The company of Zuckerberg and co., initially conceived as a service platform for Harvard University students, has come a long way. But now Facebook, after almost 20 years, seems to be in crisis.
From service to monopoly
Following the decision to expand and become a social network open to all, the behemoth has grown by leaps and bounds, thanks also to the lack of adequate competition for at least a decade and the large revenues from advertising, the real lifeblood of the company.
The services of geolocation, communication, chat and tags have succeeded in making the world truly smaller and the blue social network has succeeded in uniting young people and others around the world to the point of becoming a true monopoly in the sector.
Following its listing on the stock exchange, the price went up until 2021, but with an increasingly slow pace.
The situation has changed
The advent of Twitter, Instagram and TikTok changed the situation.
Facebook was suddenly no longer alone, with an average older clientele, unable to attract the younger generation.
More and more young people are in fact attracted by Instagram (now owned by Meta) and by Tiktok, which seems to be the real executioner of the social network par excellence.
Advertising companies have rapidly migrated to the social network of “dances” and sketches, which seems to capture users’ attention very effectively.
This situation, combined with the recent stock market crash of 25% of its value due to corporate results far below expectations, has contributed to a growing concern on the part of markets and owners. Last year, Facebook renamed itself Meta, reorganizing internally and setting a clear direction for the future.
The company is betting everything on the Metaverse, which, according to all insiders and investors, is the future of interaction and therefore of marketing.
However, despite the huge investments and progress made, this project is still in an immature state and not ready to incorporate the thirst for modernity of the younger generations.
On the one hand, Meta is trying to revolutionize itself, but it is still not taking off, and on the other hand the need to improve its accounts and attract users is putting Facebook in the classic Mexican stalemate of western films, in which any move could be the wrong one and the result is a waste of time.
Facebook in crisis: technical and legal problems
Facebook has recently made it clear that it will have to make choices. In the spectrum of hypotheses being examined by the partners, there is also the partial (Europe) or total closure of the social network in order to concentrate energies on metaverse and acquisitions.
However, these hypotheses are closely linked to the company’s difficulties in exchanging data from America to the old continent and vice versa.
Complicating the situation is the issue of privacy, which seems to be a hostile problem for Zuckerberg.
The almost three billion users are in fact decreasing day by day and more and more users are not active and therefore are not potential advertising clients. This is also happening because of growing inefficiencies and data breaches by the parent company.
The impasse is due to the removal of the Identifier for Advertisers (IDFA) and Apple’s introduction of App Tracking Transparency.
iPhone users will now have to explicitly give their consent, making access and usage more complicated and instilling doubt in people.
Facebook’s marketing has collapsed as a result of this move, and now it has to react, but it won’t be easy.
From advertising alone, it is estimated that the giant will lose 10 billion in lost revenue this year.
The solution
The main road to remedy the problem follows two plans that must proceed in unison.
The first involves a series of targeted acquisitions aimed at broadening the audience to a younger audience in order to differentiate and attract new investment as done with Instagram and WhatsApp over the years.
The second envisages a massive development of the metaverse so as to be the social reference for this.
There is competition in this field too, but no one is ahead of the others, and this bodes well for Zuck and co.
Source: https://en.cryptonomist.ch/2022/02/28/facebook-crisis/