as WhatsApp founder Brian Acton had once said? For the simple reason of not having a viable alternative.
Meta, on its part, is trying to fix things and gain back some of that lost trust. But are its efforts sincere and will these efforts be enough remains a thing to be seen.