The End of Facebook’s Growth Era

It’s amazing how Twitter sums up what I’m thinking sometimes. In light of Facebook’s cataclysmic stock plunge after a conga line of controversies I had been musing an article on how Facebook has essentially entered a new era, and likely not a positive one.

As I was putting some notes together, I discovered a fantastic tweetstorm from a tech pundit and content manager I follow. He has since auto-deleted the tweets so I don’t want to credit him, but I wasn’t comfortable claiming credit for them either.

It’s no joke that this pundit summed up almost everything I was going to say, so I thought I’d chronicle the tweetstorm and add some of my addition thoughts. In an age of ephemeral information often seen on Twitter, sometimes there are things worth saving.

How’s that apology tour going

This feels like a good time to remind everyone that Facebook has been on what is essentially a 15 year apology tour. Apologies are wonderful as long as they’re sincere, but you have to show people that you’ve changed. Zuckererg is basically stuck in an endless cycle of perpetration and apology. The only difference now is that far more powerful people are taking notice.

Nonchalantly apologizing to your users works when you’ve blindsided them by introducing the news feed. It’s not as helpful when you’re facing questions involving data privacy and whether or not your platform was co-opted for election interference.

I honestly think we may have seen the end of Facebook as a growth company. This quarter could be the turning point.

Facebook is simply running out of users, especially in the United States. 68% of Americans used Facebook in 2018; the exact same number that used Facebook in 2016. This has had the nasty coincidence of happening alongside Facebook’s current conga line of public relations disasters.

It’s a perfect storm that’s going to be bad news for Facebook’s shareholders a sign that Facebook is on the way down. Because I just don’t see Facebook maintaining its status as king of the hill if this is how it handles problems.

It’s pretty crazy to think about how badly they messed this up and how little credibility they have left. And credibility is really the key metric here.

You reap what you sow, even if it’s not apparent at the time. Facebook has a long, well-documented history of aggressively pursuing company growth regardless of how many bridges it burns along the way. Zuckerberg can issue his apologies until the end of time, but it’s clear that Facebook cashed in any credit or goodwill it once had a very long time ago.

The problem with brushing off literal livestreaming murder videos as “coming with the territory” is that, while this can help justify growth at the expense of standards, or discretion, or common sense, or just basic ethical expectations it doesn’t do a lot to build the kind of rapport you need with the very consumers keeping your company afloat.

After 18 months of nonstop bad news, people don’t trust Facebook — they don’t trust the content in their feed and they don’t trust Facebook with whatever they might share there.

Facebook has not given users a single reason to trust it. This is old news to the point of being comical. The problem is that Facebook is tied to its users trust and willingness to share data with it. It’s not like Apple, where they can just release a new iteration of a product that fixes problems.

Furthermore, Facebook’s new products and policies are going to be reliant on people being willing to share that same data. Facebook, honey, if you really think people are going to trust you enough as a banking provider I don’t know what to tell you.

And so they will share less, they will consume less. Facebook will become less useful, people will spend less time there. And because people spend less time there, advertisers will spend less money there.

Not much to add here that hasn’t been said. The question of how much value people get from Facebook has always been subjective, but the newsfeed has become a cluttered mess of memes and clickbait links unless you consciously take steps to clean it. It’s not as if this is the end user’s fault, either; Facebook’s algorithm has specifically allowed for this kind of behavior.

And so goes the death spiral.

This isn’t dissimilar to the tragic spiral I see small businesses go down. When it comes to promotion, small businesses generally don’t think about marketing or promotion because of how busy they are. It gets brushed off until the company can’t break through the initial ceiling and expenses outpace revenue.

You’re probably seeing the cycle. The business needs to spend money on marketing campaigns or overhauling the website, but it can’t afford to do this with the current state of the business. So business continues drying up. It’s a horrible feedback loop that’s almost impossible to break out of.

While it’s a very different situation for a tech giant, Facebook laid the foundation for this cycle happening years ago when it was content to sit on its laurels and not take its own reputation seriously.

The crazy thing is that Facebook sees this and has no idea what to do about it… and so you have the company trying desperately to win back their credibility. There are the apology commercials, the weird documentary thing, the on-background briefings with journalists where they can’t answer the most simple and obvious questions, the podcast where Mark says exactly the wrong thing…

What’s clear to me is that Facebook never envisioned this happening. They were content being king of the mountain and were happy to buy (hello, Instagram) or muscle out (hello, SnapChat)t their competition. Meanwhile, they were completely oblivious to all of their own problems. It’s sort of like being a rock star when you’re in Facebook’s situation – you deal with all of the bad stuff – the stalkers fans, the drugs, music agencies, the promoters, as long as they money’s coming in. Until one day it isn’.

… in each case they’ve lost even more credibility because they’re so desperate that they can’t just take a stand and do the right thing because inevitably they’re afraid they’re going to offend someone.

I’ve got nothing to add. Pretty much spot on. Facebook has been walking a very fine line here, because they’re afraid to commit to anything but by the same token they have to do something. Hence these increasingly bizarre and cagey apology tours.

It’s not like the company will disappear overnight but it’s basically just a marketing channel that’s past its peak of cultural influence. And like previous marketing channels—the aols and yahoos of the world—there’s nothing left to do now but optimize earnings on the downside.

The signs are already happening. Pew Research in a survey of US adults found that 42% took a break from Facebook for several weeks or more, 26% deleted app from their phone, 54% adjusted privacy settings in past 12 months. These are not good trends when you’re facing market saturation and are lacking any kind of pivot option. Speaking of which…

Anyway it was a good run but I just don’t see how it pivots to the next phase when all it has to sell is the information people are willing to share with it and who the hell wants to share their information with Facebook right now or anytime in the near future.

I suppose Facebook can still try convincing people to share their financial information with the company as part of this weird push to a banking provider, right?

In all seriousness, Facebook can’t rely on products in the way Amazon does. It’s not even like Apple where they can patch iPhones, fix vulnerabilities, offer replacement batteries, or come out with the new iPhone Better Version and instantly erase a lot of issues with prior models. Facebook can’t simply push out a new release in this way, and an apology tour certainly isn’t going to suffice.

Addendum: a few people argue FB can still leverage its other apps (i.e. IG & WhatsApp) for sustained growth despite slowdown/decline on core service. The only problem with that is Facebook is increasingly trying to blend those channels with its core service (e.g. showing FB notifications in Instagram feed, cross posting stories, etc.) The more the company pushes to tie the standalone apps to FB, the higher the likelihood it taints them with the same ill will it has on the core service

This is absolutely correct. We’re seeing the Facebook-ification of Instagram withe news feed and advertisements, and WhatsApp more infamously had a falling out between its cofounders and the Facebook brass when Facebook pushed advertising features that WhatsApp’s leadership didn’t want. Setting aside what the founders were expecting, this is a trend that’s likely to continue.

This was a fantastic tweetstorm, and it summed up my thoughts to the point where I don’t have much else to add. Don’t expect this to get any better anytime soon; people still tend to act like Facebook is a plucky startup, but the radical shift in thinking and philosophy to retool a company like Facebook is not something you see at a company this monolithic or this complacent. So there will be more apology tours, more mistakes, and more assurances that things will be different. Except now that legal questioning is involved, it may very well be. Only time will tell.