What challenges (as detailed in ChapterCase2 Part I is Meta Platforms facing? How should Mark Zuckerberg deal with each of them? List the challenges and make specific recommendations for addressing them.
Apple’s App Tracking Transparency (ATT).
Meta represents Zuckerberg’s strategic pivot to create an operating system for the emerging metaverse. The repercussions of not having control over an operating system became painfully apparent when Apple introduced changes to how apps can collect data about users’ mobile activity on iPhones. Apple’s ATT initiative decreases Facebook’s advertising effectiveness because its limits its ability to micro-target ads to iPhone users. As a result, companies shifted their digital ad spending to Google and Amazon. Apple’s changes to enhance user privacy cost Meta more than $10 billion in revenue per year. Given the zero marginal cost of placing online ads, this $10 billion translates directly into lost profits—an amount equal to 25% of Meta’s total profits.
Competition from TikTok.
Meta competes for people’s time because its business model is based on user engagement to serve targeted ads. Mark Zuckerberg views TikTok as the most potent competitor that Facebook/Meta has ever faced. TikTok is a video-focused social media app owned by the Chinese tech company ByteDance. In just a few years, TikTok has gained over 2 billion users worldwide. Because of a superior algorithm for detecting user interests, TikTok is hugely popular, especially with a younger demographic. In the United States, 60% of TikTok users are under 24, while only 12% of Facebook users fall in the under-24 age category. Indeed, the average Facebook user in the United States is over 40 years old. Although TikTok’s financial impact on Meta is less than that of Apple’s ATT initiative, TikTok presents an existential threat to Facebook, especially if Facebook cannot win back younger users.
Meta’s product shift.
In response to TikTok’s threat, Meta is shifting away from maximizing total users for its social media apps and is focusing on young adults, ages 18 to 29. Meta plans to lean more fully into short-video content and make Reels (Meta’s version of TikTok) more central to the user experience across its social media apps, including Facebook and Instagram. As with TikTok, Facebook and Instagram users will be served video content based on their interests; the videos will come not only from friends and people they follow but also from others they have no connection with. Instagram features Stories (Meta’s version of Snapchat, where content disappears after 24 hours) more prominently, but Reels will also be much more central to the user experience in the future.
What challenges (as detailed in ChapterCase2 Part I is Meta Platforms facing? How should Mark Zuckerberg deal with each of them? List the challenges and make specific recommendations for addressing them.
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