“The era of hypergrowth is behind us”

Faced with structural problems reinforced by the global economic context, Meta is preparing its first massive wave of layoffs for Wednesday, according to the US press. But despite its difficulties, Facebook’s parent company retains assets.

What is happening in Meta? A week after its fall on the stock market, the company that brings together Facebook, WhatsApp, Messenger and Instagram is preparing, this Monday, November 7, the first wave of mass layoffs in its history, according to the Wall Street Journal, which refers to the Wednesday date for the official announcement. Several thousand of the group’s 87,000 employees could be affected.

Indeed, Facebook’s parent company is suffering from long-standing structural problems, accentuated by a gloomy global economic backdrop. Meta suffers first of all from the huge investments made by Mark Zuckerberg to develop the metaverse, the Internet of the future where the user will be able to interact in a virtual world in augmented reality. Still in its infancy, this financial black hole has swallowed 21,000 million dollars in two years, without convincing investors or the public.

A deserted online world

Horizon Worlds, a virtual reality platform presented as the “first brick” of the metaverse, thus brings together less than 200,000 monthly users after ten months of existence, according to the Wall Street Journal. The online world is apparently a desert world and the future of the metaverse leaves most observers skeptical.

“It is impossible to predict the future of the metaverse, but what has been done is not very profitable at the moment, observes Dominique Boullier, sociologist of digital uses at Sciences Po Paris. These investments do not give a good image of the group. : if it is normal losing money still represents significant proportions.

The “metaverse runs the risk of remaining in a niche,” says Virginie Clève, a digital strategy consultant. This reminds of Second Life [un univers virtuel sorti en 2003, NDLR], which fascinated and completely ran out of steam. Especially since the energy cost necessary for its operation is colossal and, in the current context, seems unrealistic.”

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Lack of trust

Thought to become the future of the Internet, Mark Zuckerberg’s crazy project also raises questions about the respect of users’ personal data. “The purpose of the metaverse is to capture all user data through all of their activities, down to how they look in the virtual world, in order to monetize it, underlines Dominique Boullier. This strategy is likely to pose a problem with GDPR. [le règlement général sur la protection des données, texte européen, NDLR]. And users can also get tired of this kind of very privacy-intrusive permanent capture.”

Meta also suffers from its bad reputation in this area. Voted the “worst company” of the year in December 2021 by Yahoo Finance, the company saw its image tarnished by the Cambridge Analytica and Facebook Papers scandals. Despite its name change, doubts about its ethics persist and shrink its advertising revenue, already weakened by the global economic context.

“Meta is going through a negative phase in terms of reputation, Dominique Boullier points out. The company is suffering from a deterioration of its image with investors and advertisers. The investments continue, but the brands no longer have full confidence in the investments and no longer They want to put all their eggs in one basket.

Conflict with Apple

The company has also lost billions of dollars in advertising revenue due to the changes made by Apple in its mobile operating system in 2021. Criticized, the Apple brand has implemented greater protection of the personal data of its users, reducing the capabilities Target for targeted advertising.

The two giants are also in conflict over the 30% tax that Apple intends to apply since October to sponsored content that is broadcast on Facebook and Instagram, in addition to the one that already applies to purchases made within the applications. Mark Zuckerberg has thus recognized “problems with advertising targeting” that, added to aging, the decline in his audience and the fierce competition from TikTok, are melting his income.

“Far from bankruptcy”

But make no mistake: the company is still “far from bankruptcy”, recalls Virginie Clève. “Meta continues to generate considerable sums and is still very powerful,” explains the specialist. They are very far from bankruptcy, Instagram maintains strong growth, both in number of users and in monetization.

Therefore, the company has something to resist. “They have three irons in the fire,” explains Dominique Boullier. With WhatsApp, Facebook, and Instagram, Meta manages to balance itself: the flagship app differs by country, but overall, the company has a chance to get back on its feet. thanks to the diversity of its offers.”

Meta also retains the ability to effectively copy the innovations of its competitors and does not hesitate to “cut dead branches”, observes Virginie Clève. Mark Zuckerberg thus stopped the association that united Facebook with several press titles and welcomed the success of the “Reels”, these short videos directly inspired by the competitor TikTok.

“140 million [de Reels, NDLR] they are played on Facebook and Instagram every day, 50% more than six months ago, the Meta leader greeted at the end of October. “We think we are gaining market share with time spent on competitors like TikTok.”

Despite its loss of speed, the network thus retains almost three billion daily users worldwide in 2022, including 40 million in France, which it is not willing to lose. “It is difficult to leave a social network, comments Dominique Boullier, once a user has invested in it, making the decision to leave is costly, you cannot recover everything you have done there.

If the golden age of Facebook seems to be behind us, all is not lost for the queen company of social networks. “The era of hypergrowth is behind us, Meta is affected for the first time by the global economic context like any other company”, summarizes Virginie Clève. But we should not speak of twilight for all that, but of an era of maturity. Meta continues to generate stratospheric revenue.”

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