Historic decline in revenue for Meta challenged by TikTok
Meta, the California giant that brings together Facebook, Instagram and Whatsapp, saw its annual revenue fall for the first time since its 2012 IPO.
Meta (Facebook, Instagram, WhatsApp) is regaining users and investors, but looks weak from 2022, with ad revenue falling since the social media giant went public in 2012. Annual business fell 1% to $116.61 billion. due to the earnings release.
Its name was still up 19% in electronic trading after the Stock Exchange closed on Wednesday, as the market braced for a more brutal fall for the group, which has seen a year of macroeconomic constraints and fierce competition. consumer attention. In another positive sign, original social network Facebook reached two billion daily active users, up from 1.98 billion at the end of September.
In total, about 3.74 billion people use at least one of the company’s services (social networks and messaging) every month.
These pleasant surprises do not hide the reality of a company that has seen better days. In the fourth quarter of 2022, Meta halved its net profit to 4.65 billion. The economic crisis, competition from TikTok, and shrinking advertiser budgets due to Apple’s regulatory changes have hurt its revenue and profits, which has limited the ability of social networks to collect user data to sell ads.
11,000 jobs were cut
Like many big companies and their Silicon Valley neighbors, with the exception of Apple, Meta implemented a major social plan in the fall. The group cut 11,000 jobs, or about 13% of its workforce, and froze hiring until the end of March 2023. And it may not end. “We’re trying to eliminate certain levels, certain middle management positions (…) to speed up decision-making,” the group’s chief executive, Mark Zuckerberg, said on a conference call with analysts on Wednesday.
He wants 2023 to be the “year of efficiency” after 18 years of “rapid growth” and thinks it will be “more pleasant” for workers to work because “they will be able to do more”. His company has been troubling markets for a year, when the group first lost users to Facebook. Shortly after the name change and the announcement of its return to the metaverse, this parallel universe was presented as the future of the Internet, especially accessible through augmented and virtual realities.
But Reality Labs, which is responsible for developing the metaverse, widened its losses last quarter to $4.3 billion, after losing $3.7 billion in the third quarter and $2.6 billion in the second quarter. “Mark Zuckerberg will have to come to terms with the harsh reality that businesses and consumers are not currently interested in virtual worlds,” said Debra Aho Williamson of Insider Intelligence. The billionaire said Wednesday that the metaverse remains a priority, but less urgent than AI.
AI turn
Since this fall, AI is making a strong comeback as the star of new technologies thanks to ChatGPT, a generative AI software that uncovers passions. Put online in November by California start-up OPenAI, it is capable of typing all kinds of text and lines of computer code. Like Google, Meta was already working on generative artificial intelligence. Mark Zuckerberg specifically hopes that it will make it easier to create “videos, avatars and 3D images” for different platforms.
Artificial intelligence is also at the heart of the advertising world’s second-largest effort to encourage users to spend more time on its apps and generate more revenue from them. The company copied TikTok’s short and catchy videos with “Reels” and is now focusing on personalized recommendation algorithms that have contributed greatly to the success of its popular competitor.
It also needs to find a way to monetize them better, because at this stage interest in reels becomes a “revenue loss,” the leader admitted, as users spend less time on Facebook or Facebook’s central pages. “Instagram, more profitable. The algorithms should also help Meta sidestep a year-long challenge to Apple’s privacy policy. Artificial intelligence allows for improved targeting and effectiveness measures without collecting more data.
Insider Intelligence predicts that Meta’s global market share will fall below 20% this year after reaching 22% in 2021.
