Explained: Why Facebook is losing daily users

Facebook's owner Meta Platforms shares plunged more than 20 percent late recently after the social media platform posted a weaker-than-expected forecast, blaming tech giant Apple's privacy changes and increased competition for users from rivals like TikTok.

Meta stock fell 26 per cent last week erasing more than $200 billion in the biggest ever single-day market value wipe-out for a US company, said a Reuters report.

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That pulled down founder and Chief Executive Officer Zuckerberg`s net worth to $85 billion, according to Forbes – the report added. Zuckerberg owns about 12.8 per cent of the tech behemoth formerly known as Facebook.

The decline in Facebook's global daily active users, and why it happened?

- According to a report from Reuters, In the October-December quarter, Facebook’s daily active users fell by about half a million, from 1.930 billion during July-September to 1.929 billion.

- Overall, the company reported a topline of $33.67 billion during the three-month period, compared to $28.07 billion in the same period in the previous year.

WHY

- Meta said it faced hits from Apple Inc's privacy changes to its operating system, which have made it harder for brands to target and measure their ads on Facebook and Instagram.

- It also cited macroeconomic issues like supply-chain disruptions.

What does this mean? Experts take on this  

Speaking to Zee Business, Prabhu Ram, Head-Industry Intelligence Group, CMR, said Facebook’s loss of daily active users for the very first time in its history stems from the strong headwinds that it faces on multiple fronts. Hiked data prices in India tell only a part of the story.

- In a mobile-first nation, Meta’s family of apps is losing on user eyeballs to competing short-form video apps as well as OTTs on smartphones.

- "This could be potentially driven by younger consumer cohorts finding more meaning and appeal on other platforms, than Facebook," he explained.

"As the 18-year old giant competes with other much-younger platforms for sustained user engagement, I foresee more stumbling roadblocks ahead hurting its future growth. Facebook will have to reorient and retool itself to gain relevancy in user lives," Ram noted.

What led to the fall in Facebook shares?

Zuckerberg, Meta’s founder and chief executive, identified the video-sharing app TikTok as a key contributor to the user growth problem. The Chinese-owned TikTok has 1 billion users worldwide and is one of the reasons why Meta is struggling to compete in the market for young consumers

According to, Viram Shah, Co-founder & CEO, Vested Finance, there were several reasons why Meta shares plunged by more than 26% on 3rd February.

- First, there was a weaker than expected forecast of revenue growth in the next quarter and a first-ever quarterly decline in the number of daily active users.

- The company also said that it was majorly being affected Apple’s iPhone privacy changes that would cost it over $10 billion in lost sales this year.

-  Also, their Metaverse division, which the company is betting on, lost $10 billion in 2021 as it builds out this new business.

Nikhil Kamath, Co-founder, True Beacon, and Zerodha, also said taht:  "For Facebook, I've seen analysts speculate how competing apps are negatively impacting growth."

"In fact, I’d say the decline is a natural consequence of the company’s unprecedented growth. It’s an unrealistic expectation for the platform to gain users at the same momentum indefinitely.

India is Facebook’s largest market, in terms of the number of users so it’s obvious how India would play a major role in how this plays out for the global market," he noted.

Future

Experts feel that the fall in Meta share is natural as it would be unfair for a company to gain users quarter-on-quarter. Going forward India would also play a very important role on growth of users.

There are over 350 million Facebook users in India alone, an October report from Statista showed, followed by US which has 193 mn, and Indonesia which has over 142 mn.
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