Facebook’s overall user base shrinks for the first time

The total number of Facebook users has dropped — a first for the social media platform, which has seen seemingly endless growth since its debut 17 years ago.

Facebook lost about half a million daily users worldwide in the fourth quarter of 2021 compared to the previous quarter, according to parent company Meta’s quarterly earnings report. That may not seem like much of a drop from a total of less than 1.93 billion daily active users, but it’s low for a metrics-focused company whose user base across various apps has been growing at a rapid pace for a long time. Statistics show how Meta struggled to stay relevant to younger users, many of which are attracted by competing apps like TikTok. And that puts even more pressure on Meta’s big bet on the metaverse — the VR/AR-enabled alternate universe that CEO Mark Zuckerberg sees as the future of the Internet — to actually work.

Wall Street reacted immediately: Meta shares fell 20 percent in extended trading after the news.

It has long been known that Facebook app user growth has stalled, in part because of its user base aging and the fact that it has run out of new countries to expand. In its early days, Facebook was only available in the US, but has since spread to almost every other country, with the exception of places like China where the app is blocked. Previously, Facebook user growth has been declining, especially in the US.but this is the first quarter in which its global daily user base has dwindled.

This means it’s more important than ever that Meta changes its strategy to retain and attract new looks. To that end, Meta has said it is investing more in short video features like Reels, its TikTok clone. And in the long term, the company is making huge investments (worth $10 billion in losses last year) to develop its AR/VR capabilities and other futuristic technologies that support the metaverse.

When asked about profit and loss, Meta CFO David Wehner said this decline in user growth is partly due to increased competition from other apps.

“We believe competitive services are hurting growth, especially among younger audiences,” said Vener, who also cited Internet data price increases in India as the reason for the slowdown. Facebook has about 350 million users in India, which is its largest market.

Later in the call, Facebook CEO Mark Zuckerberg called TikTok, the elephant-in-the-room competitor, by name. TikTok said there is 1 billion users as of September last year and was the world’s most downloaded app in 2021, according to the analytics firm Apptopia.

“It’s unique that TikTok is already such a big competitor and also continues to grow at a pretty fast pace with a very large base,” Zuckerberg said. He went on to say: “I think overall participation will grow…and so we are optimistic about the future. But there’s a lot of work here.”

Meta also reported lower-than-expected earnings and revenue growth, which it said was driven in part by inflation and Apple’s new privacy restrictions on ad tracking that limit Meta’s ability to sell ads. The company is also subject to constant scrutiny by government regulators around the world due to antitrust issues and content moderation.

Despite falling user numbers and missing targets, Facebook is still making a lot of money. The social media giant made $33.67 billion last quarter, up 20 percent from a year earlier. And if you turn on the entire Facebook “family of apps” like Instagram and WhatsApp, the number of users as a whole is still increasing (albeit at a relatively slow pace: from 2.81 billion to 2.82 billion daily active users last quarter on compared to the previous quarter). ).

But now there’s no doubt that Facebook – or Meta, as it’s now known – is facing a real challenge to its social media dominance. Whether it will continue to be the largest social media app, as it has been for over a decade, is no longer a given.

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