Facebook lost daily users for the first time in its 18-year history, the platform’s parent company Meta reported Wednesday, which chief executive Mark Zuckerberg attributed to stiff competition from fast-growing rivals like TikTok among young people.
Facebook lost around 500,000 daily users in the last three months of 2021, Meta’s quarterly earnings report revealed, falling from 1.93 billion logging in around the world each day to 1.929 billion.
Its number of monthly users stayed relatively flat at 2.91 billion, and growth across Meta’s other platforms WhatsApp, Messenger and Instagram was modest.
In a rare direct nod to competition, Zuckerberg emphasized the threat Meta faces from growth in video platforms like TikTok and YouTube as people watch more and more short-form videos online.
Zuckerberg noted Facebook has not had to deal with a major rival during its previous strategy shifts, describing the situation as “somewhat unique.”
“TikTok is so big a competitor already and also continues to grow at quite a fast rate,” Zuckerberg said.
He said Meta was investing heavily to develop its own short video product, Reels, to compete with TikTok.
Throughout its history, Facebook has been characterized by its pursuit of growth. Despite slowing in the U.S. and Europe in recent years, it has continued to grow by adding users elsewhere. Meta’s profitability also fell in the last three month of last year—it still made nearly $40 billion in profit last year—driving shares down more than 20% in out-of-hours trading Wednesday. Advertising is still Meta’s primary source of revenue and will remain so for the near future, though the company said ad-tracking changes by Apple and inflation will eat into this. Recently, Facebook has struggled to attract the attention of younger audiences online. TikTok, meanwhile, has risen rapidly to become one of the most used and downloaded apps in the world and shows little sign of slowing down. It’s now so popular that it has dethroned Google as the most popular internet domain, as of late 2021, according to Cloudflare (Facebook.com is third). The year before, TikTok was seventh.
Facebook rebranded as Meta in October last year, signaling a conscious pivot from social networks towards the metaverse, an interactive world of virtual and augmented reality. The metaverse is far from fully realized and Meta is not alone in investing heavily in the concept. Wednesday’s earnings showed for the first time exactly how much money Meta is pumping into the project. The company lost $10 billion from its virtual reality hardware division, Reality Labs, last year.
What To Watch For
Meta announced plans to change its stock ticker from FB to META on Nasdaq.
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