During the last decade, the business of Facebook < /strong>grew up non-stop year after year, dodging multiple scandals for disinformation, violation of privacy or its impact on the mental health of minors. That streak ended. Yesterday. Meta, name with which it was renamed. the parent company that dominates the social network market, announced yesterday a 1% decline in revenue for the second quarter of the year, which is its first drop since the company went out of business. It went public in 2012.
From April to June, Meta's revenue was $28.82 billion. On the other hand, profits stood at 690 million, 36% less than during the same period a year earlier. Both results have been below what was forecast by Wall Street analysts, who were already contemplating the company's first decline in its history. Although the company's shares have fallen 6.09% in the last five days, this Thursday they have recovered 6.55%.
The poor results of the owner of Facebook, Instagram and WhatsApp, among others, have multiple explanations. On the one hand, the slowdown in the economy due to the uncertainty caused in the markets by the war in Ukraine has led advertisers to reduce their spending. This problem has also hit Google, Twitter and Snapchat, other Silicon Valley giants whose business, like Meta, depends on advertising. “It seems that we have entered an economic recession that will have a wide impact on the digital advertising business”, has recognized the co-founder and bosses of the company , Mark Zuckerberg.
On the other hand, the change in the privacy policies of iPhones that allow the user to tell apps not to track their activity has made their ads less effective. That setback caused Meta to cut $10 billion in advertising revenue last year.
Another key challenge facing Meta is TikTok, a social phenomenon of Chinese origin that has not stopped growing until it has become the sixth most used platform on the planet. Seeing this as a threat, Facebook and Instagram have announced redesigns of their apps to increasingly prioritize vertical videos, thus mimicking the trend. a model popularized by its young competitor. Both networks will also boost their algorithms to duplicate recommended content to users from accounts they don't follow, a costly system that is currently under way. investing a lot of money.
Meta's revenue has fallen for the first time since 2012, yet the number of Facebook users continues to rise. During the second quarter of the year, these grew by 3% to 1,970 million, a figure that maintains it as the first social network on the planet. Its combined apps have 2.88 billion daily users, an increase of 4% compared to last year.
Troubles in the 'metaverse'
Although the Mark Zuckerberg's digital empire has been researching virtual reality for years, it was not until last October that he announced which began to focus its business on the so-called 'metaverse', an immersive internet more similar to the world of video games that has raised a lot of expectations. During the second quarter, the Reality Labs division, responsible for the construction of this space, suffered losses of $2.8 billion.
The bad news doesn't end there. And it is that just this Wednesday the Federal Trade Commission, which depends on the Government of the United States, presented an antitrust lawsuit against Meta to block the purchase of the virtual reality company Within, a blow that, if it materializes, will affect the country. He is fully involved in the company's plans to create the metaverse.
Meta now faces a period of cutbacks to reorganize its business and try to overcome all open fronts. “I hope we do more with fewer resources,” Zuckerberg has said. it will not be easy.