In the dark night, the most terrifying thing is that I don’t know when the dawn will come.
Around 2017, a discussion was popular on the Internet: Facebook, Apple , Amazon , Microsoft , Google , , which of these Silicon Valley giants will go bankrupt first?
was the climax of the popularity of mobile Internet. The revenue of giants and profit of have increased significantly, and their stock prices have broken through new highs again and again, approaching the limit in human business history.
Whether it is the Internet bubble in the early 2000s or the Nokia was quickly defeated by iPhone, it proves that the technology industry is full of uncertainty. People understand that dynasties are difficult to last. But now, the Internet has become a new infrastructure. Will giants that grasp key resources really go bankrupt?
's discussion on which giant might go bankrupt first has spawned many different opinions, and most of the discussion revolves around Apple and Facebook. Many people believe that the businesses of both are overly dependent on consumer decision-making and do not form high barriers, and are most likely to have large fluctuations or even collapse.
Now, 5 years have passed, and the giants have experienced a new round of growth and their status has even become more stable. Only Facebook has suffered a series of serious blows. Since the 2018 "Election Manipulation" (Cambridge Gate) scandal, the company has suffered a series of blows and everything goes well.
Zuckerberg attended the Congressional hearing at the "Cambridge Gate" | Reuters
Last October, Facebook announced that it would rename Meta, betting on " Yuan Universe ".
A year has passed, and Meta's meta-universe strategy shows no sign of its rise, but the basic foundation of the social media business has already hit the ceiling of growth. Behind , TikTok is eyeing him.
In June this year, she was once considered a key figure in Facebook's internal balance between Zuckerberg. Former COO Shirley Sandberg announced his resignation, causing internal shock to the company. The successor COO Javier Olivan focuses more on growth and core operational metrics.
The situation is thousands of miles a day.
On the one hand, all kinds of marginal departments that lack efficiency at the moment are facing the fate of being laid off, and layoffs are one after another; on the other hand, Zuckerberg publicly stated internally that "some people should not stay here" without any intention of "handling low-key and appeaseing people's hearts."
In the past 20 years of starting a business, Zuckerberg's experience of founding Facebook has been full of drama and has experienced many "darkest moments". But in the past, every dark night was over, we could always have a bottoming rebound.
But this time, Zuckerberg faced more serious than ever before. Meta's market value has evaporated by 60% over the past year, and there is no sign of "bottoming".
Meta, may be becoming the Titanic of Silicon Valley.
In 2021, Zuckerberg announced that the company will be renamed Meta｜Meta
set sail "Meta Universe"
Turn back a year ago, Facebook changed its name to Meta.
is hard to understand why Facebook is so eager to change its name. Even if the "meta universe" represents a larger and reachable future, it is not worth investing in it, so at such an early stage, the trump card of brand assets is thrown out, all-in "meta universe".
But Zuckerberg is still ambitious. Since acquiring Oculus in 2014, Facebook has spent 8 years investing in VR technology, but neither hardware nor software have ushered in a key breakthrough. Hardware sales performance and software ecosystem development have fallen into a long-term downturn. Zuckerberg believes that a major release is needed to change consumers' perception of the Oculus headset hardware and the concept of the metaverse. The name change of
did indeed inject a cardiac intensifier into Meta. The Christmas season followed, sales of Oculus VR devices surged.According to the research results of IDC, in 2021, the sales of Oculus Quest were approximately 5.3-6.8 million units, almost doubled year-on-year compared with 3.5 million in 2020. This result has also been confirmed on the software side: Oculus App's daily active users increased by 90% year-on-year in in the fourth quarter of 2021, and once ranked first in the App Store rankings in the United States.
In terms of the VR market, Meta's Quest has occupied an absolute leading position. Relying on the relatively low price and Meta's market promotion offensive, many people have chosen this trendy and future-oriented toy as a Christmas gift for children.
, however, this result may be a happy ending in the field of VR headsets, but it is still not worth mentioning in the broader market context.
Oculus' previous product line｜Oculus5
Oculus VR hardware sales of 5 million to 6 million, far less than PS5 and Switch. The sales of the two in 2021 were about 17 million and 23 million respectively. The PS5 has been experiencing a hell of production capacity in 2021, with supply exceeding demand; the Switch is already a host that has been released for 5 years and is entering the end of sales.
It can be said that the achievements made by Meta after its name change in 2021 are still limited to the very narrow market of VR. Quest is far from becoming a successful "game console", let alone becoming the "next generation Internet access device".
If you want to support Meta's meta-universe strategy, Quest hardware requires at least 100 million yuan in order to form initial potential energy - after all, the total number of Meta social media users is at the 2 billion level. In the past five years, all the hardware sold by Oculus has added up to only more than 10 million units, which is equivalent to only 0.5% of Meta users who can enter that "meta universe".
Moreover, the troublesome problem is not sales, but more about how to build that "meta universe" from a technical level.
At the press conference a year ago, Meta demonstrated many so-called "meta-universe experiences", including exercise and fitness, participating in concerts... but they are all special effects images rendered in post-production, and there are almost no real-time demonstrations running on Quest.
When Meta's meta-universe application Horizon Worlds was launched this year, the effect was "car accident-level".
Previously, a screenshot of the "Meta Universe" released by Zuckerberg was ridiculed online | When the application of Twitter
was launched in Europe, the Meta team shared a picture of Zuckerberg taking a photo with Eiffel Tower in the Meta Universe on social media. In the picture, both Zuckerberg's virtual image or the modeling of objects in the background appear rough and weird. Soon this picture was "common ridiculed" by the entire technology community. Some game media commented that Meta is equivalent to replicating an old game from the 2003 era " Second Life " using VR.
In the face of cruel technical restrictions, Meta's "meta-universe ideal" is like a bird that cannot fly, falling to the ground with a bang. Moreover, the hardware performance of VR relies heavily on upstream technologies such as computing power, display, and sensors. It is difficult for Meta to "suddenly change" the technology by spending money.
htmlIn the beginning of 4, it was reported that after the company changed its name to Meta, Zuckerberg began to hold meetings in the metaverse more frequently with Quest VR. Therefore, many Meta employees also purchased their own hardware for "office" while working from home. They may be more clear about where the root of the problem lies.
According to Meta's second-quarter financial report, Reality Lab, a metacosmic division under , had a total revenue of US$1.146 billion in the first half of 2022, an increase of only 36% year-on-year, accounting for 2% of the entire parent company's revenue. The losses of this part of the business are also expanding, with growth rates comparable to revenue growth.
No surprise, Meta lost tens of billions of dollars in the meta universe this year, and there is no big problem.
"Backyard Fire" social business
Meta's meta-universe journey may still be long, but a bigger problem appears in front of you. The company's forward-facing engine - the core advertising business, is shutting down.
In the second quarter of 2021, Meta experienced its first decline in revenue, with revenue in the second quarter of US$28.8 billion, down 1% year-on-year. Profits shrank even harder, at $6.7 billion, a year-on-year decrease of 32%, down three consecutive quarters.
revenue decline is attributed to the weak advertising market on the one hand. Not just Meta, almost all social media companies based on advertising models have been affected, including Google, Twitter and Snap, which have seen slower or even lower revenue growth.
The most intuitive reflection of the advertising unit price, which dropped by 14% year-on-year. Meta's advertising system is based on social networks and focuses on "precise delivery". Its unit price is relatively high, but its effect is better. In the second quarter of 2021, Meta's advertising unit price achieved a year-on-year increase of 47%.
Apple iOS system tightens its privacy policy, which greatly affects the social platform advertising business | Embryo
However, with the update of iOS system in April 2021, the iOS system has restricted the app's tracking of users, resulting in the Meta's advertising system being unable to achieve the precise push effect as before. Coupled with the overall weakness of the market, it ultimately affected the advertising unit price and caused overall business weakness.
. Behind the weak advertising business, there is a problem with the basic platform of Meta social network.
In the past 20 years, if you want to summarize Facebook’s entrepreneurial history in one word, it is “growth”. For a long time, Facebook's company motto was "mov fast and break things", emphasizing quick trial and error, finding the best growth path through user feedback, and covering up those irrelevant flaws with explosive growth.
But now, the era of growth is a past tense.
Today, Meta's three major social platforms, Facebook, WhatsApp, and Instagram, have nearly 2 billion daily active users. In the past two quarters, Meta's daily active users' growth has stagnated in the volatility, slowly approaching 2 billion, and it is difficult to make a bigger breakthrough. After all, the total population of Meta's business areas is only so large. In addition to the number of users that will no longer grow, the real hidden danger lies in the degree of participation and usage time.
With its massive popularity, Facebook has been losing its early attractive "magic". Especially for young people, their parents and family are on Facebook, and using Facebook is easily regarded as a scheming behavior. They are more willing to try new, niche social media, such as Snapchatml5.
TikTok quickly occupied the young people's market in Europe and the United States｜Mill Valley News
Most niche social media have never shaken Facebook's status until 2019, TikTok rose in the United States. The rich and fast-paced content on short video platforms has greatly affected the attractiveness of traditional social media to users.
This forced Meta to make drastic reforms to social products.
In April this year, Zuckerberg said that the company is increasing participation by changing the way users view content. Facebook and Instagram will show users more content recommended by algorithms, not just content they follow. Now about 1/6 of the content on the user information flow comes from algorithm recommendations. The Meta plan will increase the proportion of algorithm recommendations to 1/3 by the end of 2023.
uses the algorithm to push content, which is obviously imitating TikTok's product strategy . In addition, Instagram also directly imitated TikTok and launched the short video feature Reels. Data from the latest quarter showed that Reels user usage increased by 30%.
Meta is conducting a comprehensive imitation of TikTok, but imitation can only be a defensive measure after all, and cannot change the "steam fire" of TikTok in the United States, especially among the teenagers. When TikTok's scale further grows and the advertising business is in-depth, the competition between the two companies will only become more intense.
For Meta, this may be the battle of life and death in the future.
Hemostatic Survival
Whether it is new business or basic market, Meta's local bleeding is gradually falling into an irreversible situation.
has been renamed last year, and in less than a year, Meta's stock price has fallen by 60%. With a market value of less than US$400 billion, it is far behind giants such as Apple, Google, Microsoft, and Amazon. The response given by
Meta is "save".
9, according to insiders, Meta plans to cut spending by at least 10% in the coming months. To achieve this goal, Meta will take a number of measures, including reducing management costs, cutting outsourcing budgets, reform and restructuring of non-business units, and layoffs.
This summer, Meta management has publicly discussed stopping recruitment and announced that it will focus resources on "the most critical priorities" to improve core operating indicators. In July, Meta fired 368 outsourcing staff, including some security personnel, at its California headquarters. The bigger change in
lies in department reorganization.
For example, Meta is breaking up the company's internal AI labs and assigning personnel to various product groups. This means that those AI scientists and developers must transform from "research-based talents" to "engineering talents" to solve more specific problems, rather than just doing some generalized theoretical and technical research. Reorganizations like
will inevitably bring about personnel turmoil. Jerome Pesenti, the vice president of Meta AI research, announced his departure from Meta shortly after the restructuring was announced. He worked at Meta for 4 years, and was responsible for developing Meta’s AI supercomputers.
More employees who do not want to leave have to "select a second job search" within the company in order to transfer jobs. For employees whose jobs have been cancelled, in order to avoid news of layoffs, large Silicon Valley companies such as Meta will provide employees with a period of "replacement period" and employees can seek jobs internally. Only employees who cannot find new jobs after the deadline will be fired.
In the past, it was not difficult to transfer jobs. Only those employees who were particularly unpopular would fail to transfer jobs. However, with the intensification of internal turmoil in Meta and the cooling of the external employment environment, the difficulty of transferring jobs is increasing day by day. Many employees with good reputation and high evaluations have also had to leave Meta because of the department's laid off and failed to transfer jobs.
2016 MWCh press conference, Zuckerberg walked past the participants wearing Samsung VR headset | Internet
. A Meta internal staff told the media that through department restructuring, putting pressure on the internal, increasing the difficulty of transferring jobs, and accelerating the "naturally resigned" of employees is a disguised method of laying off employees. Meanwhile, the management of Meta is strengthening performance management, requiring middle-level managers to find poor performers and arrange them into the "performance improvement plan". In Silicon Valley, entering the "improvement plan" is usually the prelude to resigning.
Cost saving pressure can be said to be everywhere. Recently, Meta is planning to launch a "flexible workstation" system, which no longer provides fixed workstations, but allows employees to apply for reservations on their mobile phones before going to work. In this way, the total number of workstations is reduced, office space and management costs are saved. The news related to
was soon opposed by employees on the intranet, but this seemed to be "hunting people". According to insiders, the series of measures currently taken by Meta are just preludes to the next step of larger layoffs.
At a plenary meeting in June, Zuckerberg said bluntly that "There may be some people in the company now, and they should not be here."
From the ideal of the meta universe to the basic foundation of the core business; from the company's stock price performance to the career future of grassroots employees, Meta is experiencing a long night without seeing.
Everything may be phased, but it is just a slightly violent bump, but it may also be the beginning of the sinking of this giant ship.
The most terrifying thing in the dark night is that no one knows when dawn will come.
