Note: This was originally published as the daily newsletter for the Columbia Journalism Review, where I am the chief digital writer
Over the past few years, criticism of “Big Tech” has grown from an undercurrent of dissatisfaction into a full-fledged crusade by Congress, the Federal Trade Commission, and other critics to blunt the power of the quasi-monopolies that control consumer technology, and Facebook—which recently changed its name to Meta—has been at or near the top of that short list. When Congress held hearings into the 2016 election, Mark Zuckerberg, Meta’s CEO, was front and center, as he has been in antitrust lawsuits launched by the FTC and a number of states. This isn’t surprising, given Meta’s control over the information consumption habits of more than two-and-a-half billion people around the world. Despite all this negative attention, however, Meta’s market power continued to grow, along with its market value, which climbed as high as a trillion dollars last year, up from three hundred billion in 2017.
The past week has been a very different story, however. On February 2, Meta’s market value was still close to seven hundred and sixty-five billion dollars, not that far from its peak, at least in proportional terms. The following day, its share price fell by more than twenty-five percent, wiping about two hundred billion dollars from the company’s market value—the largest decrease in value in the history of US stock exchanges, according to a report from CNBC. When the dust settled, Meta’s share price was lower than it had been since May of 2020. The stock dropped again the following day, although not by as much, and fell again the day after, although it has since recovered somewhat.
What happened? The most obvious answer is that Meta reported its quarterly financial results, and investors and stock analysts didn’t like what they heard. Although the company’s revenue was a little above expectations, its forecast for the current quarter was well below what analysts were looking for, and its earnings were much lower than consensus forecasts. Most important of all, the number of users who login to the service every day fell for the first time in the company’s eighteen-year history, to below two billion. The drop was not a very large one, but when you have been growing steadily for more than a decade, even a small drop can take on huge importance. As the Washington Post noted, the loss of users “was greatest in Africa, Latin America and India, suggesting that the company’s product is saturated globally.”
Meta’s user numbers in the US have been flat or falling for several years now, but the growth in the rest of the world has so far made up for those setbacks. If that has come to an end, it means there could be little or no growth in the future, and that’s a very bleak prospect for a growth-oriented stock (Meta has also said it may have to shut down its apps in Europe due to data-handling rules). This means even more pressure on the company to come up with victories in other areas of its business, and so far it doesn’t have many to speak of. Although it changed its name to Meta to indicate that the “metaverse” is the future, analysts believe it could be years before Meta starts generating any kind of significant revenue from its efforts in this area. At the moment, the metaverse is just a rather large hole into which Meta has poured more than $20 billion.
Meanwhile, analysts say Meta is under increasing pressure from TikTok, the Chinese-owned mobile video app that is popular with younger users. According to some estimates, the amount of time that the average smartphone owner spends with TikTok exceeded the amount they spend with Facebook for the first time last year, and has continued to grow. While Meta’s user base is stagnating or even falling, TikTok’s has been growing rapidly—it passed the one billion mark late last year. According to a number of recent reports, Mark Zuckerberg has told Meta staff that the company needs to shift its resources to short-form video, in an attempt to counter the competitive threat from TikTok. Last year, Meta announced plans to pay content creators more than a billion dollars, in an attempt to get them to pick Meta rather than TikTok.
Meta has also tried to promote a knockoff version of TikTok called Reels, which it launched as part of its Instagram photo and video-sharing app, but the early reviews have been pretty bleak. That’s not to say Meta won’t be able to make some headway—analysts say its copycat version of Snapchat’s Story feature, released in 2016, helped blunt the competitive force of that feature, and solidified Instagram’s growing market share. But the pressure from TikTok was a lot more palatable to investors when Meta as a whole was still growing globally, and that no longer appears to be the case—and its big bet on the metaverse future is a very long bet that may never pay off. Market experts like to say that the stock market is an eternal war between greed and fear, and in the case of Meta, fear seems to have gotten the upper hand.
Here’s more on Meta:
- Escape clause: When Meta’s stock dropped so precipitously, its market value briefly fell below six hundred million dollars. Why is that important? Because that’s the threshhold that some members of Congress chose in defining which technology companies should be subject to the provisions of a series of antitrust bills. Some technology analysts said a lower market value is unlikely to be a get-out-of-jail-free card, however, since the definition of which platforms are covered by the legislation could easily be updated.
- Rotten Apple: One of the factors Meta cited to explain its lower than expected revenue this year was a change that Apple made to its mobile operating system last year, called App Tracking Transparency. The new feature allows users to approve or deny apps on their iPhones the ability to track them or keep private information about them, which is a crucial element of the targeted advertising that apps like Meta’s rely on. According to Zuckerberg, the Apple change will cost the company more than $10 billion in revenue this year alone.
- Amazon primed: Not only is the Apple change to ad tracking going to hit Meta’s revenues, but it could make a growing competitor even more powerful, according to analyst Ben Thompson, who writes a newsletter called Stratechery. Amazon, which was once a distant third in the online advertising business, has grown rapidly, to the point where its revenue hit almost ten billion dollars in the most recent quarter. Amazon has a number of strategic advantages over Meta when it comes to digital ads, Thompson argues, and that could make it a better choice for advertisers looking to avoid Apple’s privacy hammer.
Other notable stories:
- Isaac Chotiner, a writer with the New Yorker, wrote recently about a profile of deceased billionaire Jeffrey Epstein that Vicky Ward wrote in 2003 for Vanity Fair, and asked why Ward didn’t include details of two sexual abuse allegations by women she interviewed. Chotiner expressed skepticism about Ward’s claim that then-editor Graydon Carter removed the allegations because he was friends with Epstein. Ward has published her own version of those events in a Substack newsletter, in which she argues that the New Yorker can’t be objective because it is owned by Vanity Fair‘s parent, Conde Nast, and that the attacks on her are a result of “the patriarchy… circling the wagons to protect itself.”
- IAC, the media conglomerate controlled by Barry Diller, is shutting down the print operations of six magazines, including Entertainment Weekly, InStyle, Eating Well, and Health, according to a report Wednesday from the Wall Street Journal. IAC, which acquired the magazines when it bought Meredith last year for almost three billion dollars, said they would continue to be published online, but about two hundred people will be laid off. “Naysayers will interpret this as another nail in print’s coffin,” an IAC executive said in an internal memo that was seen by the Journal. “They couldn’t be more wrong.”
- Nilay Patel, editor-in-chief of The Verge, talked with Lauren Williams, co-founder and CEO of Capital B, a new nonprofit media company dedicated to coverage of news events for Black audiences. “Our idea is ambitious: to have a national newsroom and also launch a local newsroom. We want to have a centralized business function that’s going to be able to support not just our first local newsroom, which is in Atlanta, but also our subsequent local newsrooms,” Williams told Patel. “That’s not cheap. And we want to be able to do the kind of journalism that we want to do for our audience and that we feel like our audience deserves — that’s also not cheap.”
- Samuel Danzon-Chambaud wrote in the Tow Center newsletter about how the BBC is experimenting with auto-generated news. “Some media organizations outsource the production of automated news to external content providers, while others build them in-house,” he writes. “The BBC opted for a third way, utilizing an online platform, Arria Studio, which lets journalists design their own templates for automated news. This platform uses a type of No-code language that makes it accessible to editorial staff with little to no computing background, even if more complex programming needs to be done outside the tool.”
- Ashley Bardhan writes for Study Hall about why the media is so obsessed with The Drunken Canal, a free newspaper created by Claire Banse and Michelle Guterman that covers about New York culture, and has been featured in outlets such as Vogue and the New York Times. “I don’t think these girls, neither of whom have any real experience with media or had any intention to enter it, are deserving of widespread, big deal media attention,” Bardhan writes. “The Canal girls are just another addition to media’s love affair [with] complicated, politically incorrect, and above all, beautiful white New York women.”
- The BBC is launching a new live team with thirty-one journalists, and plans to invest heavily in new live news coverage, according to a report from Press Gazette. The British public broadcaster says it has seen a significant increase in audience engagement with its live reports, including blogs and video, since the COVID pandemic began. “Live blogs everywhere have rocket boosters right now thanks to the pandemic,” said Stuart Millar, the BBC’s executive online news editor. “The BBC became appointment viewing for audiences.”
- Journalists, editors, and business staff at Grist announced Wednesday that they are unionizing with the Pacific Northwest Newspaper Guild. Grist is a nonprofit independent media organization dedicated to telling stories about climate solutions. “In recent years, the organization has made enormous strides in terms of culture, compensation, benefits, and diversity and inclusion. We are excited to take a seat at the table to protect these important gains and continue to build Grist into a stronger and more equitable organization,” staffers said in a mission statement sent to company management Wednesday morning.
- Some academics at the University of Melbourne are upset after News Corp. and the Australian unit of Google set up a journalism academy as part of the university’s business school, The Guardian reported. Andrew Dodd, the director of the Centre for Advancing Journalism at the university, said he first heard of the move when he read the press release, and that his concern is that making the journalism program part of the business school will encourage students to overlook journalistic principles in favor of financial success, and that this is “a reflection really of the antagonism that News Corp has had for university journalism programs over many years.”