Facebook To Metaworse
The Times of India Mumbai|February 09, 2022
Metaverse may not be Zuckerberg’s salvation if privacy violation is built into its business model
Apar Gupta
Facebook To Metaworse

Over the past week Meta Platforms, which owns and operates Facebook, Instagram and WhatsApp, has taken a big market hit. Its shares dropped 25%, wiping off at least $240 billion off its market capitalisation. As of Monday, this trend continued with another dip of 4.7%, a cumulative stock price fall of 30% since its earnings report for the fourth quarter of 2021.

Is Meta’s share fall a part of the overall bearish market sentiment on global technology companies? No, because the Alphabet-Google stock is down only 1.8% and the Amazon stock, after a drop, is now witnessing a rally. Therefore, markets are sending a bigger message to Meta.

Market analysts have set out two primary reasons for Meta’s challenges. The first is that Facebook has lost roughly half a million users, marking a decline in its global user base for the first time. While this may seem like a blip in the overall number of 1.93 billion active daily users, if this continues as a trend, it will lead to a negative network effect.

The doctrine of network effects says that the value of a communications network is proportional to the square of the number of its connected users. Just as this plays out when most people join social media, a shrinking user base will usually have a compound impact that will spur greater attrition – simply, each person leaving Facebook, prompts another.

This story is from the February 09, 2022 edition of The Times of India Mumbai.

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This story is from the February 09, 2022 edition of The Times of India Mumbai.

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