Facebook's parent company Meta may face a time of greater uncertainty. The number of Facebook users is declining very slightly, it is losing billions due to a privacy measure by Apple and the dances that make TikTok so popular are also bothering the company.
The group warned analysts last night that revenue growth could be disappointing in the coming months. All in all, the stock dropped about 26 percent in value at the opening on Wall Street, or about 211 billion euros in market value.
Now it is true that Facebook has been struggling with problems for years. Think of the Russian trolls, the data scandal with Cambridge Analytica or whistleblower Frances Haugen who brought abuses to light last year. Nevertheless, the company continued to grow happily. The question now is whether that will remain the case. Three developments are worrisome for Facebook:
1. Fewer Daily Users
For the first time in the company's history, the number of users logging into Facebook every day has decreased by 1 million, from 1.930 billion to 1.929 billion. The number is so small that the top of the company managed to brush it off without difficulty in the press release and in the conversation with analysts.
Decrease in daily active users on Facebook
Yet it is painful for a company that stands for unbridled growth. Are we seeing the ceiling of Facebook's growth here? It will come as no surprise to CEO Mark Zuckerberg. He knows better than anyone that Facebook has not been given eternal life. It was not for nothing that he bought Instagram in 2012, two later WhatsApp and made an attempt to take over Snapchat.
A windfall for Zuckerberg is that the number of people logging in every month is still growing, albeit slowly. Slight growth is also visible in what Meta calls the 'family of apps', which also includes WhatsApp and Instagram. However, the major growth is now over across the board.
When you first open an app on your iPhone, there's no way around the notification. The app asks if you can follow it on other websites and apps. It is an anti-tracking measure that Apple introduced last year.
The company says it wants to offer its customers more privacy. According to research firm Flurry, 80 percent worldwide have said 'no' to the follow-up question. As a result, advertisers are much less aware of who they are reaching through Meta's apps. So they spend their money elsewhere, for example at Apple itself.
This is what the notification looks like (Apple example)
It is clear that Facebook's parent company suffers from this. The financial chief warns that losses this year could reach $10 billion. Analyst Eric Seufert estimates that the company has also lost so much money in the past six months as a result of the measure.
3. Competition from TikTok
Reels should eventually yield as much money as the well-known timeline and Stories. Zuckerberg is "optimistic" that this will happen.
TikTok is also important for Zuckerberg in another battle, namely against governments and regulators. Zuckerberg likes to use the Chinese app as a signal that there is indeed competition, and that breaking up his company is therefore not necessary. He tells policymakers that if they take Meta too seriously, TikTok could take its place.
Tipping point or ripple?
Facebook has had to deal with bigger and smaller challenges many times before. But again it is striking that it does not notice much financially. The profit last year was converted to 34 billion euros, an increase of 37 percent, although it was somewhat lower in the last quarter than a year earlier.
In other words: the company can take a beating and experience so far shows that it always recovers. The question is how long that 'magic' will continue to work. After all, the metaverse – Zuckerberg's dream for the future – is still a long way off.