Facebook parent company Meta has reported the first year-on-year revenue decline in its history.
Meta has reported revenue of $28.8 billion for the second quarter of the year, which represents a 1 percent drop from the same time last year.
Profits have fallen a whopping 36 percent to $6.7 billion, while the key Reality Labs division (the home of the company’s core metaverse efforts) lost $2.8 billion.
What’s more, the company is predicting that revenue could slip even more in the third quarter of the year, with ad sales set to suffer as a result of the current financial downturn.
Even before the current spending slump, Apple’s ‘Ask App not to track’ feature had put a serious dent in Facebook’s ad income. Having been introduced in iOS 14 towards the end of 2020, it’s said to have cost Meta $10 billion in ad revenue throughout 2021.
Another major factor behind Facebook’s downturn has been the rise in popularity of TikTok, which is the social network of choice for younger smartphone users. This has prompted Meta to re-angle its Facebook and Instagram apps towards short form video content in a bid to get more eyeballs on viral content (and thus ads), which of course costs money to build.
Those efforts appear to be paying off, with the company’s response to TikTok, Reels driving strong-then-anticipated engagement.
Indeed, it’s not all bad news for Meta on the facts and figures front. Despite the aforementioned TikTok effect, Facebook still managed to grow its user base 3 percent to 1.97 billion. This followed on from its first ever decline in daily users earlier in the year.
Meanwhile, a total user base of 2.88 billion for all of its apps (WhatsApp and Messenger are in there too, remember) represents a year-on-year rise of 4 percent.
CEO Mark Zuckerberg confirmed that the company would be reducing hiring over the next year in response in response to the downturn, and as part of its shift from being a social media company to a virtual reality one.