Why I think Facebook is a dying platform
In 1997, SixDegrees.com was launched, and social media was born, along with MySpace, Hot or Not and Friendster in the early 2000s. In the same year, Facebook (FaceMash at the time) was created by Mark Zuckerberg and his college roommates at Harvard, and they celebrated their one millionth user less than a year later. Facebook exploded in popularity, and 10 years later they reached 1.2 billion users worldwide. This has more than doubled since. However, in 2019, for the first time in social media history, Facebook saw a decline in the number of people using their platform.
In the US alone, their penetration rate fell from 67% to 62%, a loss of over 16.5 million users. This brought down Facebook’s users to below their rates in 2015. Although this rate may not look huge, when looking at the growth trends before the decline, Facebook seemed to be in a steady upwards trajectory. Facebook’s (now Meta’s) stock plummeted by $250 billion a few weeks ago, and I’m by no means an investor, but this sum makes me cringe. Why is this happening to Facebook, and why is their user base now in decline?
The first reason is the stereotype of a Facebook user. I asked my fellow Gen-Z friends to explain why they use other social media sites instead of Facebook. Nearly 70% of them claimed that it was because they saw it as a platform used solely by older people, and it is ‘uncool’ to be on Facebook. Interestingly, the stereotype of an older demographic using Facebook isn’t entirely true, as the highest proportion of Facebook users are between 26 and 35 years old, with nearly 80% of that age group in the US being an active user. This begs the question, what is creating the perception that Facebook is only used by older people?
When Facebook was launched in 2004, only a few months after I was born, it was the first real mass-used social media, in other worlds, the ‘golden child’ of social networks. Since then, there has been mass adoption of so many other social networks, like Instagram, Snapchat, and more recently TikTok, which all actively seek young users and tailor their sites towards youth. For example, TikTok directly caters towards my age demographic. Being a Snapchat user, I have seen countless TikTok ads between flicking through my friends’ posts, to the point they become mildly irritating. However, if I flip the coin, have I ever seen Facebook advertising on Snapchat? The answer is quite simply – no.
Facebook (and Instagram for that matter), have a habit of not innovating, and suffer the syndrome of not adapting to market pull, which is what has killed off companies like Blackberry, Blockbuster, and Polaroid in the past. When Snapchat came out with stories, Instagram and Facebook jumped on the trend by allowing you to post stories too. When TikTok blew up a few years ago, Instagram created reels which you could then post on Facebook. There’s a theme here. The other social networks are iterating, but Facebook is just bolting on other app’s innovations into their own software. It’s interesting when you take a step back and look at Facebook holistically – its most popular features were invented elsewhere. A huge problem with Facebook is that they just can't seem to be able to create new stuff. This might be why Facebook’s stock plummeted recently. It’s been 9 long years since Facebook actually made something new on their software, with the introduction of Graph Search in 2013. This allowed you to search things like ‘Nightclubs my friends like’ or ‘Steak restaurants my friends go to’. 9 years is an awfully long time. If I was an investor, I wouldn’t feel confident that Facebook was going to create the next big thing, even with the Metaverse looming.
I also think Facebook is becoming bloated as a product. It is starting to combine so many proven social networking models into its software. For example, you can buy and sell on Facebook Marketplace, talk to your friends on Messenger, share pictures and videos, put out short updates via stories and then share reels. Instead of attracting more and more people to become users, it is becoming too much of a generalised social media network. Facebook is trying to do too much, and in my experience isn’t doing it as well as the other networks who specialise in it. This is putting off existing users and deterring new, younger users from joining.
Graph Search sparked a lot of controversy among Facebook users, primarily about privacy concerns. Graph Search allowed you to look up scarily specific information about your friends on the app, sparking fears about how much data the site actually keeps on you. Unfortunately, this is a common concern for Facebook users, as the company has made slipups regarding user data, like the 2018 Cambridge Analytica scandal, where Facebook sold data captured on its own site to Cambridge Analytica, which violated Facebook's own terms and policies. Facebook paid $5 billion in a lawsuit, and promised to improve their data privacy, but since then there has been scandal after scandal after scandal, and the future doesn’t look too bright for Zuckerberg either.
A lot of the controversy surrounding the site came from the Trump campaign in 2016, many media corporations arguing that Facebook helped Trump win his presidency. One of these stories is about a group of teens from Macedonia who manipulated Facebooks algorithm to spread false rumours and conspiracy theories in favour of Donald Trump which got hundreds of thousands of likes and shares of Facebook. Admittedly, Facebook is a tech company not a media outlet, but Facebook still has a responsibility to control the spread of misinformation (or fake news as Mr Trump likes to call it) and help the public by providing a set of more balanced ideas. This is better for society, but bad for business, as someone will spend more time on the app if they are bombarded with things that support their views.
From a business angle, I think Zuckerberg and the team surrounding him will try and squeeze as much money out of Facebook as they can. You can use the Growth Market Share Matrix to review Facebook’s portfolio, which I’m using to predict how Facebook are going to approach the coming years. Facebook has a huge relative market share, with 2 billion users logging in every day. However, these users are decreasing, making their market growth rate low. According to the BCG Matrix Model, this makes Facebook a cash cow. I think Zuckerberg is going to try and milk this cow for as much as its worth, without killing it. For this reason, I don’t think we’ve seen the end of Facebook any time soon.
But when considering all my other points, I think that it’s inevitable that Facebook isn’t going to last much longer in the grand scheme of things. But to be fair, I don’t think this worries Zuckerberg one bit. This is the natural product life cycle which happens to all companies at some point. Look at Skype for example, when was the last time you used Skype to speak to your family abroad? I think we won't see the death of Facebook any time soon, and I don’t hope for it either. Facebook has a special place in my heart as something that really marks the beginning of the post-digital age. However, I wouldn’t be surprised if in 10 years, when Generation Alpha grow up and Beta is born, Facebook won't be a household name anymore. This isn’t necessarily a bad thing. Facebook is just part of Zuckerberg’s ever-increasing portfolio of products, and it’s inevitable that some will die, which is natural for a business, just as long as there is something to replace it. What will Facebook replace itself with though?
Sam Watson
28/3/22