Facebook Daily Active Users Drastic Drop, For First Time in 18-Year History

Recently, there are reports that Facebook’s daily active users have drastically dropped to a significant low. Such a drastic drop is the first time in recent years and 18 years since the inception of this popular social media platform.

Facebook has always been popular among the masses, and with its acquisitions of other social media platforms, the company has grown into a social media giant. But time constantly changes, and tech giants like Meta (Facebook) also fall prey. Despite its business slowing down in the US and Europe, the company has significantly managed to add users in other parts of the world. But what appears to be awesome externally doesn’t guarantee that all is going well. 

Meta stated that the ad-tracking changes by Apple and inflation would eat into this profit. Facebook has struggled to engage the younger audiences online and grasp their attention recently. Meanwhile, it has also seen the rapid rise in popularity of its competitor “TikTok,” becoming one of the most used and downloaded social media apps in the world, thus slowing down the expansion of Facebook.

Recent Happenings in Facebook

In October 2021, Facebook owner and chief rebranded the company as Meta, signifying a conscious turn of Facebook from social networks to the Metaverse. Metaverse is an interactive virtual and augmented reality world that has gained popularity in less time. The concept of Metaverse that shifted Facebook from social networks is far from fully realized virtual reality. Also, Meta is not the only firm investing heavily in the idea of Metaverse. Some sources also suggest that Meta lost around $10 billion from its virtual reality hardware division and Reality Labs last year.

What Exactly Happened to the Social Media Giant – Facebook?

In the past few months, the total number of Daily Active Users in Facebook has witnessed a massive drop for the very first time in its 18 years of existence. Meta, the owner company of Facebook, has also shown that the Daily Active Users of Facebook have declined to 1.929 billion in the 4th Quarter,2021 from 1.930 billion in the Third Quarter of 2021. Besides this, the platform is losing some of its active users in its home country. Reports say that Facebook’s US and Canada cumulative user base declined from 196 million to 195 million.

Also, Meta, the title-holder company of Facebook, rebuked that the revenue growth may perhaps slow down because of the increased competition from other social networking platforms such as TikTok and YouTube. Along with this, the advertisers pulling back on spending can be a reason for the slow revenue growth of Facebook. As per some sources, Meta’s shares dropped by more than 20% subsequently in New York’s Stock Exchange after a few hours of trading. This fall in the share price of Meta has removed around $200 billion of stock market valuation from the company.

Moreover, according to some data sources, Facebook even lost the top spot of social media network to Instagram as the latter surpassed Facebook for the first time since 2014. Instagram is top-ranked in Google Play downloads for social networking in 2021, beating Facebook worldwide. Mark Zuckerberg mentioned in the earnings report that Instagram Reels were also one of the growth areas of Meta along with commerce and virtual reality.

Response of the Company on the Loss

Meta Platforms, Facebook’s title-holder company, mentioned that though it might seem very small, there is a considerable decline in daily active users of Facebook from 1.930bn to 1.929bn in the last Quarter to the end of December in 2021 as compared to the previous Quarter of the year 2021. 
Moreover, the Shares in other social networking platforms such as Twitter, Snap, Pinterest, and many more also dropped sharply in extended trading.

As per the Chief executive of Facebook, Mark Zuckerberg, the sales growth of Facebook had been hurt because its audiences or users, especially younger ones, had selected rivals for social networking. Here we would also like to mention Snapchat, which is well accepted by teenagers and young adults, especially in western countries.

Reaction of Mark Zuckerberg on this Issue

Zuckerberg has also emphasized that the decline in Facebook’s daily active users and the company’s sales growth has been obstructed as the audiences and users, especially young Facebook users, have switched to other social networks. 
In addition to this loss in Facebook, industry experts claim that Apple’s operating system’s privacy modifications can considerably impact Meta, presently operating the world’s second-largest digital advertising network after Google.

According to Dave Wehner, the chief financial officer of Meta, it has become more difficult for marketers to target and assess their advertising on Facebook and Instagram due to the modifications, which might cost them $10 billion this year.

Mark Zuckerberg also mentioned that he was confident in the investments in video and virtual reality and thought it would pay off the same as previous risks on mobile advertising and Instagram stories. However, he noticed that the firm did not need to connect with the main rival during shifts in strategy. Zuckerberg also stated that the teams are executing quite well, and the product is growing very swiftly.

A steep decline in a daily active user base is never good news for any company, and Zuckerberg knows it pretty well. The platform’s primary revenue model revolves around the ads across its platforms, and a decline in the active user base is directly proportional to its decline in ad revenue. Brands, too, will be pretty aware of the happenings and plan their marketing and sales strategy differently.

Interestingly, a decline in revenue would also pause Meta’s foray into the world of Metaverse. Meta is investing billions in this project and is super ambitious to win this ride. Therefore, a daily decrease in the active users is sure to bring sweat on Zuckerbag’s forehead. The company is also spending a considerable portion of its funds on video content, such as reels. Instagram reels have seen tremendous growth and have been successfully growing the engagement rate. Several analysts even claim that the reels will generate more revenues for the company in the future.