> ## Content Index > Fetch the complete content index at: https://www.europeans.today/llms.txt > Use this file to discover other available public pages before exploring further. # Why Meta’s share price collapse is good news for the future of social media - URL: https://www.europeans.today/2022/11/05/why-metas-share-price-collapse-is-good-news-for-the-future-of-social-media/ - Published: 2022-11-05T02:00:00.000Z - Updated: 2022-11-05T18:00:37.000Z - Description: Meta’s focus on virtual reality might free up space for smaller social media firms to compete. - Author: Dr Renaud Foucart - Tags: Tech, Analysis, Meta, Social Media, China, TikTok, ByteDance, Mark Zuckerberg, Metaverse ### Meta’s focus on virtual reality might free up space for smaller social media firms to compete. ###### First published: Nov 2022. --- F *acebook* may not be the original social media platform but it has stood the test of time – until recently. *Meta*, the company that owns *Facebook*, *Instagram* and *WhatsApp*, saw its value plummet by [around $80 billion](https://www.ft.com/content/0f4c676c-56a6-4b5e-850f-ddb78f9feb40?ref=europeans.today) (£69 billion) in just one day at the end of October, after its [third-quarter profits halved](https://www.theguardian.com/technology/2022/oct/26/meta-earnings-report-facebook-stocks?ref=europeans.today) amid the global slowdown. *Meta* is now valued at [around $270 billion](https://www.cnbc.com/2022/10/27/meta-is-no-longer-one-of-the-20-biggest-us-companies.html?ref=europeans.today) compared with more than $1 trillion last year. Several issues have caused [investors to turn away](https://www.theguardian.com/technology/2022/oct/27/metas-shares-dip-is-proof-metaverse-plan-never-really-had-legs-facebook?ref=europeans.today) from the social media giant, including falling advertising revenue, a [conflict with *Apple*](https://www.theverge.com/2022/10/25/23423637/apple-app-store-tax-boosted-social-media-posts?ref=europeans.today) over its app store charging policy, and [competition for younger audiences](https://www.washingtonpost.com/technology/interactive/2022/tiktok-popularity/?ref=europeans.today) from newer platforms such as *TikTok*. *Meta*’s chief-executive Mark Zuckerberg has also used his majority control to double down on his ambitions for the *“metaverse”*, a virtual reality project on which he has already spent more than $100 billion – with [questionable results](https://www.businessinsider.com/memes-mark-zuckerberg-metaverse-meta-struck-a-nerve-2022-10?ref=europeans.today) according to initial investor and media reaction. Zuckerberg has promised [even more](https://www.ft.com/content/f24edcb8-74a1-45da-8eb9-108ecc0da9ae?ref=europeans.today) investment in the metaverse next year. It’s [tempting](https://www.dailymail.co.uk/news/article-11369273/How-Mark-Zuckerberg-pumped-36-BILLION-failing-Metaverse-lost-30-billion-it.html?ref=europeans.today) to describe this spending spree as [a billionaire’s *“insane fantasy”*](https://www.independent.co.uk/voices/mark-zuckerberg-facebook-meta-metaverse-b2213071.html?ref=europeans.today), but there is a simpler explanation. As dominant platforms compete for a limited amount of advertising revenue, regulation – particularly when it differs between countries or regions – has created space for more competitors. This is good news for new social media companies, but it also means that the only way *Meta* is likely to be able to keep its dominant position is by placing a massive bet on the technology of the future. Zuckerberg believes that means the metaverse, but this [remains to be seen](https://www.independent.co.uk/tech/tim-cook-metaverse-apple-meta-b2191705.html?ref=europeans.today). ### Tech’s changing fortunes Even with its recent troubles, *Meta* owns [the largest social network](https://www.statista.com/statistics/272014/global-social-networks-ranked-by-number-of-users/?ref=europeans.today) in the world. Those recent results that caused investors to flee in their droves [still showed](https://www.ft.com/content/9e457f1a-ee9f-419d-b8aa-2b54f7809705?ref=europeans.today) total revenues of $27 billion and profits of $4.4 billion. To maintain its position as market leader in the past, *Meta* has typically bought its [most promising competitors](https://theconversation.com/tech-firms-face-more-regulation-after-moves-to-stop-killer-acquisitions-but-innovation-could-also-be-under-threat-187278?ref=europeans.today) as early as possible. [Integrating](https://theconversation.com/facebook-latest-court-case-shows-how-europe-is-clamping-down-on-big-tech-173100?ref=europeans.today) these newly acquired startups into the company’s ecosystem helped to [maximise advertising revenue](https://onlinelibrary.wiley.com/doi/full/10.1111/1756-2171.12298?ref=europeans.today) and preclude competition. Research shows that digital markets are typically dominated by a single firm, but also that these firms tend to be [much more specialised](https://onlinelibrary.wiley.com/doi/full/10.1002/smj.3365?ref=europeans.today) than the major companies of the past. *Meta* is only active in social media and makes money almost exclusively by selling advertising. Attempts by such firms to expand into other areas typically fail – know anyone with a *Facebook* [phone](https://www.cnet.com/tech/mobile/heres-why-the-facebook-phone-flopped/?ref=europeans.today)? And while you may not remember *Google*’s attempt at [social media](https://www.theverge.com/2019/4/2/18290637/google-plus-shutdown-consumer-personal-account-delete?ref=europeans.today), *iPhone* users are probably at least aware of *Apple*’s [maps](https://www.cnet.com/tech/tech-industry/apple-ceo-we-are-extremely-sorry-for-maps-flap/?ref=europeans.today) app. So *Facebook* relies on consumers using devices produced by other tech companies to make money. But as global social media advertising revenue [slows down](https://www.ft.com/content/0abf4840-2f5a-4eae-8414-1dfda77750b0?ref=europeans.today), this is becoming more difficult. *Apple* has begun [charging *Meta*](https://www.theverge.com/2022/10/25/23423637/apple-app-store-tax-boosted-social-media-posts?ref=europeans.today) for the revenue it makes from *iPhone* users, for example. And research shows that, when two companies compete to make [money from the same captive source](https://link.springer.com/article/10.1007/s11151-022-09872-z?ref=europeans.today), their successive markups not only push prices higher for consumers but also keep profits lower for both firms. ![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2022/11/wwww-00007.jpg) ###### London Street art in Shoreditch, London. | [Unsplash/Annie Spratt](https://unsplash.com/@anniespratt?ref=europeans.today) ### Global domination fail *Meta*’s strategy has, until recently, allowed it to rule social media in western markets – but not in China, a country of more than [300 million social media users](https://www.mckinsey.com/%7E/media/McKinsey/Business%20Functions/Marketing%20and%20Sales/Our%20Insights/Understanding%20social%20media%20in%20China/Understanding%20social%20media%20in%20China.pdf?ref=europeans.today). Since 2009, *Facebook* has been blocked by the country’s *“[great firewall](https://www.theguardian.com/news/2018/jun/29/the-great-firewall-of-china-xi-jinpings-internet-shutdown?ref=europeans.today)”*, the largest and most sophisticated system of censorship in the world. Reported attempts to [adapt *Facebook*](https://www.bbc.co.uk/news/technology-38073949?ref=europeans.today) to suit Chinese government media control have never been successful. And so, Chinese company *ByteDance* was able to launch a news platform called [*Toutiao*](https://d3.harvard.edu/platform-digit/submission/the-story-behind-toutiao-the-20-billion-news-aggregator-app/?ref=europeans.today) in 2012 without having to compete with a dominant social network. In 2016, *ByteDance* launched *Douyin*, a social media platform for publishing short videos which was [subsequently released](https://www.bbc.co.uk/news/technology-53640724?ref=europeans.today) to the rest of the world in 2018 as *TikTok*. Despite not being profitable, *ByteDance*’s market capitalisation is now estimated at around [$300 billion](https://www.reuters.com/technology/bytedance-spend-up-3-bln-repurchase-shares-investors-2022-09-16/?ref=europeans.today) – versus *Meta*’s current £270 billion valuation. It is also popular among [younger users](https://www.washingtonpost.com/technology/interactive/2022/tiktok-popularity/?ref=europeans.today) that tend to be much more avid social media users. *Meta* cannot simply buy *TikTok*: it is too big, [not publicly traded](https://www.scmp.com/tech/big-tech/article/3193932/tiktok-owner-bytedance-approves-us3-billion-share-buy-back-its-first?ref=europeans.today) and under [tight control](https://www.theguardian.com/world/2021/nov/03/chairman-tiktok-owner-bytedance-steps-down-zhang-yiming-beijing-tightens-grip?ref=europeans.today) by the Chinese government. Zuckerberg’s firm has instead tried to compete by launching [similar features on *Instagram*](https://techcrunch.com/2022/06/02/chasing-tiktok-meta-rolls-out-new-reels-features-and-expands-instagram-reels-to-90-seconds/?ref=europeans.today). Ironically, the only large market where [this strategy is really working](https://www.bloomberg.com/news/newsletters/2022-10-04/facebook-s-glitzy-parties-in-tiktok-free-india?ref=europeans.today) is India, a country that banned *TikTok* in 2021 [due to a military conflict](https://www.bbc.co.uk/newsround/53266068?ref=europeans.today) with China. ![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2022/11/wwww-00008.jpg) ###### TikTok tends to attract a younger audience than more established platforms like Facebook. | [Unsplash/May Gauthier](https://unsplash.com/@maygauthier?ref=europeans.today) ### Fair competition At the same time that *TikTok* has been expanding beyond *Meta*’s reach, western regulators have also started to examine the impact of the lack of competition in digital markets on innovation. While research shows that the *winner-take-all* nature of highly innovative markets is typically [good for consumers](https://academic.oup.com/jeea/article/8/5/1133/2295941?ref=europeans.today), this is only true when all companies get a fair chance [to become dominant](https://www.sciencedirect.com/science/article/abs/pii/S0167718721000023?ref=europeans.today). In addition to [recent rulings](https://theconversation.com/google-loses-appeal-against-2-4-billion-fine-tech-giants-might-now-have-to-re-think-their-entire-business-models-171628?ref=europeans.today) against tech company dominance by its highest court, the European Union also recently introduced the [*Digital Markets Act*](https://eur-lex.europa.eu/eli/reg/2022/1925/oj?ref=europeans.today). This outlaws many practices used by dominant firms to preserve their status in a market. Similar legislation is expected [from the US](https://www.ft.com/content/8c64e651-c073-449e-bc6b-ca55ed7165ca?ref=europeans.today) after the November [midterm elections](https://time.com/6214028/tech-antitrust-bill-senate-vote/?ref=europeans.today), while the UK has [forced *Meta* to sell](https://www.theguardian.com/technology/2022/oct/18/facebook-meta-sell-giphy-cma?ref=europeans.today) gif library *Giphy* to ensure it doesn’t [decrease competition](https://www.gov.uk/government/news/cma-orders-meta-to-sell-giphy?ref=europeans.today) in the online advertising sector. All of this means that, for *Facebook* to remain dominant, *Meta* needs to invest in its own products. To be the market leader of tomorrow, the company cannot simply count on buying up promising startups. But its metaverse is a [nebulous project](https://www.ft.com/content/41c59dc9-6185-4142-95b6-8aba8d2d84b3?ref=europeans.today) and an odd bet. After all, *Google* has already failed to drum up interest in [*Google Glass*](https://www.wired.com/story/google-glass-reasonable-expectation-of-privacy/?ref=europeans.today), even though the [technology](https://www.theguardian.com/commentisfree/2017/jul/23/the-return-of-google-glass-surprising-merit-in-failure-enterprise-edition?ref=europeans.today) behind it was successful. What has changed to convince normal people to [regularly wear](https://www.theverge.com/2022/10/6/23391895/meta-facebook-horizon-worlds-vr-social-network-too-buggy-leaked-memo?ref=europeans.today) virtual reality headsets? The only alternative for *Meta* may be to find a better idea in which to invest. In the meantime, regulation continues to protect potential competitors. This is great news for consumers and creators alike: now might be the best moment to launch an innovative social media format that can actually compete with giants like *Meta* to become the market leader. ![PMP Magazine](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2021/09/end-flat-1.png "PMP Magazine") --- | [![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2022/08/feeback1-small-flatten-1.png)](https://forms.gle/tRe7igVtMPaiAPtJ8?ref=europeans.today "Leave some feedback") | [![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2022/08/share-1-small-flatten.png)](#share "Share this article") | [![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/2022/08/comment4-small-flatten-2.png)](#comments "Leave a comment") | | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------- | --- ### **— AUTHOR —** | ![](https://storage.ghost.io/c/15/40/1540bec0-7154-4feb-b8e1-97f579155b08/content/images/size/w150/2020/10/renaud-foucart-2.jpg) | ▫ **Dr Renaud Foucart*, Senior Lecturer in Economics, Lancaster University Management School, Lancaster University.* | | -------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------- | --- ##### Sources **Text:** This piece was originally published in [The Conversation](https://theconversation.com/why-metas-share-price-collapse-is-good-news-for-the-future-of-social-media-193482?ref=europeans.today) and re-published in PMP Magazine on 5 November 2022\. | The author writes in a personal capacity. - **Cover:** Unsplash/[Mariia Shalabaieva](https://unsplash.com/@maria%5Fshalabaieva?ref=europeans.today). (Licensed under a [Creative Commons Attribution-ShareAlike 4.0 International License](http://creativecommons.org/licenses/by-sa/4.0/?ref=europeans.today).) ![Creative Commons License](https://i.creativecommons.org/l/by-sa/4.0/88x31.png "Cover photograph license") ![The Conversation](https://counter.theconversation.com/content/193482/count.gif?distributor=republish-lightbox-basic)