Why Is Facebook Faltering?

Social media giant Facebook recently rebranded itself as Meta. While Mark Zuckerberg, co-founder and CEO, hopes to inspire people and “build awesome things,” the company he helped build has lost more than half a trillion dollars in market value since August of 2021.

Meta was once the sixth-largest company by market cap, but since August of 2021, they have slipped out of the top ten rankings. Rebranding problems aside, one apparent hit to Meta’s cash vault is a tremendous loss in ad revenue.

Facebook: The Titan of Advertising

In previous years, Facebook excelled in tracking data and collecting information about what other websites users visited, and they were able to make billions of dollars selling advertisements for products that their users did not know they needed.

They were experts at precisely targeting advertisements. In the world of social media and online advertising, this was a game-changer. But due to recent changes in Apple’s privacy settings, Facebook’s old business practices no longer hold up.

Apple Takes On Facebook

Apple introduced a privacy feature last year that restricts user tracking. Companies won’t be allowed to track users and collect information like they used to. Investors noted this change by Apple, and it resulted in Meta’s market value plummeting by more than $300 billion.

Advertisers are now testing other social platforms including Amazon, TikTok, and Snap, all of which are proving competitive with Facebook. For example, TikTok boasts lower ad pricing than Facebook. Companies that depend heavily on e-commerce sales are shifting their ad money to Google and Amazon, resulting in a $10 billion hit to Facebook’s ad sales this year.

Facebook: Too Future-Focused for its Own Good?

Facebook keeps looking toward the future, but its present-day problems keep piling up. The rebranding of the company to Meta has been tumultuous: the news feed on the platform is now called Feed; employees formerly known as Facebookers became known as Metamates. Changes such as these have resulted in mocking on other platforms like Twitter.

These unsophisticated company updates, combined with a failed attempt to launch their own cryptocurrency and further accusations from a whistleblower, have positioned the company to possibly lose even more.

Shares in Meta have fallen more than 40% over the past six months, and the number of users has declined.

Meta also owns Instagram, WhatsApp, and Oculus. They are betting big on the metaverse by developing their own ecosystem. The trouble for the company is that broad adoption is still years away. Loyal users enjoy the Facebook marketplace, where the buying and selling of goods is simple and straightforward; however, it remains to be seen if these users will join other aspects of the platform, such as the metaverse.

A decline in users, ad sales tumbling, and a slow adaptation to living life in a virtual world could continue to spell trouble for Facebook. The company is fast approaching its twentieth anniversary, yet it seems shockingly out of touch.

Facebook will doubtless not accept failure, so it will be fascinating to see how they handle these accumulated challenges.

Their “move fast and break things” CEO may need to slow down to ensure the company continues to innovate in a way that resonates, or the results could prove even more disastrous in the long run.

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