How Low Will Meta Go? Businesses may not be living, breathing organisms in the literal sense, but they share certain characteristics with their mortal counterparts. The most fundamental is that, like living organisms, organizations move through a defined life cycle – some faster than others.
Companies begin as startups and experience growth. Eventually, they reach a period of maturity. The most successful organizations stay in the maturity stage for decades, but eventually, there is a fork in the road: renewal or decline.
A few manage to adapt to technological advances and changing consumer expectations, allowing them to experience renewal rather than decline. However, renewal is less common than the alternative. Most companies decline when they reach the fork in the road.
Sometimes, their exit is sudden and spectacular, like Enron. Other times, it is a slow decline during which the company becomes less and less relevant until, one day, it ceases to exist at all. Some of the most beloved brands that faded away include Blockbuster, Borders, and Toys R Us.
In most cases, there are signs that the end is coming, and some industry experts believe they are seeing those signs with a certain massive tech company right now.
Meta Platforms, formerly known as Facebook, has had a series of challenges in recent years. It has become clear that the organization has reached the fork in its life cycle, and its next moves will determine whether it experiences renewal or decline.
Is Facebook Use Increasing Or Decreasing?
Since its 2004 launch, Facebook has experienced seemingly unstoppable growth. The platform acquired one million users within months of its introduction and passed the 100 million user threshold in 2008. By 2012, Facebook boasted more than one billion monthly active users, and in 2017, that figure reached two billion.
However, something happened in the fourth quarter of 2021, just as the number of monthly active users was about to hit the three billion mark. For the first time in 17 years, monthly active users went down.
Though the total only dropped by half a million, it signaled the possibility of a more significant trend: consumers are turning away from Facebook in favor of other social media platforms – or no social media at all.
Is that trend reversible? Yes. But unfortunately for Facebook, a declining user base isn’t the only warning sign that the end of Facebook is coming.
Why Is Facebook Disappearing From The Internet?
Creating and memorizing user IDs and logins for dozens of sites is an impossible task, and the assorted tools available to manage passwords aren’t always convenient. Many sites realized that requiring unique user IDs and passwords could be avoided by partnering with platforms that consumers already use.
It was a win/win/win proposition. Sites added the option to log in with Google, Facebook, and other social media platform credentials as an alternative to creating unique user IDs and passwords. Consumers and online businesses benefited from a more straightforward account creation process, and social media platforms got access to valuable consumer information.
That’s important because Google, Facebook, and other social media sites don’t charge consumers for the use of their services. They need consumer data to optimize their digital advertising business – a primary source of revenue.
The trouble is, when consumers got a closer look at how their information was being used, they grew concerned with so much sharing.
In 2018, details of Facebook’s relationship with Cambridge Analytica, a data analytics firm, became a major news story. A few years later, Facebook was accused of permitting misinformation and hate speech to flow freely through the platform.
In 2021, a whistleblower released internal documents that revealed the negative impact social media could have on vulnerable populations – and, more importantly, the fact that Facebook knew of the potential damage the platform was causing, yet did nothing.
Facebook users began questioning the wisdom of allowing Facebook to track their online movements outside the platform. They stopped using the “login with Facebook” button, preferring to keep their social media pages separate from other online activities.
Less-frequent usage caused web-based businesses to begin rethinking the partnership. Many decided that the cost of maintaining the technology and the potential reputational risk that comes from being associated with Facebook made the “login with Facebook” option far less appealing.
Companies like Best Buy, Dell, Ford, Match, Nike, and Patagonia have removed the “login with Facebook” button from their sites, and more will likely follow. Is this a warning sign that the end of Facebook is coming?
What Is The Meta Strategy?
Stagnant user growth isn’t the only issue faced by Facebook and parent company Meta. Meta stock is down nearly 60 percent year-to-date, largely due to declining revenues and growing competition. People have a finite amount of time to spend on social media, and many now prefer TikTok to Facebook.
In response, Facebook and Instagram have launched short video features similar to TikTok. It’s a necessary move from a competition perspective, but the short videos are harder to monetize.
When coupled with the new privacy requirements for devices running Apple’s iOS, it is becoming more difficult to persuade digital marketers to put their advertising dollars into Facebook and the Meta family of social media sites.
The negative impact on Meta’s revenue is alarming for investors, prompting many to trade their Meta stock for alternatives with better growth potential. However, the company still has a loyal group of supporters who are convinced that the company will achieve renewal instead of decline.
Their confidence comes from the fact that the long-term Meta Platforms strategy doesn’t revolve around Facebook ad revenue. Facebook Founder and CEO Mark Zuckerberg is turning the company’s focus to virtual and augmented reality in preparation for the rise of the metaverse.
There are a variety of visions for what the metaverse could be and should be, but the basic premise is this: In the future, many experiences will take place in the digital world rather than the physical one. People will spend more time working, learning, and playing online, and Meta intends to lead the way as that virtual world is constructed.
If the metaverse expands the way Meta Platforms expects it to and Meta is in a leadership position from the start, Meta might return to its former glory as a rapid-growth company. However, if Zuckerberg’s bet doesn’t pay off, this could be the end of Facebook.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.