SAN FRANCISCO, Feb 4 ― When reporting the company's financial results, Facebook revealed that it had lost users for the first time in its history. The Californian giant has lost one million daily active users in three months. Its business model is increasingly being eaten away by newer social networks and Gen Z's flight to these platforms.
Never since its creation has Facebook lost users from one quarter to another. This is now a reality for the social network belonging to the freshly rebranded Meta group. As a direct result of this downward trend, the group's share price has fallen by 22 per cent on Wall Street. And while the fall in users is far from extreme ― with the loss of about 1 million active daily users in the last three months, out of 1.93 billion users ― it reflects a real trend around the world. The Facebook social network is clearly losing ground to competitors such as TikTok or Instagram (even though it too belongs to the Meta group), which are much more popular with young people.
If the reasons for this trend are numerous, the economic model of the network appears to be under threat. Facebook is financed mostly by selling targeted ads based on users' tastes or habits. An update from Apple in April 2021 requires application developers to ask permission to retrieve user data. For Facebook, this is linked to a considerable loss of revenue. Meanwhile, the number of daily users on all the group's applications (Facebook, Instagram, WhatsApp, and Messenger) totals 2.8 billion people worldwide. A figure that remains stable.
On the financial side, Meta is still recording good results and acceptable growth (+11 per cent). Its revenue reached US$117.9 billion (RM493.7 billion) in 2021, an increase of 37 per cent compared to 2020. But since the introduction of its new concept for a virtual world, opening up a whole new field of possibilities, Meta seems to be accumulating setbacks, and, as it stands, no financial gains will be able to be drawn from this futuristic project for some time. For the American group, this seems to be a warning. If the network continues to lose users in favour of the future platform, it seems hard to see how it could recover. ― ETX Studio
