There’s two companies right now responsible for the dire situation that Mark Zuckerberg and Meta find themselves in, can you guess which ones they are? The first one is easier to figure out, It’s the app we’re all on right now, Tick Tock.
The second one is a little less obvious. It’s Apple, the world’s biggest company and maker of the iPhone. Apple has decimated Meta’s advertising business and cost the social media giant billions of dollars.
It’s also pushing Zuckerberg to invest vast sums of money into the Metaverse, investments that a lot of people think will go down the drain.
Let’s try to tie all these separate threads together and figure out what the future holds for Meta. It feels like ages ago but Meta stock hit an all time high only a little over a year ago, at the time the company seemed to be at the peak of its powers.
It controlled two of the most dominant social media apps in the world, Facebook and Instagram, and was making money hand over fist, but under the surface, cracks were beginning to form.
In June of 2020, Apple announced key changes to the iPhone operating system that would prevent apps from tracking users across the internet.
At first, most people didn’t realize the significance of this announcement. But Meta did, the company took out multiple full page newspaper ads attacking Apple for attempting to dismantle a digital advertising ecosystem that millions of businesses relied on.
But no one really cared, Meta found little sympathy among the public because the company had an unsavory reputation for collecting user’s data and profiting from it.
Fast forward to the end of 2021 when most people had upgraded their iPhone operating system and began to see a scary pop-up on their screens, “Allow app to track your activity across other companies’ apps and websites,” as you might expect, most people opted out of being tracked which was bad news for Meta.
That’s because without the ability to track users across apps, Meta and the businesses that relied on its technology couldn’t figure out whether an advertisement shown on an app led to a sale on another app or a website.
Because of Apple’s privacy changes, they couldn’t make that connection. And so the price of ads on Facebook, Instagram and third party apps which use Meta’s technology, tumbled.
In February of this year, Meta announced that the privacy changes to the iPhone operating system would cost the company $10 billion, even for Meta which is on track to generate sales of $100 billion this year, its a big number.
In fact, the loss of that $10 billion has been enough to push the company’s growth rate into negative territory for the first time ever. This is why Mark Zuckerberg is plowing so much money into building out the Metaverse.
In addition to seeing it as the inevitable next version of the internet, Zuckerberg believes it is the key to defeating Apple. Because today even though he and his company own some of the most popular apps in the world that are used by billions of people, they are still at the mercy of a company that controls the most lucrative hardware platform in the world: Apple.
If Meta controls the next big computing platform, whether it be virtual reality or augmented reality, then it can escape Apple’s grip. So that’s what Mark Zuckerberg is thinking and it’s why he’s willing to take huge losses on his Metaverse investments in the short term in order to potentially realize his vision in the long term.
But Zuckerberg dreams might not come to fruition. For one, the Metaverse even if it is the future, it is still years away from becoming mainstream. And two, Apple isn’t sitting still, the company is rumored to be working on a mixed reality headset that will combine virtual reality with the real world.
That device could be released in the coming years and would provide formidable competition to Meta’s industry leading VR headsets.
Now up to so far, I’ve talked a lot about Apple and it’s true that the company has been a major thorn in Meta’s side, but it’s not the biggest threat to Meta, that title belongs to Tick Tock.
As you know, Tick Tock is dominating the social media landscape today, and apps like Facebook and Instagram are struggling to keep up.
Meta is investing heavily in things like data centers, chips and artificial intelligence in order to improve its recommendation algorithms so it can better compete with Tick Tock but there’s no guarantee that it can.
This is a big deal because Tick Tock is an existential threat to Meta, it directly competes with Meta for the attention and the ad dollars that flow through the social media industry.
If Meta can’t compete with Tick Tock, then there’s no point even talking about all the Metaverse stuff because there won’t be any Meta around to see that come to fruition.
That’s why I think Meta’s fortunes depend on how its battle with Tick Tock plays out, if it can beat Tick Tock or even if it can just manage to coexist with Tick Tock without losing a ton of users, then the company will be just fine. They can rebuild its advertising technology to better target ads, and it can spend as much money as it wants on the Metaverse regardless of whether anything comes of those investments or not.
In fact, if Meta can survive the Tick Tock threat, it might come out of all of this stronger because few companies can match the enormous investments that it is making to create more advanced forms of advertising technology powered by AI, but that’s a big if ultimately.
It all starts and ends with Tick Tock, either Facebook and Instagram can compete and Meta remains a dominant social media company or they can’t, and Meta withers away.
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