Has Facebook reached a Saturation Point?

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Facebook has seen a drop in its daily user base for the first time in 18 years. Is this a one-off or an ominous sign?

  • Meta Platforms Inc (formerly Facebook) announced its quarterly earnings, and though its revenues exceeded analyst expectations, Facebook’s daily active users saw a drop.
  • On the earnings call, Mark Zuckerberg also touched on competition from TikTok, change in Apple’s privacy policy and forecast some tough quarters ahead in light of its metaverse plans.
  • The market reaction was swift. Meta’s stock price plunged 25% overnight wiping off $200 billion off its market cap —the largest single-day market value drop ever.
  • Facebook has been losing relevance among the Gen Z users who have switched to platforms such as TikTok and Snapchat. Instagram is still a destination for the young.
  • Facebook has been at the receiving end of countless controversies. Last year saw the release of the “Facebook Papers,” which brought more shameful practices to light.
  • Last year, Facebook also rebranded to Meta Platforms Inc and Zuckerberg said that Facebook’s next growth trajectory would focus on the metaverse - a mixed reality future.
  • TikTok has captured the attention of the younger audience that would normally be on Facebook and Instagram. It even forced Instagram to introduce a copycat product - Reels.
  • Despite being banned from India, TikTok has over a billion downloads, has given rise to global sub-cultures, redefined the term ‘creator’ and even been used as a social justice instrument.
  • Apart from the TikTok onslaught, Apple pulled the plug on Facebook’s data collection practices with a simple iOS update. Facebook estimates the related loss at $10 billion this year.
  • We take a look at what has led to Facebook’s decline over the years. Is it purely competition from likes of TikTok? Is it Facebook’s shady handling of privacy? Or is there something more?
The Washington Post
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