Mark Zuckerberg has plenty on his plate: from legal settlements for privacy violations, trying to avoid being seen to support interference in elections, and working out how to build and promote the “Metaverse” (whatever that means) while being mocked for how rubbish it looks.
But it’s the rising threat of TikTok that is the biggest threat to the social media juggernaut that is Meta.
Facebook & Instagram make it easy for users to keep up with what their friends and favourite celebrities are up to. Both platforms are built around the “social graph”, which is the data relating to interconnections between people, their friends, and the accounts they follow and interact with.
This data is used by the newsfeed algorithm to show relevant content on each platform based on who we are connected to - whether it’s a page we follow, an update from a friend, or something that Facebook thinks we will find interesting.
By keeping users hooked on interesting content, Meta can then sell their captive attention to advertisers. And that’s why Mark Zuckerberg is a billionaire.
But TikTok uses big data & AI to recommend addictive videos from people we don't know, and never would have thought to follow. Instead of recommending content in the feed based on who we are connected to, TikTok curates a personalised feed based on the content we have watched, liked or shared on the platform in the past. Every piece of content a user watches on the platform is another datapoint to provide better recommendations.
Network effects are when the value of a platform increases for each individual user as the overall number of users grows. Other social networks benefit from network effects when more users connect with each other - after all, Instagram is pretty pointless when you aren’t following anyone, but is much more fun when you have a few dozen friends whose content is appearing in your feed, and when everyone you want to hear from is using the platform.
But TikTok is less of a social network and more of a content engine that is insanely good at finding and recommending interesting videos. You don’t have to add any friends to get value from the platform, compared to other social networks like Facebook, Instagram, Twitter and LinkedIn.
TikTok also gets the benefit of network effects from every video people interact with: which is a much smaller action for a user to take than finding and connecting with friends.
While Meta needs your social graph to build you a newsfeed that will capture your attention, TIkTok can just keep recommending you videos until the platform has worked out how to get you hooked.
Globally, average monthly engagement on TikTok is 25.7 hours per user, compared to just 16 hours for Facebook and 7.9 hours for Instagram.
In the UK, adults (18+) are spending more time on TikTok than on any other platform (closely followed by Instagram). That’s not bad for a platform that only launched properly in 2018 - compared to the 12 years Instagram has had to become the behemoth it is now.
Meta knows that the days of Facebook’s dominance of the social media landscape are over. That’s why Zuckerberg renamed the parent company of Facebook, Instagram, WhatsApp and Oculus to Meta instead of Facebook.
That’s also largely why we’ve been hearing so much about the “Metaverse” from Zuck over the past year - he needs investors to back his long-term vision, because the future sure isn’t Facebook.
It will be a long time before we know whether or not Zuckerberg’s ambitions for the “Metaverse” will work out. In the meantime, Meta needs to work out what to do with Facebook and Instagram.
Essentially, Zuckerberg's challenge ahead is to transform Facebook & Instagram:
From: follower platforms that show content based on people's social graph (i.e. friends and people/brands we follow).
Into: discovery platforms that use data and algorithms to recommend content from creators that we wouldn't have otherwise known about.
Essentially: Meta is trying to play catchup by turning Instagram into a TikTok clone - but it's an uphill battle, and mega-influencers like Kylie Jenner and Kim Kardashian have already kicked up a fuss about how Instagram is changing, forcing Meta to backtrack.
For now, Meta has had to cancel the proposed changes to Instagram - but they will have to find a way to catch up in order to stay competitive in the battle for our attention.
It won't be easy.
If Zuck is successful, Meta will continue to be the most important company that shapes how people communicate and connect.
But if he fails, then Meta will continue on a downward spiral towards irrelevance.
And meanwhile, Meta's share price is already taking a hit, after posting its first YoY quarterly revenue decline since it went public in 2012 - in large part because of declining user engagement as shown in this chart.