Austin Johnsen knew his Facebook use had dwindled over the past couple of years, but it wasn’t until recently that he and his wife realised just how little they used the world’s largest social network. “We got married three years ago and we hadn’t even updated our status that we were dating,” says Johnsen, a tech employee living in the San Francisco Bay Area who joined Facebook in 2004. “Back in the heyday that would have been something you add right away.”
Johnsen, 38, hasn’t stopped sharing important life updates online. He just doesn’t do it on Facebook. He posts some pictures of his children to a private group of friends and family on Instagram, and most of his conversations happen on Apple’s iMessage, which he says feels more intimate and personal. “Even if the features are there, it just feels like a ghost town,” says Johnsen. “The network effects work in the down direction as much as they do in the up direction. You don’t want to be the one weirdo forcing your friends and family to go back to Facebook.”
Meta Platforms remains far and away the world’s biggest social networking company, with 1.93-billion daily users on Facebook alone, in addition to vast numbers on Instagram and WhatsApp. But for the first time in its almost 20-year existence, the network’s daily user base shrank over the holiday quarter, helping send its market value down more than $300bn (about R4.5-trillion) in the ensuing weeks and reinforcing the perception that its best days may be behind it. Facebook has intense competition from long-running rivals such as YouTube and Snapchat, and buzzy newcomers such as TikTok, as well as iMessage, FaceTime — also owned by Apple — and Discord. Then there are other chat services that may not initially seem like direct competitors.
Though Meta’s public, feed-based service has long been the dominant form of social networking, it’s always competed with other ways to socialise and share on the internet. The company has leant heavily into many of them — private messaging, video, virtual reality — as a way to stay ahead of shifting tastes.
Its challenges have come not only from product development shortcomings, but also from the damage it’s done to its own brand. A string of privacy issues has been eroding trust in Facebook for years, pushing some users towards other services on which messages and photos are more private. In the US, the company’s most valuable advertising market, its user base, has been stagnant for two years. In 2021 66% of US adults used Facebook weekly, according to a survey from Forrester Research, down from 69% a year earlier. Among young people, a group for which Facebook faces more competition, the declines are steeper. Just 49% of 18- to 24-year‑olds used Facebook weekly in 2021, down from 55% the previous year, Forrester found. That meant video app TikTok, which was used by 50% of people in that age group, was more popular than Facebook for the first time.
The problem for Meta is that it needs more than one fix, says Mike Proulx, a research director at Forrester. Rivals such as TikTok have come up with new ways for people to share, such as letting users post a music video or a clip of them reacting to someone else’s post, sending Meta scrambling to copy the new features. In addition to privacy concerns, Meta’s reputation has been damaged by the idea that it’s a place full of “old” people, making it less cool for teens. “Facebook is losing relevancy,” Proulx says.
CEO Mark Zuckerberg has been preparing for this transition for years. Meta spent an astounding $19bn (about R287bn) to buy WhatsApp in 2014 to jump-start its private messaging business. Barely a month later it bought virtual-reality company Oculus, again illustrating his belief that feed-based communication was just one of a number of growing ways for people to share.
In 2019, Zuckerberg argued that private messaging would supplant feed-based interactions as the main way people interact on his company’s services. “I expect future versions of Messenger and WhatsApp to become the main ways people communicate on the Facebook network,” he wrote.
Sure enough, private messaging has exploded in popularity worldwide in recent years. Messaging apps were used by almost 3.1-billion people in 2021, according to US-based market research company eMarketer, more than 500-million more than in 2019. That figure is expected to grow by an additional 400-million by 2025. Meta’s messaging platforms appear as strong hedges against erosion of its traditional social networking product.
Some of this popularity is driven simply by rising smartphone use around the globe, but an increasing interest in privacy, inspired in part by Meta’s own practices, has pushed people towards services that are often advert-free and encrypted. Last year, Forrester found that just 41% of US adults trust Meta; in the UK only 26% did.
Byron Perry, a 38-year-old living in the Bay Area who runs a series of news and entertainment websites in Asia called Coconuts, joined Facebook almost immediately after it started. He’s now all but abandoned the social network for private messaging, citing privacy concerns, though he still uses WhatsApp, which is encrypted. “I’ve just really been turned off by the scandals Facebook has been involved in,” he says. “I’m so aware of how much everything that I do is quantified, turned into data and then monetised.”
Mark Zuckerberg has reason to talk up the competition: it’s a way to counter accusations that Meta, which is facing a federal antitrust lawsuit, is an anticompetitive monopolist.
Competition is intense in private messaging. Meta’s WhatsApp has more than 2-billion users globally and is the top private network in countries such as Brazil and India. But Meta faces stiff competition from leading services in Asia, including Line in Japan, Kakao in South Korea and WeChat in China. Messenger, Meta’s other messaging service, saw more than a 20% decline in users in Japan and South Korea in 2021, according to eMarketer. Meta doesn’t operate in China.
In the US, Meta’s messaging ambitions have run up against an increasingly familiar foe: Apple. Zuckerberg has called iMessage Meta’s “biggest competitor by far” as long ago as 2018. He suggested in January 2021 that Apple’s success results from unfair advantages, such as iMessage coming already installed on iPhones.
Zuckerberg has also started describing TikTok as a significant competitor, noting that short-form videos are becoming increasingly popular with younger users. “People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly,” he said during Meta’s last earnings call. He has reason to talk up the competition: it’s a way to counter accusations that Meta, which is facing a federal antitrust lawsuit, is an anticompetitive monopolist.
Still, Zuckerberg’s concerns about being outflanked seem genuine. Meta has copied some of TikTok’s product for its own apps and in 2019 it began testing Reels, a rival service for short videos. The feature exists inside Facebook and Instagram. Zuckerberg said Reels, which launched globally in 2020, is the company’s “fastest-growing content format by far”.
An issue for Facebook’s main app is that its trouble keeping pace could accelerate if it’s no longer seen as the inevitable destination for social networking. When Jenna Vassallo, a 36-year-old Boston resident who works in online marketing and does freelance photography, joined Facebook around 2005, part of her motivation was that everyone else in her circle seemed to be using it. Facebook “felt like a necessary evil”, she says. Her “friends and family used it for everything”.
In the past few years Vassallo’s Facebook use has dwindled to almost nothing. It’s been replaced by other services — some Meta-owned, such as Instagram, and some competitors, including group message threads and Apple’s FaceTime. Other people seemed to be making their own migrations, she says. “Being absent from Facebook stopped feeling like an issue.”
More stories like this are available on bloomberg.com
— Bloomberg
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