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The share price of Meta (the company that owns Facebook, Instagram and WhatsApp), fell 27% on a thunderous day this Thursday. That represents a drop of more than $215 billion in market capitalization, making it the largest single-day stock market decline by a single company.
On Wednesday, Meta’s chief financial officer (CFO) David Wehner announced that the company expects to lose up to $10 billion in sales due to Apple’s new device privacy policies. Since April, Apple announced that it would make changes to the privacy policy in its iPhone software where it will require apps to first ask the user if they want to be tracked.
The change in Apple’s privacy policy limits the ability of apps to obtain information from their users, which is used to profile audiences and target digital ads to certain audiences. This information is also an indicator of how much advertisers spend on advertising on social networks such as Facebook and Instagram.
The former Facebook is in the business of providing near real-time information about its users to advertisers, who also use the information to target their advertising to specific audiences. This advantage for Meta has been partially disabled, as, according to Wehner, the vast majority of iPhone users are opting out of letting apps take their data.
For Meta’s board, Apple’s policy is making it harder to target online ads, so advertisers will not be incentivized to pay Facebook to sponsor their brands within its social network.
Meta is facing another problem and that is the loss of users, mainly on Facebook’s social network. At the time, Facebook not only swept away the social network concept, but also monetized an idea that other companies had tried and failed for years, as in the case of the failed Myspace or Hi-5.
Meta is dealing with Facebook’s stagnation after a substantial growth in the number of users that joined the social network during the pandemic. In the last two years, Facebook gained 265 million new users in Asia-Pacific, 15 million in Europe, 5 million in the United States and Canada, and 87 million in the rest of the world.
Despite the increase, over the past two quarters Facebook’s user growth has stagnated, and the company faces challenges in keeping its current base engaged. Despite Facebook’s decline, Meta maintains control of Instagram, which contains more than 1 billion monthly active users.
Mark Zuckerberg’s new bet, virtual reality viewers, doesn’t seem to have taken off yet. In the last two years, investment in the so-called reality labs has yielded losses of more than $16 billion. Meta’s financial report announces that the company’s operating expenses will increase by $20 billion over the next year, due to Zuckerberg’s bet on the Metaverse.
Economist, writer and liberal. With a focus on finance, the war on drugs, history, and geopolitics // Economista, escritor y liberal. Con enfoque en finanzas, guerra contra las drogas, historia y geopolítica