Facebook faces a decline

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The social networking giant of its time has stopped being the crown jewel for a while now. The growth as stopped altogether now in USA, Canada, and some European countries.

Stoppage in growth has also slipped further into decline in many instances. However, its growth on an international level still enjoys a rise of an average 9% increase in its active users. This year, the increase was a record 10%.

A part of recent takes on this issue claims that although the short-term future of Facebook seems secure enough, its long-term future is still very unsure. This idea owes itself to the fact that the most profitable users come from the countries where Facebook is facing a decline. The speculated reason for a decline from 279 to 278 million European users is said to be the GDPR. These are regulations by the governments on the use of social media which inevitably cuts one million users from Facebook annually. Since the most revenue per user is linked to these same countries, owners and stakeholders at Facebook are worried.

Moreover, the most widely used method to generate revenue by Facebook is through advertising. If users from societies related to the generation of a larger part of Facebook’s yearly revenue leave, they take more potential users with them. This, in turn, leads to a decrease in the online advertising that feeds Facebook. Hence, an uncertain future is not that far away for Facebook.

This misfortune has intercepted Facebook especially recently due to some of the most widely known scandals it has indulged itself in. The data privacy and security scandals including misinformation being spread using Facebook as a vessel to tamper with elections have been the hottest. Out of these, the most globally famous event was the Cambridge Analytica scandal which landed Mr. Zuckerberg in front of dozens of cameras and an unimpressed US Senate to testify.

Even in the aftermath of this scandal, the world continues to watch Facebook being used as a vector to the craziest conspiracy theories, religious fanaticism, jingoism, espionage, and misinformation. The most recent alleged misuse is being seen in the form of an Iranian group seeking to spread division among voters before the midterm elections.

Zuckerberg has been recently reported as saying:

“Public sharing will always be very important but people want to share privately too. People feel more comfortable being themselves when they know their content is only seen by a small group and when they know it won’t be around forever.”

When Wall Street faced an unexpected decline that was the gravest in its history, Facebook did not feel the brunt as much. The Facebook overlords had already reported and warned of its potential descent. The downturn of active users, therefore, does not surprise Wall Street. It does, however, puts a blanket on the expected future of the company. Till now, it has stayed in the topping list of Silicon Valley endeavors. But a 33% revenue generation dependent on ads can make this social media giant fall just yet.

Stay tuned for more updates!

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