Meta: Zuckerberg’s big bet goes wrong

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For Facebook, things have gone from bad to worse, Edward Ongweso said in Vice, and it “implodes before our eyes”. The much-publicized pivot to “metaverse” – with a name change to Meta – turned into a disaster. Last week, Meta chief executive Mark Zuckerberg said the company had lost $9.4 billion in the last quarter as it developed its “soulless” vision for a virtual world. “Zuckerberg’s obsession with the metaverse is a major problem, but there are fundamental issues plaguing the company’s core business,” Facebook, Instagram, and WhatsApp too. “Facebook’s revenue has declined for two straight quarters,” and by many metrics it’s “getting its ass kicked by TikTok.” Meta’s stock plunged another 24% last week and is down about 70% on the year. Just 16 months ago, Facebook was among the top five most valuable companies in the United States. Since then, it has lost nearly $800 billion in value.

The Metaverse looked like a bold gamble a year ago, Rachel Metz and Clare Duffy told CNN. Now it sounds “borderline unhinged”. The pace of spending on the project is outrageous “even by Silicon Valley standards”, and it’s still unclear “whether consumers actually want to work on it or play on it”. But Zuckerberg positioned it “as a sort of existential imperative for the business,” which doesn’t want to depend on an app store to survive. Zuckerberg is increasingly seen as ‘a roadblock to stock recovery,’ Ryan Vlastelica says in Bloomberg. Yet the structure of the company leaves shareholders little influence over its actions. “Zuckerberg owns or controls approximately 90% of the company’s unlisted Class B shares, which have 10 votes to one vote each” for publicly traded Class A shares. However, Zuckerberg’s huge stake means he lost $100 billion in 13 months.

Don’t Dance On Facebook’s Grave Yet, Ben Thompson Said In Strategy. Facebook isn’t losing to TikTok as much as critics would like. His video feature Reels is growing rapidly, and while it “may not overtake TikTok anytime soon,” it undermines the narrative that TikTok dominates. Meanwhile, Facebook “continues to add users: the company has up to 2.93 billion daily active users,” an increase of 50 million over the past three months. The Metaverse “may be a speculative mess, but that doesn’t change the fact that the old Facebook is still a massive company,” and many Meta indicators are still pointing up.

In fact, all Big Tech indicators could be trending down, Richard Waters said in the FinancialTimes, and Meta’s problems are a “warning” for the industry. “Growth in digital advertising, e-commerce and cloud computing has slowed more than expected as economic conditions deteriorate,” hurting “profit margins for some of the most profitable groups on the planet” , such as Google, Microsoft and Amazon. While their mistakes may not be as publicized as Zuckerberg’s, all are still taking a big risk, spending big in the belief that they are “on the cusp of a new era of growth.”

This article first appeared in the latest issue of The week magazine. If you want to know more, you can try six risk-free issues of the magazine here.