Ouch. Facebook’s subscriptions dropped by 1-million — from 1.93-billion to 1.92-billion — in the three months to December, and it lost $252bn in one day on February 3, the biggest selloff in history.
Facebook — now trying to hide from its shame by rebranding as Meta Platforms — is in big trouble, at last. This 26% plummet for what seems like a seemingly small drop in subscriber numbers is the result of years of bad corporate governance catching up with it. Mark Zuckerberg’s personal fortune also took a $30bn hit
It is significant for many reasons. First, it’s the first drop in subscriber numbers it has had. Second, it shows that growth has peaked; people can tell when the end is nigh, as it were.
But the real concerns are that Facebook hasn’t been able to deal with two major market changes that deeply affect its business. The first is its waning popularity (and that of Instagram) among the youth market, which prefers TikTok; the second is the knock-on effects of Apple’s app tracking transparency (ATT) privacy feature.
Facebook is expecting to lose at least $10bn in revenue because of ATT, it warned last week.
"We believe the impact of iOS overall is a headwind on our business in 2022," said Meta CFO David Wehner. "It’s in the order of $10bn, so it’s a pretty significant headwind for our business."
Facebook hasn’t been able to deal with two major market changes that deeply affect its business
It could be worse, because it’s only a guess, he added. "We can’t be precise on this. It’s an estimate."
Said to analysts on a call, this is corporate doublespeak for "We’re frakked and we don’t know how bad yet".
No wonder the market panicked. Facebook is in real trouble. Its business growth is stalling and its big bet of the future — the metaverse — is a $10bn gamble that is years away from being ready.
Meanwhile, with an innovation strategy defined by Zuckerberg in a 2008 e-mail — "It is better to buy than compete" — Facebook can’t buy its way out of this problem. With the newly energised Federal Trade Commission and seemingly all of the US states’ attorneys-general pushing for a breakup — and the offloading of WhatsApp and Instagram — Facebook has to be creative on its own.
This is not its strong suit; it is better known for shoplifting ideas from others. When it was threatened by the then emergent SnapChat, Instagram copied its features. Now that TikTok’s short-form video is in the ascendancy, Instagram has developed a similar feature, called Reels.
This is the end of the beginning, and the start of the meaty middle. This is a company with a management that has proved to be isolated and out of touch with reality and has consistently failed to deal with its misinformation and hate speech problems. Zuckerberg has no other strategy in his limited playbook apart from buying the competition, and it shows.
Shapshak is editor-in-chief of Stuff Studios (stuff.co.za) and publisher of Scrolla.Africa
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.