Facebook Founder Mark Zuckerberg’s 20-Year Formula for Success Has Expired
Facebook can’t copy or acquire its way to another two decades of prosperity. Is the CEO Mark Zuckerberg up to it?
The other day I did something I haven't done for years. I browsed Facebook. By which I mean: I really took a look around. Good grief, what a mess! It's like walking round an abandoned amusement park of badly executed ideas. Can you name a single person who's found love through Facebook Dating, which was meant to challenge Tinder? Is anyone viewing Facebook Watch, a supposed rival to Netflix? How about the Facebook Gaming portal, once billed as its foray into cloud gaming and an effort to take on streamer platforms Twitch and YouTube? Today it's littered with low-rent titles offering little more to the player than your typical fruit machine. Even some of the more popular ideas must be shared with warning labels — scammers are everywhere on Facebook Marketplace.
Fortunately for Mark Zuckerberg, the barnstorming success of other parts of Meta Platforms Inc. — the rebranding of the business meant to reflect his vision of the future — means its duds can hide out within the comically cluttered navigation menu on the main Facebook app. Besides, for 20 years, use of the main Facebook service — known as the “blue” app internally — has remained remarkably resilient. It attracted 3.07 billion monthly active users as of last quarter, the company said. Though, tellingly, Meta said it would no longer break out the number in future reports.
We are on WhatsApp Channels. Click to join.
The Blue app graveyard, and what it represents, is something worth thinking about as the company enters its 21st year with a record high valuation above $1 trillion. Investors see Zuckerberg as a weatherer of storms — bucking worries about the shift to mobile and, more recently, worries that Apple Inc.'s privacy changes would blast a hole in its targeted ads business model, which in 2023 accounted for 97.8% of its total revenue.
But the more cynical take on Zuckerberg has long been that he's lacked any fresh ideas of his own since creating the app in the first place — and even that's disputed, famously. When he saw that the promising image-sharing app Instagram was gaining traction, he bought it, saying in an email at the time that it would have been “really scary” if the company couldn't. Later, when messaging app WhatsApp looked to be gaining a foothold in how young people, particularly outside the US, were communicating — he bought that, too. Even progress in the metaverse, long seen as Zuckerberg's personal pet project, came in through the front door thanks to his acquisition of Oculus VR.
When he can't acquire, he copies. This approach has relied on the existing network effect of Facebook or Instagram to make the duplicate product a success through sheer brute force. There's no better example of this than Instagram Reels, Meta's TikTok rip-off, which has offered little of any innovative value — it would fade without a trace as a standalone app — but in the past few quarters has been the key driver of Meta's engagement growth thanks to the fact that billions of people already use Instagram.
This approach has all been well and good — for the first 20 years. But there are signs Zuckerberg may not be equipped for the challenge he now faces. The Blue app graveyard speaks to a record of ill-judged, reactionary moves. Bolder projects, like the desire to create a cryptocurrency, fell apart largely because of Meta's poor reputation among regulators, while its poor reputation among the general public can be blamed for its Portal video device failing to take off despite its technical excellence. Zuckerberg's humbling Senate appearance earlier this month showed that he is still being vilified for the company's mistakes around safety, particularly with regards to how children use its apps, and may not fully grasp the outrage.
And now, despite being seen as the big tech “comeback kid” after recovering from 2022's dwindling share price, Zuckerberg may no longer be able to continue to copy and paste his way out of trouble. The next threat to Meta doesn't come from easily duplicated up-and-coming social apps but new paradigms in computing altogether.
Let's look at hardware. It's becoming quite clear, despite my own enthusiasm, that Apple has created a chasm in quality between its Vision Pro headset and Meta's Quest. While Meta says it could make an ultra-premium headset that costs more than $3,000 if it wanted, the truth is it won't because no consumers are interested in buying one from the company. Now, there is likely space for a budget headset for some time (as I have argued), but it seems unlikely that Meta can outcompete Apple on hardware in the long run. If Meta loses on hardware, it will lose on the ecosystem that will underpin the next computing platform.
In AI, its open source approach to growing its large language model, LLaMA, is an intriguing counterpoint to the closed-off systems being built by OpenAI, Anthropic and others. But the trade-off is control, speed and monetization. It will be hard for Meta to sell use of its AI when the underlying technology is out there for anybody to use. And while the company has a great chance to add AI features to its existing successes, there will be high computing costs with no obvious way to make money back from the billions of users who are on Meta's apps largely because they're free.
There is no easy way to copy the successes of others. Not anymore. These innovations are certainly not something Meta's engineers can whip up in a few months, as they did with Threads, its Twitter clone. Nor can Meta go on a shopping spree, with regulators making it clear they will look extremely closely at any dealmaking (a recent, small-beans deal to buy a fitness startup only just scraped through). Without a cloud-computing platform, Meta can't, as Microsoft, Amazon and Google have done, tempt collaborators to come on board in return for providing gold-dust computing power.
In short, it is down to Zuckerberg and his team to innovate for themselves. The Blue app's graveyard shows how hard that might prove to be — and these next bets are so costly, he won't be able hide them on his website if they don't work out.
Also, read these top stories today:
The new and terrible face of war is here! Israel's army has deployed some AI-enabled military technology in combat for the first time in Gaza, raising fears about the use of autonomous weapons in modern warfare. Know all about it here.
Looking for an iPhone with a discount? Look no further! Here is iPhone 14 Plus and it comes with a big discount. Jump right in here.
Layoffs or not? How top companies in the world are fudging what they call the fact of sacking employees. Amid a slew of job cuts, companies opt for euphemistic and vague synonyms, like “rightsizing” and “org changes.” Know what it is all about here.
Catch all the Latest Tech News, Mobile News, Laptop News, Gaming news, Wearables News , How To News, also keep up with us on Whatsapp channel,Twitter, Facebook, Google News, and Instagram. For our latest videos, subscribe to our YouTube channel.