Meta reported a decline in revenue in 2022 for the first time in 10 years
Last year, Meta (Facebook, Instagram, WhatsApp) saw ad revenue decline for the first time since the social media giant went public in 2012. Its annual revenue decreased by 1% to 116.61 billion dollars.
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 Californian group, which has floated between macroeconomic constraints and fierce competition for attention for a year. of consumers.
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.
Thousands of layoffs and hiring freezes
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.
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.
Also read: It’s the end of the roaring twenties for tech giants who have been laying off en masse.
“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 enjoyable” for employees to work because “they will be able to do more.”
Significant losses for the Metaverse
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 sad reality: businesses and consumers don’t have the appetite for virtual worlds right now,” said Insider Intelligence’s Debra Aho Williamson. The billionaire said Wednesday that the metaverse remains a priority, but less urgent than AI.
Also read: How Google became toxic to its users
Efforts on artificial intelligence
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 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 catchy short 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.
Also read: Will TikTok suffer the same fate as Huawei?
