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.
The Key Facts
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.
Zuckerberg made a rare nod to rivals and highlighted the danger Meta faces due to growth on video platforms such as TikTok or YouTube, where people are watching more short-form video 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 stated that Meta had invested heavily to create its own short video product called Reels in order to be competitive with TikTok.
Facebook’s history has seen it pursue growth throughout its existence. It has grown by adding more users to its network, despite slowing growth in Europe and America in recent years. 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. Facebook’s recent struggles to draw younger users online have been a problem. TikTok is a rapidly growing app that has become the most popular and downloaded in the world. It shows no sign of slowing. 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). TikTok was number seven in the previous year.
Facebook changed its brand name to Meta in October 2013, signaling an intentional shift from social media towards the metaverse. It is an interactive realm of virtual and augment reality. Meta isn’t the only one investing in this concept. Wednesday’s earnings showed for the first time exactly how much money Meta is pumping into the project. Reality Labs, the company’s virtual reality hardware division that lost $10 billion last year, was responsible for this loss.
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