Facebook parent Meta on Wednesday reported its first quarterly revenue decline and plunging profit as the social media powerhouse battles a turbulent economy and the burgeoning phenomenon of TikTok.
Meta had long delivered seemingly never-ending upward growth, but after that drop in revenue — and reporting earlier this year of the first drop in global daily users — the company struck a more modest note.
“This is a time that requires more intensity, and I expect to do more with fewer resources,” CEO Mark Zuckerberg told analysts after the company reported a 36 percent drop in earnings to $6.7 billion.
Meta also said that revenue in the recently ended quarter fell 1 percent to $28.8 billion, the first such slip since the company, then known simply as Facebook, went public in 2012.
“The year-over-year decline in quarterly earnings shows how quickly Meta’s business has deteriorated,” said analyst Debra Aho Williamson.
“The good news, if we can call it that, is that its competitors in digital advertising are also experiencing a slowdown.”
However, Meta reported an increase in daily Facebook users to 1.97 billion, defying analysts’ predictions of a decline, but noting that monthly users fell by about two million to 2.93 billion.
Shares of the company fell about 3.5 percent in after-hours trading, continuing the decline in the company’s shares since February, which has lost about half of its value.
Meta has also been under constant scrutiny from lawmakers and regulators not only for its massive power in the social media market, but also for its impact on the health of its users.
The results came just hours after US regulators announced they would seek to block Meta’s acquisition of virtual reality fitness app maker Within, in what could be a potential setback to the tech giant’s Metaverse ambitions.
– USA target purchase of Meta VR –
“This acquisition represents a reasonable possibility of eliminating both current and future competition,” the FTC complaint reads. “And Meta would have been one step closer to his ultimate goal of owning the entire ‘Metaverse.'”
Meta is focused on building its Metaverse vision for the future of the internet and has a strong bet on the interactive virtual world that the company believes will secure its strong position.
The social media giant said the FTC’s move contradicted reality and expressed confidence that buying Within would be good for both VR users and developers building apps in that market.
“The FTC’s case is based on ideology and speculation, not evidence,” Meta said in response to an AFP inquiry.
Meta has also faced turbulence as it attempts to adjust its platforms to better combat short-video app TikTok, which threatens the Silicon Valley giant’s primacy.
Meta-owned Instagram is trying to quash complaints from users, including celebrities Kylie Jenner and Kim Kardashian, who say changes have made it too much like TikTok, including video recommendations.
Instagram boss Adam Mosseri posted a video on Twitter addressing the complaint, saying it was experimenting with a number of changes and promising not to stop sharing photos on the service.
“We will continue to support photos, they are part of our heritage,” Mosseri said.
Earnings season got off to a shaky start with disappointing reports from Netflix, Snapchat’s parent company and Microsoft.
Snap last week announced plans to slow recruitment “significantly” after dismal results took about 30 percent off the share price of the tech company, which is struggling on multiple fronts.
Even giant Google reported that its profit and revenue fell as the internet giant’s long-sizzling ad revenue growth cooled, but the market seemed relieved the news was no worse.
The big tech platforms are suffering from the economic climate that is forcing advertisers to cut their marketing budgets and Apple’s privacy changes that have limited their scope for ad personalization.
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