Facebook Experiences Decline In Users For The First Time In 17 Years

Facebook is losing out on growth competition with TikTok. (photo: doc. unsplash)

JAKARTA - Facebook experienced a decline in users for the first time in the fourth quarter (Q4) of 2021, since its debut 17 years ago.

In the annual revenue report, Daily Active Users (DAU) on Facebook fell very slightly between the last two quarters of last year, from 1.93 billion to 1.929 billion.

Although this change is very small, it has happened to Meta's social media, which is quite disappointing, and the growth of its users has also stagnated.

Statistics show how Meta has struggled to stay relevant to younger users, many of whom are more interested in competing apps like TikTok. That puts more pressure on Meta's big stakes on the metaverse.

On the earnings call, Meta's CFO, David Wehner, said the decline in user growth was partly due to increased competition from other apps.

“We believe competitive services are negatively impacting growth, especially with a younger audience,” explained Wehner, who also cited rising Internet data prices in India as a reason for the slowdown. Facebook has around 350 million users in India, which is its biggest market.

Alternatively, there are many reasons why this decline in the number of users has occurred. In recent years, especially during the pandemic, how popular calls for people to “divorce themselves” from social media.

This is due to rampant COVID-19 misinformation and lax measures to prevent it, a lot of scams and the notion that the site allows malicious posts to be spread simply because it's popular.

The report also revealed that Facebook's first-quarter revenue increased from $27 billion to $29 billion, while analysts expect sales of $30.15 billion, according to Refinitiv. That means the company is experiencing growth of 3 percent to 11 percent year over year (YoY).

Although increased, but not as expected by analysts. The company reasons this because it is being hit by a combination of factors, including privacy changes on Apple's iOS and macroeconomic challenges. It blamed lower-than-expected growth in part on inflation and supply chain issues affecting advertisers' budgets.

There's also been a shift to products that don't generate as much revenue as their core news feed. For example, people spend more time on their Reels videos.

"On the impressions side, we expect continued challenges from increased competition for people's time and a shift in our in-app engagement to video surfaces like Reels, which earn money at lower prices than Feeds and Stories," said Meta.

Meta also describes its Family of Apps (FoA) as WhatsApp, Messenger and Instagram seeing revenue of US$32.79 billion with operating income of US$15.89 billion in the fourth quarter. Meanwhile, its Reality Labs segment generated $877 million in revenue for the quarter with an operating loss of $3.3 billion.

The report is Facebook's first since changing its parent company's name to Meta, in reference to the metaverse. CEO Mark Zuckerberg announced the name change in October last year following a series of troubling reports about Facebook, stemming from leaked documents his former employees shared with journalists, lawmakers and the Securities and Exchange Commission.

With the name change to Meta comes a new reporting structure. The company said in its latest earnings report that it will split its hardware division, Facebook Reality Labs, into a separate division, while its core business is FoA.