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As stocks for Meta, the company formerly known as Facebook, continue to plunge, the tech giant is pivoting to video, and not for the first time.
On Thursday, Facebook shares fell 25 percent after the company reported its first ever drop in daily user numbers. That is equivalent to a $240 billion loss in value—more than the value of McDonald's. It marked the biggest one-day fall in value in U.S. stock market history.
Meta CEO Mark Zuckerberg's net worth fell by roughly $30 billion, while the company also saw $10 billion in losses on its investment in the "Metaverse" over the fourth quarter.
On the earnings call on Thursday, Zuckerberg said although he was "proud" of the work the company did over the last year, it faced tough competition from other streaming and social media rivals, such as TikTok and YouTube, The Guardian reported.
Bloomberg reported on Thursday that Zuckerberg said in a company-wide virtual meeting that day that Meta was facing an "unprecedented level of competition" from TikTok and as a result, it is planning to focus on Instagram Reels short-video product. Reels was launched in the U.S. in August 2020 as Meta's answer to TikTok.
This is not the first time that Facebook has pushed for more video on its platform. It started in 2015 when Zuckerberg said that video was the future of Facebook and the media.
Facebook made its case by touting statistics that said huge numbers of people were not only seeing video in their feeds, but watching them for long periods of time. After advertisers saw these statistics, agencies pumped more money into video.
But in 2016, The Wall Street Journal reported that Facebook had miscalculated multiple key metrics for advertisers around video. Facebook later conceded in a statement at the time that it had made a "mistake," but said they "fixed it" as soon as they discovered it and informed their partners of the error, which caused backlash from many advertisers. The error was quite significant—Meta was only counting views longer than three seconds in its "average," ignoring all the users who scroll past the videos.
In October 2018, a class action lawsuit was filed against Facebook. The lawsuit alleged that Facebook executives brushed off an employee who proposed changing an ad metric to make it more accurate because they thought the change would affect revenue.
According to the lawsuit, senior Facebook executives knew for years that its "potential reach" function was inflated and misleading, but they failed to take action and tried to hide these issues.
Facebook in August 2017 launched Facebook Watch, its video-on-demand service. The service became available internationally to all users of the social network globally in August 2018.
Meta faces an uphill battle competing against TikTok, which knocked Google off first place as the most visited internet site in 2021.
Newsweek has contacted Meta for comment.
About the writer
Jack Dutton is a Newsweek Reporter based in Cape Town, South Africa. His focus is reporting on global politics and ... Read more