Meta News: Are we witnessing the beginning of the end for Facebook?

In 2004, a scruffy college kid from Harvard University co-created, in his dorm, what would be the most important networking platform in the next two decades. Considering that it was initially meant to connect university students, Mr. Zuckerberg probably did not know how much of an impact his creation would have on the world. Since 2006 when it was open to anybody above the age of 13, the Facebook co-founder and CEO has steered the company to amass 2.93 billion active monthly users (more than a third of the world’s population) and is ranked the third most visited website globally.

In the years since, Facebook acquired the photo-sharing App, Instagram, an instant messaging App, WhatsApp, the virtual reality company Oculus, and Giphy, an online database and search engine for short looping videos. All these platforms have had their share of successes.

It has however not been smooth sailing for Facebook (now Meta.) The last eight years have been extremely difficult for the California-based tech giant. Facebook’s history is grossly tainted with scandals of user privacy breaches, illegal business practices, and online propaganda that directly influenced elections and perpetuated genocide. There was also the PR nightmare (and a source of so many memes) that was the congress hearing where Mark appeared stoic and unremorseful to the accusations laid against his company.

Fast forward to 2022, and Meta’s shares have been in a free fall for the last few months. Investors and users seem to be losing confidence in the company and its platforms. CNBC’s website reports that shares of Meta plunged 24.5% in the second quarter of 2022 as investors and analysts digested the company’s third-quarter earnings miss and a weak fourth-quarter outlook. Shares closed at $97.94, the lowest price since 2016.

Meta also reported a 4% loss in quarterly revenue in the same period and its profits fell 52% to 4.4 billion dollars. It has also cautioned that the fourth quarter numbers will still more or less be disappointing. Today, November 17, 2022, Meta’s share price is hovering above $110 down from $376 in 2021. These are signs of a giant plopping to its knees.

The tech giant has recently laid off about 11,000 employees. The employees constitute about 13% of Meta’s workforce. They also extended a hiring freeze to the first quarter of 2023.

Facebook changed its name to Meta in October 2021. This move was intended to initiate a shift of the company’s focus to creating the ‘metaverse’. This change was not going to affect the operations of its social media platforms. It was also a much-welcomed move by investors as it forecasted a new beginning for the company that was trying to shake off the ghosts of its publicized controversies. 

But this, insiders say, may be causing more harm than good. Mr. Zuckerberg is said to be no longer interested in the operations of Meta’s social media platforms (the cash cow of the company) and is instead investing his time and company resources into the metaverse – which he bullishly believes is the future. But Reality Labs, Meta’s division that oversees research and development for the metaverse is also bleeding money. Third-quarter financial reports reveal a loss of 3.7 billion dollars last quarter compared to 2.6 billion in the same quarter last year. Then there were the metaverse reviews that were less than stellar. Marques Brownlee, the popular tech reviewer called the metaverse presentation cringeworthy and generally suggested that the technology was unfinished. Interestingly enough the YouTuber also said that Facebook as a social networking platform is saturated and “peaked out” and that we were now witnessing its inevitable decline.

Competition has also become pretty stiff lately. TikTok has become a very popular App for creating and sharing short videos, directly challenging Instagram which, by the way, took a while before realizing video was the next evolution of content. YouTube Shorts is also a very good content creation tool that takes advantage of the giant, creator-centric platform. It seems like these platforms are slowly but consistently taking away users from Meta’s social platforms. Whether this is true or not, perception matters.

Then, there was what is likely to have been the final blow; Apple’s new anti-tracking feature. Forbes estimates that this feature will be a 10 billion dollar blow to Facebook in the second half of 2022. This feature explicitly asks iPhone users for permission to be tracked by Apps. The loss of revenue is because most iPhone users have said no to tracking by companies like Facebook - making it difficult to collect data for advertising.

It's hard to imagine what is going on at the Meta headquarters, but things are not great for the Menlo Park-based tech giant. Just as we were wrapping up this article, our official "Meta-alert" pinged. There was also another privacy breach that recently led to the firing of dozens of employees. Bribes were paid, accounts were hacked, data privacy was breached and some employees were fired. Sounds like an overplayed song for Zuckerberg and Co. - a song that will be deceptively pacifying Meta to its downfall.

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