On the earnings call, Meta CFO David Wehner said this drop in user growth was due in part to increased competition from other apps. And in the long term, the company is making huge investments (to the tune of $10 billion in losses in the past year) in building out its AR/VR capabilities and other futuristic technologies that support the metaverse. To do that, Meta said it’s investing more in short-form video features like Reels, its TikTok clone. That means it’s more important than ever that Meta change its strategy in order to retain and attract new eyeballs. Facebook’s user growth has declined before specifically in the US, but this is the first quarter in which its global daily user base has dropped.

In its early days, Facebook was only available in the US, but has since expanded to almost every other country except for places like China, where the app is blocked. It’s long been known that user growth on the Facebook app was stagnating, in part because of its aging user base and the fact that it has run out of new countries to expand into. Wall Street immediately reacted: Meta shares were down 20 percent in extended trading after the news. And it places even more pressure on Meta’s big bet on the metaverse - a VR/AR-enabled alternative universe that CEO Mark Zuckerberg sees as the future of the internet - to actually work out.

The statistic shows how Meta has struggled to stay relevant to younger users, many of whom are drawn to competing apps like TikTok. That might not seem like a major drop relative to its under 1.93 billion total daily active users, but it represents a low point for a metrics-driven company whose user base long grew at a rapid pace across its different apps. Meta reported that 2.88 billion now use its suite of social apps - Facebook, Messenger, Instagram, and WhatsApp - every day, an increase of 4 percent from a year ago.Facebook’s total number of users has declined - a first for the social media platform that has experienced seemingly never-ending growth since it debuted 17 years ago.įacebook lost about half a million global daily users in the fourth quarter of 2021 compared to the previous quarter, according to the quarterly earnings report of Meta, its parent company.

Building the AI needed to make that happen is a costly investment, he said.Įven though Meta’s revenue is declining, it managed to grow Facebook’s daily users by 3 percent to 1.97 billion, reversing a worrisome decline in users it observed a couple of quarters ago. On a call with analysts, Zuckerberg said that the percentage of content people see in Facebook and Instagram that comes from accounts they don’t follow will more than double next year. Meanwhile, in its effort to compete with TikTok, Meta is rearchitecting Facebook and Instagram to place an emphasis on short videos and posts that its system recommends to people. And now a rapidly slowing economy has caused advertisers to pull back on their spending. Apple’s “Ask app not to track” prompt on iPhones has made its ads much less effective, costing Meta $10 billion in ad revenue last year alone. While the first-ever drop in revenue growth was expected on Wall Street going into Wednesday’s earnings report, it solidifies how challenged Meta’s business has quickly become on all fronts. The Reality Labs division responsible for building Mark Zuckerberg’s metaverse dreams lost $2.8 billion in the quarter. The overall profit for its parent company, Meta, fell 36 percent to $6.7 billion. The social network reported its first-ever yearly decline in revenue for the second quarter, announcing a 1 percent drop to $28.8 billion, and predicted that growth in the third quarter could fall even more.

Facebook’s decade-long streak of nonstop revenue growth has come to end.

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