This article was first published in June. It has been republished in light of the news that Meta, Facebook’s parent company, is laying off 11,000 employees, or 13 per cent of its global workforce. In a statement announcing the cuts, Meta’s chief executive, Mark Zuckerberg, admitted he had grown the company too quickly, on the false assumption that pandemic spending habits would become permanent. Meta is now struggling to justify its investment in the metaverse, while continuing to face intense competition from TikTok.
When Sheryl Sandberg revealed on 2 June that she was leaving Facebook, variations of the same question began to spread through the tech community. If Sandberg’s arrival from Google in 2008 proved that Facebook was growing up, does her departure mark the beginning of its demise?
The company she joined bears little resemblance to the one she is due to depart this autumn. Famously launched from Mark Zuckerberg’s Harvard dormitory in 2004, the social network was still growing rapidly when Sandberg became chief operating officer four years later. That growth continued for nearly a decade and a half, until, in early February, Facebook reported that its daily active user numbers had fallen for the first time in its 18-year history.
The scrappy start-up had morphed into a global advertising behemoth with tens of thousands of employees but its size, reach and revenues failed to protect it from the shifting sands of digital culture and the perils of the attention economy. Since the start of this year, Facebook’s market capitalisation has fallen by 43 per cent.
The received wisdom is that TikTok is to blame for Facebook’s woes. While Zuckerberg and Sandberg controversially secured permission to acquire Instagram and WhatsApp in 2012 and 2014 respectively, TikTok has remained firmly beyond their grasp. Although Zuckerberg has launched a copycat feature called Reels, it is failing to drive as much revenue as his other products.
Facebook’s problems, however, may reflect a deeper trend within the advertising ecosystem. In Subprime Attention Crisis, Tim Hwang argues that the effectiveness of online advertising has been dramatically exaggerated by the American tech giants. As the inefficiency of their commercial offering has been exposed over time, says Hwang, Facebook and Google have been forced to litter their platforms with ever more ad units.
They “force more and more ads into an experience, or into a social media channel, in order to make the same amount of money… and that has the perverse effect of squeezing people away from those platforms,” said the former Google employee in a New Statesman interview earlier this year. The tech giants’ solution to this challenge, Hwang believes, is to direct users to new platforms, before they become so saturated with advertising that they too become unusable.
[See also: Whatever Mastodon is, it won’t replace Twitter]
Beyond buying competitors, copying rivals, producing more products and lobbying for favourable regulations, there is another trick social media companies use to maintain growth expectations and market share. They build ever higher walls around their platforms.
Zuckerberg knows this well. In 2013, Facebook launched Free Basics, an internet service for developing markets that provided free access to a limited number of websites – including, of course, Facebook. Between mid-2014 and mid-2019, 32 African nations were granted access to the service. A major backlash forced Facebook to withdraw Free Basics from India, the largest prospective market, however.
If you can’t selectively edit the internet, another option is to remodel it. This may explain Zuckerberg’s obsession with Facebook’s latest innovation, the metaverse. The virtual reality (VR) world, which will be accessed via headsets and represents users through avatars, would not only usher in a new platform yet to be cluttered with adverts, it would also open up access to an alternative, virtual world controlled by Facebook (or, under its new moniker, Meta).
As concern about Facebook’s digital imperialism has grown, Nick Clegg, the company’s president for global affairs, has pushed back against this narrative. “There won’t be a Meta-run metaverse, just as there isn’t a ‘Microsoft internet’ or ‘Google internet’ today,” he wrote last month. “It won’t be ownable… just as today’s internet isn’t.”
There clearly is a “Google internet”, however: Google’s monopoly on internet search means it drives more than half of traffic to all other websites. It also provides the world’s most popular operating system, email client and online video platform and keeps more than half of visits on its own site. For many internet users the experience of being online is entirely provided and mediated by Google.
Given the backlash against Free Basics and Facebook’s wider ethical record, it is unsurprising that Meta’s plans for the metaverse have aroused suspicion. But however imperial its ambitions are, Facebook is unlikely to see a return on its investment any time soon. It has promised to recruit 10,000 engineers in Europe to work on the metaverse, which Forrester analysts have warned “won’t gain scale for a number of years”.
As the attention economy evolves, Zuckerberg is searching for a way to build “the next Facebook”. But as TikTok increases its market share, it must be increasingly apparent to the Harvard dropout’s executives that they no longer even work for the current Facebook.
Like MySpace and Bebo before it, the social network is expected to suffer a gradual demise, rather than a sudden death, over the coming years. The question of whether the metaverse can save it will take years to answer, but with another fraught US election on the horizon and investor confidence waning, Sandberg isn’t prepared to wait around to find out.
[See also: We deserve better than the Metaverse]