Yahoo was once the most popular website on the planet, the only place that everyone on the internet seemed to touch at least once an online session. After an ignominious slide, however, Yahoo is just another site that has some fans in certain parts of Asia and offers some niche products.
Has Mark Zuckerberg launched Facebook on a similar path?
That is the big question investors need to start asking as the Meta Platforms Inc. META, -1.01% chief executive scrambles to shift his strategy amid obvious signs of distress. After its first-ever decline in users three months ago, Facebook reported its first quarterly revenue decline in history Wednesday, and Zuckerberg’s answer is to mimic a rival and send the company into dangerous waters that already almost killed the platform and took U.S. democracy with it.
Zuckerberg is changing the company’s core apps to become far more reliant on artificial intelligence to drive the content its users see, seeking to mimic growing Chinese rival TikTok — a major shift to give the algorithm more power over what people see on Facebook and Instagram. Zuckerberg told analysts on the company’s second-quarter earnings call that Meta’s apps will rely more on its discovery engine, instead of people or things you follow, for content. That means users will see (and are already seeing) content from complete strangers in their feeds and videos, just like TikTok.
“Right now, about 15% of content in a person’s Facebook feed, and a little more than that of their Instagram feed, is recommended by our AI from people, groups or accounts that you don’t follow,” Zuckerberg said. “And we expect these numbers to more than double by the end of next year.”
Facebook was lucky to survive a series of scandals in recent years, from allowing election misinformation to run amok to selling private user data to helping spread the incitement of violence that led to the storming of the U.S. Capitol. Yet apparently nothing was learned, as the company, or at least its algorithm, will now decide what stranger’s content you will see.
Facebook, and the world, have already learned that bad actors will learn how to game that algorithm, leading to dominance of incendiary posts or videos, divisive content that will pit strangers against strangers, on an even scarier scale than exists today. If we’re lucky, the result will be that the users Facebook still has will decide it’s time to leave for other online destinations, as Yahoo’s fans once did.
While the algorithm takes even more charge of Facebook and Instagram — the content-moderation aspect of both social-media sites is already mostly handled by AI, Zuckerberg said in answer to a question on the call, showing just how incapable Facebook’s technology is at succeeding in its aims — Zuckerberg will expend his human capital on his pipe dream of the “metaverse.” Zuckerberg’s grand vision is to create a digital universe populated by those who want to escape the real world of grass, flowers, air, sky, animals and humans by wearing a clunky headset so you can hang out with your friends in a digital nightclub or boardroom or wherever else you want.
Virtual reality has only proven to be popular among a small segment of the population, and it is still too kludgy to be adopted by the mainstream consumer, something Yahoo co-founder Jerry Yang has already learned. So instead, all those parents and grandparents on Facebook, the olds Zuckerberg no longer cares about, will be tended by bots, while his minions focus on a new world: The uncomfortable, potentially dystopian future.
Facebook and Instagram have had huge growth because they appealed to the masses, not just advanced users or the techies who develop these products. If Meta loses these users, its apps will continue their current downward spiral — digital ad declines, recession or not — much in the same way that Yahoo failed to transition to mobile, with a complex site and services that could not easily adapt even as they tried to copy younger rivals, just as Facebook is doing now.
Zuckerberg is the king of Meta, with total founder control, so what he says is the law of the land — power that Yang and the parade of CEOs who took over Yahoo when he was not in charge never had. Nobody is going to stop Zuckerberg from this bet on an algorithm-driven future, so investors need to decide if they want to take the chance that there is nothing ahead of him but a downward spiral to the same fate Silicon Valley has already seen from a once-popular portal to the web.