Meta: A Post-Mortem

Meta: A Post-Mortem
Photo by davide ragusa / Unsplash

Meta is dead. Mark Zuckerberg just doesn't know it yet.

I'm not saying that Meta won't be an active business concern in the future, or that the site will be suddenly shuttered. That's how neither business nor the Internet work.

What I mean is that Meta's cultural relevance is dead. As in, it's done. It's no longer the place where it happens – and by it, I mean it's no longer a place that holds our collective attention span.

That's the kiss of death for social media.

Look what happened to MySpace. It was it and then it was dead.

If you don't believe me, here's some cold-hard facts regarding Meta:

  1. Facebook is losing daily users
  2. Teenage usage is set to decline by 45%
  3. They missed their last earnings estimate by $0.17
  4. Their YTD stock price is down -36.08% (for comparison, the S&P is -6.17%)
  5. The market expects earnings to fall – again

Of course, Mark Zuckerberg knows that the original "blue app" is not long for this world. But maybe he has options?

Yes, let's consider those options.

Instagram is still growing, but Gen Z prefers TikTok. And where the younger generation goes, so does the Internet.

But what about WhatsApp? Again, for now it's the top dog of messaging services, but it's not a good sign when Brian Acton, the former founder of WhatsApp, launches a competing service and almost immediately builds hockey stick growth.

Growth of Signal's monthly active users
Growth of Signal's monthly active users

If Meta's three big apps are no longer a guaranteed slam dunk, maybe Meta can make an acquisition? Sure, that worked a decade ago, but now every acquisition Meta makes is being examined by the FTC. It doesn't help that there's an active antitrust case at the moment – and it will take years to resolve.

Why not just copy the competition? They launched Reels to counter TikTok. They're still losing.

Maybe Meta can motivate a few rock star employees to develop a new killer app in a jiffy? All those company scandals have resulted in low company morale. They're not encouraging innovation. They're encouraging whistleblowers.

Is the metaverse the solution?

Again, Meta employs enough bean counters to be aware of their problems. Which is why the company formerly known as Facebook pivoted, rebranded themselves as Meta, and decided to focus on the metaverse. The metaverse could be a good long term bet if the rest of its revenue stream was secure, but even the most optimistic futurist predicts it won't reach the masses until 2030.

(If you want to know why this is the case, it's quite simple: VR headsets are expensive, heavy, and chew up battery power.)

More to the point, Meta's own behaviour reeks of desperation. For a company that famously staved off monetization for user growth during its early years, it's not doing the same for something that's supposedly its future. After criticizing Apple for taking a 30% commission for App Store sales, Meta is demanding a 47.5% cut from sales of digital assets in its metaverse.

This would be a ballsy move for a company in a monopoly position, but they're not. NFTs exist. They might have their detractors, but even detractors would probably prefer NFTs over Meta's marketplace for virtual goods.

Yet even if Meta is a good long term play, that doesn't mean investors are convinced. At one time, Mark Zuckerberg had carte blanche to do whatever he wanted, but not anymore. As a judge recently ruled, Meta's plans for the metaverse must meet shareholder approval.

Natasha Lamb, a managing partner at Arjuna Capital says:

Yes, Zuckerberg is emperor at Facebook, but they are facing a lot of headwinds, so it’s not written in stone that Meta will continue in this form forever. They are pumping $10 billion a year into a new project when it’s quite obvious they can’t handle their current platform.

The metaverse might be a case of Emperor Zuck wearing new clothes.

The Twist of the Knife

So far, I've mentioned why Meta has been dying. Let me explain why it's now dead.

Facebook's entire revenue model is predicated on tracking its users. It has been the leading proponent of surveillance capitalism. Now it can't do it.

A change to Apple's iOS privacy policy will result in a $10 billion revenue hit. That's not the only blow. With Android, Google is following suit.

Meta doesn't just need to worry about Apple and Google, they're facing challenges from governments. Due to new privacy rules, Facebook may be shuttered in the EU.

A social network is only as strong as its network effect. With its userbase contracting, employees whistleblowing, governments regulating – share price cratering – Meta's hearbeat is flatlining.

Meta's dead. It might be a going concern in zombie form, but it's still deader than dead. It's done.