Is Facebook in trouble?
Is this the end of Facebook? We are hearing more and more reports about the shrinking numbers of Facebook users in North America. In fact this is nothing new and Facebook had already been concerned about it for quite a while. Back in 2016, Facebook users between the ages of 12 and 17 were already moving over to more innovative platforms like Snapchat and Instagram… which is owned by Facebook. Their image is also being tarnished by growing debates over data protection, which came fully to light during the Cambridge Analytica scandal in 2018.
Initially a social network, Facebook is becoming a social media conglomerate
The rising popularity of Instagram is undeniable: when Facebook bought it for 1 billion USD in 2012, the platform had 30 million active monthly users and was generating zero revenue. Today, it has 1 billion users and steadily increasing ad revenue, which already stood at 1 billion USD in 2016. Its exclusive focus on visual content is massively popular with millennials and generation Z (the under-25 set), who have soured on Facebook due to the massive array of features and its adoption by older generations.
Facebook has therefore managed to put a strategy into place that allows it to keep its original users thanks by incorporating innovative tools. This has meant keeping a close eye on the competition, plus the acquisition of a series of emerging platforms, made possible by the company’s financial means and expertise. In 2017, for instance, when Facebook acquired TBH, a platform popular with teens, it attracted 5 million users – exchanging a billion messages – in only three months. Over the past two years, Instagram has also successfully increased its range of formats and features, borrowing heavily from Snapchat (stories, masks, live streaming), which had in fact rebuffed a takeover offer from Facebook back in 2013.
Its chief rival outside Asia cannot compete on the monetisation front
Since then, Snap has been suffering a decline, which recalls the difficulties encountered by Twitter, and its IPO in early 2017 fell short of expectations. This has gone hand in hand with serious uncertainties over the strategic direction of a company struggling to keep its users’ interest and to monetise its business. Attempts to turn the tide on this situation, such as an overhaul of the Snapchat format and the launch of Spectacles smart glasses, were met with a tepid response. But other social media giants, such as the Chinese Tencent (WeChat’s parent company), are still voicing their support for Snap. In this clash of the titans, it is becoming increasingly hard for independent players to carve out a foothold for themselves and to keep it.