I think it's fair to say that social media is at the moment one of the few topics where most of the population can agree to hate on. In this post I would like to deconstruct a few popular myths about Facebook/META and give my personal opinion on how I think the public image of this company has gone from bad to worse in recent history.
Myth 1 – META is selling your data to advertisers.
I think this is a common misconception that a lot of people make simply because it's easy/convenient to understand META's business model like this. But reality is that META has NEVER sold any of its users data to advertisers in any of the platforms under its umbrella. Instead, when advertisers want their ads to be displayed on Facebook/Instagram, they request a target audience(things like age, occupation, interests, political orientation etc.) and pay META money. After the contract is signed, META will then use its internal algorithms and data to efficiently and accurately target ads requested by the advertiser. No personal data is transferred between META and the advertiser.
One thing to add to this section is about the Cambridge Analytica scandal in 2014. Facebook was not without blame of course, but they are not the main culprit. A third party app called ' This Is Your Digital Life ' improperly harvested data on 87 million Facebook users and then used that data for gaining political advantage in different election races. Facebook is guilty of improperly protecting their users data. Cambridge Analytica was basically doing the stealing while Facebook had a security issue.
Myth 2 – No one is using Facebook anymore. Or at least people are leaving META's platforms in droves.
This is simply factually wrong. Global MAUs(Monthly Active Users) and DAUs(Daily Active Users) have been increasing every quarter since IPO. It is true that a slight decline started happening in Europe, while USA and Canada growth has basically stagnated(because already almost anyone is on one of the platforms). But META's reach is much beyond that. I cannot add images in this subreddit, but you can verify this yourself by searching for the MAU/DAU graphs in the last Q3 release.
Myth 3 – META is investing all they have into the Metaverse.
This is again factually incorrect. Here is a direct quote from the CEO in the last conference call:
“We continue to direct the majority of our investments toward the development and operation of our Family of Apps. In Q3, Family of Apps expenses were $18.1 billion, representing 82% of our overall expenses. Family of Apps expenses grew 18% driven mostly by employee-related costs, infrastructure-related costs, and the impairment of certain operating leases for office facilities that we plan to exit. Our current surge in capex is largely due to building out our AI infrastructure and we would expect capex to come down as a percent of revenue over the long term. “
We can clearly see that only 18% of expenses are directed to VR/AR aka the Realty Labs segment(also the nature of these expenses is that they should come down over time and margins will improve again). The rest of the expenses are going into the traditional apps like Facebook/Instagram/Messenger/Whatsapp.
People think that Zuckerberg and his team are lunatics that will throw the whole company in jeopardy because of some dream Zuckerberg had about VR/AR. Don't forget these guys have built a gigantic company with more than 3.6 BILLION users worldwide. They have also bought Instagram and Whatsapp(people were criticizing FB back when these acquisitions were made ) and built them out into behemoths as well.
Myth 4 – META is dying, financially speaking.
While it is true that recent earning releases were lackluster, people seem to not think about the cyclicality of the advertising business. Given the current economic struggles and the projected global recession incoming, do you know how majority of business cut their expenses? At the top of the list is cutting advertising budgets. Add to this the recent iOS privacy changes and of course META has been struggling to show growth(especially after the increased growth after the pandemic).
Zuckerberg has already mentioned that the next leg in revenue growth will not be the Metaverse, but monetizing Messenger and Whatsapp:
' Beyond Reels, messaging is another major monetization opportunity. Billions of people and millions of businesses use WhatsApp and Messenger every day, and we're confident we can connect them in ways that create valuable experiences. We started with Click-to-Messaging ads, which let businesses run ads on Facebook and Instagram that start a thread on Messenger, WhatsApp or Instagram Direct so they can communicate with customers directly. This is one of our fastest growing ads products, with a $9 billion annual run rate. This revenue is mostly on Click-to-Messenger today since we started there first, but Click-to-WhatsApp just passed a $1.5 billion run rate, growing more than 80% year-over-year. '
Also, the metaverse doesn't have to take over the world in order for it to become a profitable investment. Reality Labs has been mostly growing since 2020(at a loss) and only this year has META released the new VR headset . The growth is there, it can become profitable in the future and it doesn't mean that all of us will walk around with VR headsets and buy property in the Metaverse.
Concluding thoughts – How did META's reputation got so bad?
Let me begin this by saying that I am in no way absolving META of any blame, they made/make mistakes. Their algorithms work in such a way that it brings to the surface some of the most over the top and toxic people/takes. It creates echo chambers that keeps its users engaged/addicted to its apps. At the same time I understand that the benefits that META brings to this planet, cannot come without the downsides, especially if you want to be using its services for free. You,the user, have to accept the terms and conditions that you will be the product.
I am not one to believe in conspiracy theories, I like to critically think why/how events unfold. Do you know who is also a player in the ad industry? Traditional media. It is in their direct interest if METAs public image is bad and advertisers pull their money out of META and give it to them. Same can also be said about Apple(they don't give a rat's ass about your privacy, they just want to get a bigger share of the advertising pie themselves ).
While so many other outlets will be benefiting from META's demise, it's easy to understand why a constant flow of bad news/coverage is coming towards META to destroy its reputation(worse than any other FAAMG company).
Because so many of us are using META and we all can see the glaring issues with its platforms, it's easy to hop onto a blind hate bandwagon that impairs our financial decision of whether to buy/not buy META stock without looking at the huge investing opportunity META is at its current prices.
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