Nothing like a $150 billion tumble in market capitalization to hammer home the message: Facebook’s chickens have come home to roost.
In its Q2 earnings report, the social giant reported that growth has stalled in the United States and Canada, its most valuable markets. And its overall user growth for the quarter, just 22 million users, is the smallest jump since 2011, indicating that a slowdown in revenue growth will likely prove a long-term challenge in the years ahead.
The reasons for the bad news? Besides market saturation, Facebook’s very name has since the 2016 U.S. presidential election become a stand-in for everything lawmakers and watchdogs lament about the tech industry: shabby privacy practices, unwillingness to take down the pages of publishers who promote such heinous views as Holocaust denial, and slowness to combat the weaponization of its resources for political wrongdoing like election hacking.
Facebook chief financial officer David Wehner attributed the troubles to “more choice around privacy” and the company’s recent adherence, along with the rest of the digital marketing ecosystem, to the European Union’s GDPR. Wehner said we can expect a drop-off in revenue growth for at least a couple of quarters to come.
It’s also worth noting that Facebook seems to be losing its grip on the future of the Internet. eMarketer projected earlier this year that Facebook is shedding users in the youngest demographic brackets, while photo-centric platforms such as Snapchat and Instagram clean up. That’s why Facebook’s purchase of the latter is now hailed as one of the shrewdest big business decisions of the millennium.
Joe Zappa is Street Fight’s managing editor. Follow him on Twitter @joe_zappa.