Facebook parent Meta blames Apple, rising competition as it loses million users for first time

Facebook’s daily active user count declined quarterly for the first time as its parent company, Meta Platforms, posted a largely underwhelming financial report for the last quarter of 2021. Facebook’s daily users fell by a million to stand at 1.929 billion. Its monthly active users remained flat at 2.91 billion, underwhelming analysts who had expected it to grow to 2.95 billion.

At its investor call, Meta executives blamed a number of factors — including greater competition to its key businesses and Apple’s privacy changes to its iOS operating system — for stifling its growth. The company’s financial report flat growth and a weak future projection, sending its stocks crashing in the late hours of Wednesday, February 2.

According to Meta’s chief financial officer, Dave Wehner, Apple’s privacy changes with iOS has hit a $10 billion blow to the Facebook group and its core business of targeted advertisements. In October 2021, Facebook and Meta chief Mark Zuckerberg had also said that the ‘Ask app not to track’ feature by Apple has made a significant dent to the company’s ad revenues.

In April 2021, Apple introduced the app tracking privacy feature through iOS 14.5, which allowed users to choose to ask an app to not track their activity across other apps and browsers. The feature was built to reduce targeted advertising based on user activity, which is a key revenue path for Facebook. The latter had then run multiple campaigns to try and convince users that opting out will hurt small businesses.

Apple had defended its stance by stating that its move simply gave the power to users to decide if they wanted to part with their data, instead of being left powerless over it. However, reports have since questioned the effectiveness of the feature, and claimed that it may not really make as big a difference as many may have thought.

Meta’s quarterly revenue for Q4 2021 was reported at $33.67 billion, meeting analyst estimates. However, it reported lower earnings per share, and issued a weak forecast for Q1 2022 — targeting revenue of $27 billion against industry estimates of $30 billion.

In the earnings call, Zuckerberg said, “I'm encouraged by the progress we made this past year in a number of important growth areas like Reels, commerce, and virtual reality, and we'll continue investing in these and other key priorities in 2022 as we work towards building the metaverse.”

However, reports state that business areas such as Reels continue to offer poor monetisation returns. The company’s new augmented reality and hardware business spin-off, Meta Reality Labs, also reported $10.2 billion in net loss, which Zuckerberg said he doesn’t expect to return profits “any time soon”.