The latest edition of the British "Economist" printed version of the article said that the recent troubled Facebook suffered a lot of the same problems as Yahoo that year, if not handled properly, it may become the next Yahoo.
The following is the full text of the article:
Whether it's private communication or public, the bosses of several large technology companies are now calling Facebook "tobacco giants" (Big tobacco). In the past year, the company has been trying to cope with criticisms: some claim that it is addictive, some think it is unfavorable to a democratic society, and others believe that it is difficult to keep up with the supervision. Being compared to the tobacco giant is a big insult to the company, but it is not the only unpleasant analogy. Others think that Facebook may become the next Yahoo & mdash; — this once-incompetent Internet giant has long since faded out of sight.
If it was a year ago, this idea would make people feel incredible. The social networking giant has popular applications such as Instagram, WhatsApp and Facebook Messenger, and its core services are also booming. But since January of this year, it has fallen into a series of controversies, misjudgments and mistakes. Obviously, it did not take sufficient measures to prevent Russia from interfering in the 2016 US election. It was also forced to recognize the sharing of 90 million users' personal data with external companies without permission. It was later caught in a data breach scandal, affecting as many as 50 million users.
On November 14th, the New York Times reported that Facebook tried to downplay the extent of Russia's interference in the elections, and even hired black public relations to discredit other companies and critics. The incident triggered a big wave of news, Facebook CEO Mark · Mark Zuckerberg was forced to take a TV interview to defend his deputy Shirley · Sheryl Sandberg. An advertising industry executive said that these reports made people more convinced that Facebook & ldquo; serious management is not good. In fact, the company's share price has fallen by 27% since the beginning of the year.
Comparing Facebook to Yahoo was not appropriate. Even at its peak, Yahoo never had the huge, lucrative business of Facebook. The competitive landscape between the two is also different. One of the main reasons for Yahoo's decline is that it lost to a strong competitor in the online search industry. Google: With the continuous loss of users, Marissa · Meyer (Yielah), who has been CEO of Yahoo before selling to Verizon from 2012 to last year Marissa Mayer) also failed to restore the confidence of advertisers and employees. No company today really competes with Facebook's suite of apps, in part because it has acquired competitors like Instagram —— this is a very successful photo app and is at the heart of its future plans.
However, those who have witnessed the collapse of Yahoo have seen ominous similarities. Executive change is the leading indicator of Yahoo's decline: it replaced four CEOs in three years before Mayer took the helm. In contrast, Zuckerberg, who controls most of Facebook's voting rights, has not left, but many executives have left. Several key figures announced their departure this year, including the founder of Instagram, the owner of Oculus, the co-founder of WhatsApp, and the general counsel of Facebook and its chief security officer. “Openly resigning and condemning the company’s number of executives is unprecedented. This is the case with Marisa · Yahoo before Meyer took the helm. “A senior executive in the digital advertising industry said.
On the other hand, various negative news led to low morale. An employee used the “worry” application on Facebook on Blind to describe the company's atmosphere. This raises two risks. Star employees may switch to less controversial companies, and Facebook may end up paying a premium for retaining mediocre employees (because the stock price falls, it must provide more equity incentives to retain talent).
How can this be interpreted? Facebook is still strong, but it is still in an unstable balance in the industry and will face several challenges in the coming year. Most importantly, it has to deal with people's changing use of products, which can have a huge impact on their profits. Compared to two years ago, adults over the age of 18 spent 31% less time on Facebook's core social network, which would reduce the chances of selling advertising.
Facebook relies heavily on Instagram to deal with this situation, and the photo sharing app is also seen as a savior by executives at the company. The service is rapidly increasing the number of ads users see. However, how much strength should be used when advertising on Instagram has caused disagreement, which also led to the accidental departure of the founder of this photo application in October. Ads now account for about one-fifth of the total number of posts users see on Instagram, about twice as many as a year ago. This may be annoying to people, they may choose to reduce their stay on Instagram in the future, making it repeat Facebook's mistakes.
Users have shifted more time to products with fewer ads. “Story” means that users record their experiences through a series of photos and videos, which was first created by Snap and later copied by Facebook. This feature is currently popular on Instagram and Facebook. But people's personal "story" has less advertising space than a regular landing page (that is, NewsFeed), which intersperses ads when people browse posts.
Chat apps like WhatsApp are also becoming more popular, but they are still losing money. Facebook is inevitably advertising in it (which is why the WhatsApp co-founder left), but the company is well aware that the introduction of advertising in people's private communications environment must be extra cautious.
Moving from a publicly consuming consumer content on social networks to a more intimate interaction will have an impact on Facebook's business. Zuckerberg has acknowledged this and compared this shift with Facebook's earlier shift from desktop to mobile devices, and he also expects to make money from "story" and chat services" Our revenue growth may slow down. Whether these new products are as profitable as Facebook's core products has not been confirmed.
The political controversy triggered by Facebook has not weakened advertisers' enthusiasm for their platform, but this may change in the coming year. Many advertisers have long believed that Facebook is very arrogant. If a marketer has a large budget, Facebook will not follow the conventions of the advertising industry to send employees to serve them, but will ask these marketers to go to their headquarters in Menlo Park.
Leaving aside such complaints, the marketing industry has two major dissatisfaction with Facebook. First, from the perspective of user interaction, Facebook's performance is no longer the same. The second is that it misleads the customer. For example, Brian Wieser of Pivotal Research in New York pointed out that the company mistakenly promised that advertisers could reach more 18-34 year olds in the US, but in reality there are not as many users. Although it has been subject to class action for allegedly fictional audiences, Facebook has not removed this claim.
A senior marketer at a major US bank said Facebook made mistakes in measuring participation, coverage, opinions and other data for at least 43 products. He pointed out that all these mistakes are good for this social networking giant. “If these are real mistakes, shouldn't at least half of them benefit marketers? & rdquo; he asked. He wants to reduce the amount his company spends on Facebook and predicts that other marketers will do the same next year.
Just as advertisers’ confidence in Facebook has been shaken, Washington’s politicians have lost patience with the company. It seems unlikely that the United States will introduce a new law to significantly curb Facebook’s activities. But legislators' censorship of the company will make it more cautious when using data to deliver targeted advertising and providing information to the outside world. This will further weaken its appeal in the eyes of marketers.
Zuckerberg and Sandberg are under tremendous pressure to prove to users and advertisers that Facebook is not only trustworthy, but also worth spending time and money on it. If they can't do it, if the stock price continues to fall, then Sandberg is likely to be replaced next year. Zuckerberg controls the majority of voting rights and he is unlikely to leave. But what is certain is that he has some understanding of Yahoo's tragic experience. He has a responsibility to prove to employees, advertisers and shareholders that Facebook will not repeat Yahoo's tragedy.