Social Media In Flux: Existential Threats and Generative AI’s Impact

Key questions about the future of social media that brand marketers should consider

Mirroring the stormy macro-state that the tech industry has found itself in this year, social media has also been in a state of flux, as major platforms confront existential-level threats and brace for the impact that generative AI will have on user-generated content. Closely aligned with two of our Outlook 2023 trends, the end of digital media duopoly and the rise of synthetic media, one could say that social media is entering a period of interregnum as well. For brand marketers, this is a crucial time to keep your eyes open and adapt your social strategies.

In particular, brands should be keeping a close eye on the following questions, whose outcomes will reshape the social media landscape on a global scale.

Will Meta Solve Its “Morale Crisis” Soon?

Meta is at an interesting cross-road. The company’s big bet on the metaverse is not quite materializing as soon as CEO Mark Zuckerberg may have hoped, and the economic headwinds are forcing the company to cut down on costs. Zuckerberg declared 2023 the “year of efficiency” — In March, the company announced it would lay off 10,000 workers and cut 5,000 open roles as part of a management restructuring. This is on top of the mass layoff in November that eliminated about 13% of Meta’s workers at the time. While Wall Street responded positively to the cost-cutting measures, inside the company, employees are reportedly facing a “morale crisis,” per the New York Times, as mass layoffs and a reversal on its remote work policies has led many employees to question the future of the company.

Yet, when you look at Meta’s most recent quarterly earnings report, everything seems just fine. In fact, the company reported its first increase in sales in nearly a year due to continued improvements in its ad business, which the company attributed to Reels, its TikTok competitor feature on Instagram. The company also reported gains in monthly active users and, more importantly, in overall app engagement. Expectedly, the market responded warmly to the report and sent its stock surging by more than 12% in after-hours trading. If Meta can keep this momentum going, it’d perhaps be able to hire some people back and improve morale. That said, the long-term issues that Meta faces go deeper than a morale crisis.

The long-term issues that Meta faces go deeper than a morale crisis.

The discrepancy in the positive financial results and the reportedly employee morale crisis less than a month ago reflects the state of flux that Meta is in. The cost-cutting efforts and doubling down on Reels, which reportedly includes offering advertisers discounts of as much as 25% for those willing to spend a certain amount testing ad products on Reels, were evidently effective at improving the company’s bottom line. However, neither are sustainable in the long run, nor do they address the more existential issues that the company faces. For Meta to have a future as a true “metaverse company,” it will need to find a way to bring online socialization into 3D immersive environments. Yet, the financial pressure is forcing the company to focus on competing with TikTok while It waits for the metaverse adoption to pick up in earnest.

The financial pressure is forcing the company to focus on competing with TikTok while It waits for the metaverse adoption to pick up in earnest.

Previously, Meta has claimed that early successes with AI tools had helped offset the billions in lost ad revenue due to Apple’s privacy changes taking effect last year. But some marketers have reportedly expressed concerns over being forced to relinquish too much control to Meta. For brands, Facebook’s new priorities on cost efficiency and Reel ads are a blessing, but they also expose advertisers to a sense of false complacency as the social media landscape rapidly evolves.

Update 06/09/2023: Meta’s employee morale remains low, according to a new Washington Post report. Even before the layoffs at the end of May, an Meta employee survey conducted by the company found that just 26% of employee respondents expressed confidence in leadership — a 5% drop from October 2022, according to the report.

Will Twitter Be Replaced?

Another social platform suffering from a morale crisis recently is Twitter, which has seemingly been on a gradual death spiral ever since billionaire Elon Musk took over six months ago. Multiple rounds of layoffs and firings have been common, and Twitter’s employee count is now down to only 10% of its pre-takeover number. Although the company no longer reports its earnings as a privately held company, a recent WSJ report suggests that Twitter’s revenue and adjusted earnings reportedly fell about 40% year-over-year in December 2022, citing an advertiser exodus following Elon Musk’s takeover.

Twitter’s employee count is now down to only 10% of its pre-takeover number.

Even worse to Twitter’s legitimacy as a social platform, which has always functioned as a public town square, Musk’s recent fixation over revamping its “blue check” verification system has alienated many public figures and celebrities, ranging from Stephen King to LeBron James, as they refuse to pay for the blue marks (as part of the Twitter Blue subscription) and distancing themselves from the platform by publicly denouncing their restored blue check.

In addition, the decision to charge for its previous-free API access for third-party integrations also alienated some public institutions and media outlets. Twitter has since restored free API access for emergency, weather and transportation alerts for governments and public services, but the reputational damage is done.

Ever since the takeover bid was finalized, there has been a wave of new platforms vying to replace Twitter. Notable attempts so far include Mastodon, T2, and Artifact, but none came close to replacing Twitter as a viable alternative. In late April, however, user interest in Jack Dorsey-founded Bluesky skyrocketed, as the decentralized social network opened up invitations to more beta testers and reportedly sped past its first 50,000 users. Partly, the surge in interest was stoked by a viral “hell thread,” which coincided with the platform opening up its access by allowing users to send out invite codes. Prominent Twitter users such as Representative Alexandria Ocasio-Cortez and Chrissy Teigen have joined Bluesky, which, in turn, drew more interests to the platform.

Yet, there are still many hurdles for Bluesky to fully replace Twitter as the de-facto town square of the internet. For one, the unruly nature of a decentralized platform, plus its lack of moderation policies as a new platform, means that it still has a long way to go to become a brand-safe platform for advertisers. (Unsurprisingly, the trending post section of Bluesky is full of nudes.) The excitement that a new social platform generates is often short-lived these days, and as more users join, the early adopters often decamp for a new site. To avoid that fate, Bluesky will need to win over a critical mass of dissatisfied Twitter users, and more importantly, to keep them engaged on the platform, before the novelty factor wears off.

The excitement that a new social platform generates is often short-lived these days.

For years, Twitter has been a playground for brands to try out their online personas and participate in cultural moments. If Twitter were to continue its decline, brands may lose an important social channel for organic impressions and potential viral moments. Perhaps one of the Twitter alternative platforms will rise up to the occasion and take over the mantle. Or perhaps Twitter is a one-off phenomenon unique to the platform era, never to be replicated again. Either way, marketers will have to wait and see.

Will TikTok Be Banned In the U.S.?

Since 2020, TikTok has been the hottest social platform, although one could argue It may be the least social platform of all. Its algorithm-driven For You feed eliminated the need to follow the right people to curate your feed, and Interactions between users are primarily encouraged to take place in the comment section rather than DMs. It took the vertical, short-form video format mainstream and spun a homogenizing TikTok-fication of other social (and non-social) platforms, prompting apps from Instagram and Snapchat to Klarna and Spotify to incorporate short-form video into their offerings.

Yet, despite its continuing success, TikTok is facing an existential threat of its own. Following its ban in India in 2020 over national security and privacy concerns, the Bytedance-owned app may be facing a ban in the U.S. as well, as regulators mount an refreshed campaign following former president Donald Trump’s failed attempt to install a ban.

Despite its continuing success, TikTok is facing an existential threat of its own.

In March, the Biden administration threatened to ban TikTok if it didn’t find an American owner. The company’s current CEO, Shou Zi Chew, was summoned to DC for a congressional hearing. At the same time, a group of senators introduced the RESTRICT Act, a bill authorizing the government to ban the app and others like it. On April 14, Montana becomes first state to approve a full ban of TikTok. In early May, it was reported that Eric Han, the executive tasked with leading the US Data Security Trust and Safety team, a separate entity created in December to convince the government that the app shouldn’t be banned, is l;aving the company. Overall, the signs are not pointing in TikTok’s favor.

At the moment, about a dozen countries have implemented total or partial bans on access to TikTok, with most of them banning TikTok on government devices due to national security concerns. A nationwide U.S. ban could potentially prompt more countries to consider restricting TikTok access, and leaving the market open for competitors such as Instagram Reels or YouTube shorts. Regardless of how that plays out, the TikTok-fication will likely continue among social platforms, making short-form video a creative format that brand advertisers must master.

Given that TikTok has been a leading platform championing shoppable social content and features, banning TikTok in the U.S. would also have a huge impact on the development of social commerce, for the company would be losing out on the biggest consumer market In the world. Interestingly, despite gaining popularity in some international markets such as Indonesia, TikTok’s social commerce initiatives have been struggling to attract merchants in the states. The latest survey data from Modern Retail found that only 11% of U.S. consumers say they shop on social platforms “a lot,” or “often.” Among that 11%, Meta-owned apps were preferred over TikTok: 49% said they trusted Facebook 21% said they trusted Instagram. TikTok came third at 12%. The TikTok Shop feature launched in November 2022 has been reportedly struggling to attract merchants in the U.S. as well.

TikTok’s social commerce initiatives have been struggling to attract merchants in the states.

For the past few years, the growing presence of TikTok has pressured the likes of Instagram, Snapchat, and YouTube to keep up with the booming popularity of short-form videos and social commerce features. As TikTok’s efforts in spearheading shopping features stalled, so did the similar initiatives from its competitors. Instagram pulled its live commerce feature after it failed to gain momentum, and YouTube’s ad revenue continued to decline YoY, despite adding shoppable features to its Shorts formats last year. Overall, no one seems close to figuring out how to make social commerce work In the U.S., and a nationwide ban of TikTok would likely eliminate any competitive reason left to keep testing social commerce features.

In conclusion, if it comes to be, a U.S. ban on TikTok would further fragment our social media landscape, potentially putting an end to the platform-driven era that birthed and defined social media so far. As more alternatives seek to fulfill the entertainment and social needs of users, brands will need to better understand where their target audiences reside and design campaigns fit for each social platform.

Generative AI’s Impact on the Future of Social Media

While the major social platforms may be facing different types of crises, be it mismanagement or regulatory, they are also facing the same existential-level disruptor in generative AI. The logic behind it is simple — All major social platforms are monetized primarily via targeted ads on top of the attention amassed through the enormous amount of user-generated content. Not only can generative AI make the social media ads more dynamically targeted, it will also lower the barrier to content creation, opening the flood gate of even more content vying for our already fragmented attention. Overall, the two apparent consequences of integrating generative AI into social media — lowering the cost of creating endless arrays of personalized ads while gaining more content to monetize against — would likely turn out to be net positives for brands.

If generative AI continues to take off, soon the key differentiating point between social platforms will be how good their integrated AI creative tools are. As brilliant as it may seem, generative AI doesn’t create content on its own; it still needs someone to prompt it. And in the future social media landscape, the people with the best content ideas will inevitably turn to the platform with the best AI tools to help them execute their prompts. Ease of access and use of these future AI integrations will also become an influencing factor as well.

The people with the best content ideas will inevitably turn to the platform with the best AI tools to help them execute their prompts.

At the moment, generative AI is still mostly limited to texts and images, with some startups such as Runway and ModelScope working on text-to-video generation; so far, their outputs have been rather rudimentary. Given the popularity of the short-form video, whichever social platform successfully integrates generative AI tools capable of generating high-quality short-form videos stands to gain a massive competitive edge in attracting creators. On the flip side, however, AI-generated content can be created quickly and easily, which could lead to increased competition for creators, making it more difficult for creators to stand out and earn a living from their content.

Given the cheaper labor cost involved with AI-generated content, it may seem inevitable that social media platforms, hungry for profits, will eventually find new ways to monetize synthetic media. Still, the question remains whether a content feed populated mostly by AI-generated content would be a compelling one for social media users. For one, some artists are already rejecting AI art on ethical grounds. More importantly, part of what makes user-generated content compelling is their authenticity, which AI content inherently lacks. Sure, AI-generated content can be compelling and entertaining in its own way, but it will not be able to provide us with the same level of connection and authenticity that we get from human-generated content.

Therefore, it is likely some social platforms may choose to counter the wave of AI-generated content by committing to only non-synthetic media, or at least clearly labeling AI-generated content, as both an ethical stance on compensating creative labor, as well as a brand safety argument for safeguarding content.