Facebook parent Meta recently announced its second-quarter results, revealing that it had missed its revenue and earnings targets. More worryingly, the company also experienced its first ever drop in revenue along with a bleak third-quarter forecast that suggests the social media behemoth is heading into stormy and uncharted digital waters.
In response to the gloomy forecast, Meta quickly responded by raising $10 billion in its first bond offering. The move is expected to pave the way for more significant funding for the Metaverse and virtual-reality projects. But could the combination of TikTok capturing the attention of younger audiences and Meta's obsession with going all in on the Metaverse be the start of a gradual decline, or even its ultimate downfall?
On the surface, Facebook attempted to brand itself as the digital equivalent of a town square, where friends and communities collaborated and communicated. However, anyone who dared to take a peek behind the curtain quickly learned that it was built on the foundations of advertising. Ironically, the users of free services such as Facebook, WhatsApp, Instagram, and Messenger had become the product. The harmless-looking, easy-to-use apps on our smartphones now require a college degree to understand the terms of service.
The bad news for Meta is that tech-savvy Gen Z audiences who cannot remember a time before the iPhone are now calling the shots. Predictably, they don't want to hang out on their parents’ and grandparents' platforms. But when Facebook attempted to go toe to toe with TikTok and replicate the features of the short video sharing app with Instagram Reels, it resulted in a backlash from Kim Kardashian and Kylie Jenner, who shared their frustrations with their combined 700 million followers.
There is a saying that history doesn't repeat itself but often rhymes, and in big tech Zuckerberg will have fond memories of the moment when he turned down $1 billion from Yahoo to buy Facebook. In 2013, the Facebook CEO found himself on the other side of the fence when he allegedly told Snapchat's Evan Spiegel that if he refused to sell the social media platform’s owner company Snap for $3 billion, Facebook would crush them.
Facebook went on to launch the ill-fated “poke” feature, but would find eventual success with the Snapchat-inspired “stories.” However, a downturn in the advertising industry, combined with Apple's privacy changes, is making it challenging to measure the effectiveness of running ads on iPhones, and piling on the pressure. As a result, winning the battle of attention is no longer as simple as the strategy of copying a competitor's apps and features.
Ultimately, Meta is having a very public identity crisis and frustrating its users, who don't want another TikTok clone.
In addition, users across the Meta network who have invested years building followers and networks are also learning that the shift to an algorithmically curated model means they don't actually have the community they thought they were developing. Instead, their tribe belongs to Meta, who will dictate the content that they see.
History repeating itself
For Zuckerberg, it's all about migrating to the next phase of Meta and building immersive digital worlds. Although Web 3.0 and the Metaverse are trends destined to rule the future, in reality that big shift is still many years away, and most Facebook users have little interest in purchasing a headset or the virtual reality project.. Many merely see it as yet another example of a tech solution to non-problems.
If this story sounds familiar, it's because it's a cycle we have seen many times before. Yahoo had a similar identity crisis that would eventually lead to its demise, and many will remember the moment when Netflix bravely killed off its DVD-mailing business to focus on streaming content instead. The difference with Meta's story is we are entering a turbulent period in the industry, and the world is arguably not quite ready for a shiny new tech solution that nobody asked for.
For example, those selling the technology are creating a vision of a future where we will work, shop, and socialize in a self-contained digital world. By contrast, a recent study revealed that working in virtual reality for a week actually made people less productive. In addition, a recently leaked Meta memo around job cuts, bonus reductions, and a request for managers to refer any employee "coasting" to its HR department suggest the company’s culture is far from harmonious. But only time will tell if the widespread change being implemented both in and outside of Meta will pay off.
The reality check ahead
It is widely reported that some of the biggest names in tech were founded to distract us all and keep users endlessly scrolling rather than unite them online. Facebook's founding president Sean Parker also admitted that in 2017 he had purposely created something addictive that exploited a vulnerability in human psychology to keep users on their apps. Although the platforms may change, a glance at your immediate surroundings will reveal that the same discovery algorithms are providing a dopamine rush via an endless bombardment of short videos and snackable content.
There is an increasing concern about how this constant barrage of content is rewiring our brains, shortening attention spans, and even programming the daily narrative. Instead of building something that brings zero value to the real world, what would happen if we collectively dared to put the phone down and be bored, or just daydream, again?
Analysts are currently trying to predict if Meta has what it takes to move beyond Web 2.0 and the long shadow of Facebook, or whether it will follow the same path as the ill-fated MySpace. But maybe it's an opportunity to explore a new approach that solves real problems and makes a difference in this world. Alternatively, you could replace endlessly scrolling on your smartphone with strapping a headset to your face and joining Meta’s vision for an immersive digital future. The choice is yours, but make sure you choose wisely.
More from Cybernews:
Subscribe to our newsletter