Major reasons behind the downfall of Meta’s empire

The worst decline of a tech giant in the last 2 decades

Image by Author

Meta, a company that was once listed in the top 5 valuable US companies, and was adding 100 million active users almost every year has dropped more than 70% in its value in just one year. The downfall of Facebook started when Facebook lost $230 billion in a single day on Feb 02, 2022.

Major Reasons for Meta’s downfall

1. The biggest reason for Meta’s downfall started when the news came about its Data Scandals. Facebook shared its user’s data with UK-based analysis firm Cambridge Analytica which used the personal information of 87 million Facebook users without their consent to manipulate the voters during the 2016 US Presidential elections.
2. Another reason for Meta’s downfall is users leaving Meta apps and going to its competitors like TikTok. After this Meta started to copy the idea from TikTok and first they created Instagram Reels and then a new app- Lasso which failed and shut down in July 2020.
3. Another reason that played a big role in Meta’s downfall is the global decline in demand for digital advertising. Due to global economic and geopolitical reasons, there is a huge decline in the advertising budgets of companies. It caused a 20% decline in Meta’s revenue as almost 97% of their revenue comes from Ads.
4. In 2021, Apple introduced an App Tracking Transparency feature for iPhone. After this feature, Facebook was not able to track user activities without user consent and its revenue got hit by around $10 billion.
5. Another reason for Meta’s decline is major concerns from the content creators on its platform. Meta takes almost 97% of the advertising revenues and only 3% goes to the content creators. This is way less than YouTube and TikTok and is a major reason that creators are moving away from Facebook and Instagram to YouTube and TikTok.
6. Another reason for Meta’s decline is shocking confessions from its own employees claiming that Meta is manipulating the people and countries using its power.
7. And lastly, the major reason behind Meta’s downfall is their huge investment in Metaverse. In 2021, Meta announced its plan to invest $10 billion in the metaverse and launched its first Metaverse platform Horizon World which didn’t get much traction after its release, and now Meta is struggling to gain users on its platform.

Meta is going through a tough time. Meta’s stock dropped to $88 on Nov 3. Recently Meta laid off 13% of its workforce. But Mark Zuckerberg is very positive about their investment in the metaverse. Meta is spending billions in the metaverse, so it will be interesting to see where this investment will take Meta in 2023.

Thanks for reading. If you want to know the full story of Meta's decline, you can check this youtube video.

If you want to hear more from us please like, share and follow.