Facebook records a drop in daily users - A first for it

At first sight, the change may seem miniscule. Social media platform Meta (nee Facebook) registered 1.929 billion daily users in the fourth quarter of 2021, a small slip from 1.93 billion in the previous quarter.

But in the context of scandals and bad vibes surrounding it, Meta is facing a crisis that it has not faced before --- People quitting the platform. 

Meta, the holding company that covers Facebook, Instagram, WhatsApp, and Oculus, released its earnings report yesterday, and it is where these problematic numbers for it emerged. This is the first drop in daily users on record for Meta (Facebook).

For the record, its monthly active users (MAUs) were 2.91 billion as of December 31, 2021, an increase of 4% year-over-year. Meta still made nearly $40 billion in profit in 2021, mostly from advertising.

The user growth slowdown came in the same period when the company, formerly known as Facebook, announced that it would rebrand as a 'metaverse' company.

Zuckerberg's explanation

Despite the first drop, its CEO Mark Zuckerberg seemed unfazed. Or at least he put a brave face and said: "I'm proud of the work our teams did here. We shipped products, our community continued to grow, and businesses of all sizes turned to us to help them reach people. But there are two things that I want to call out that are having an impact on our business." 

The two areas that he mentioned as affecting his platform is competition and transition.

For the first, Zuckerberg said: "People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly."

This where Meta wants to focus on Reels over the long-term. He wants to make sure "our apps are the best services out there for young adults". 

The second point (transition) takes off from here. Zuckerberg said "we're in the middle of a transition on our own services towards short-form video like Reels. 

As Meta is shifting towards this medium, it is replacing some time in News Feed and other higher monetizing surfaces. "So as a result of both competition and this shift to short-form video as well as our focus on serving young adults over optimizing overall engagement, we're going to continue to see pressure on impression growth in the near term," he said.

Not all is lost for Meta

Zuckerberg pointed out that he was confident that leaning harder into these trends is the right short-term tradeoff to make in order to get long-term gains. "We've made these types of transitions before with mobile feed and Stories, where we took on headwinds in the near-term to align with important trends over the long term."

Stating that video has historically been slower to monetize, the Meta CEO said "we believe that over time short-form video is going to monetize more like feed or Stories than like Watch – so I'm optimistic that we'll get to where we need to be with Reels too."

For the record, across all of its apps, Meta actually added a million more users, which likely means that WhatsApp and Instagram are still growing.  So all is not lost for it, and its family of apps are still the most used social media platforms by far, with close to 3 billion DAU.

In terms of revenue, Meta posted another strong result, bringing in $33.6 billion for the quarter. For the full year, Meta generated $117.9 billion. VR sales jumped in Q4, bringing in $877 million. In a sense, the company's plan to pivot to metaverse is not without reason.

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