The video platform is attracting attention
Facebook has reported a fall in daily active users for the first time in its history, as boss Mark Zuckerberg acknowledged the growing competition from rival social media apps such as TikTok.
New figures, released as part of parent company Meta’s latest financial results, show that daily users of Facebook fell to 1.929 billion people in the last three months of 2021, compared with 1.939 billion in the previous quarter.
Meta’s shares fell 22.6% to 249.90 US dollars (£183) in after-hours trading following the announcement.
Chief executive Mr Zuckerberg admitted the rise of rival apps such as TikTok is having an impact on Facebook, with Meta also warning of slowing revenue growth because of the growing competition and a reduction in spending among advertisers.
“People have a lot of choices for how they want to spend their time and apps like TikTok are growing very quickly,” the Facebook founder said.
TikTok has become increasingly popular among younger users, who prefer the video-sharing platform over the likes of Facebook and Instagram as the way to interact with followers.
In response, Meta has introduced its own video-sharing service, Instagram Reels, in an effort to lure back the younger generation of social media users who started looking elsewhere.
As well as the competition from rivals, Facebook has faced a number of controversies across its network of apps in recent years – notably Instagram and WhatsApp – which has damaged trust among some users, and the wider company rebrand to Meta last year was seen by some as a way of revamping the firm’s image as well as highlighting the company’s new focus on the development of the metaverse virtual world.
In addition, changes made by Apple to its iOS mobile platform that have expanded privacy features for users has hit Facebook’s advertising business.
Industry analyst Martin Garner, from CCS Insight, said the competition now being offered by TikTok is a “new dynamic” for the company.
“It (Meta) is grappling with five big issues: Apple’s privacy changes in 2021 are hurting Meta’s ad sales; user growth has slowed sharply; users are shifting their content posting to short-form video; Meta is a long way behind TikTok on short-form video; and – at the same time – Meta is investing billions of dollars in the Metaverse,” he said.
“Mark Zuckerberg sought to reassure markets that it has been through big transitions before, knows what it is doing and always comes out stronger. But this did not land well.
“TikTok’s strength as a competitor, and its speed of growth, bring a new dynamic for Meta – real competition in a core product area.”