Good morning. Facebook remains extremely powerful, but it also faces legitimate problems. |
 | | Facebook's parent company, Meta, has seen its stock fall over the past year.Benoit Tessier/Reuters |
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In October of last year, my colleague Kevin Roose wrote a column titled, "Facebook Is Weaker Than We Knew." His hook was a series of stories in The Wall Street Journal, based on internal company documents, which revealed the company's failure to stop content that damaged teen mental health, spread vaccine misinformation and more. |
"It would be easy enough to come away thinking that Facebook is terrifyingly powerful," Kevin wrote. "But there's another way to read the series, and it's the interpretation that has reverberated louder inside my brain as each new installment has landed. Which is: Facebook is in trouble." |
The societal damage that the company was causing seemed to be a sign that its executives were struggling to attract more users and taking desperate measures to do so. Yet Kevin also included a major caveat: The company's stock had still been rising over the previous year, a sign that investors remained confident. |
That's no longer the case. |
The stock has fallen more than 50 percent over the past year. In the most recent quarter, company revenue fell slightly and profits fell 36 percent. Mark Zuckerberg, the chief executive, blamed a broad economic downturn that had reduced spending on digital ads, and it certainly played a role. But the specific problems facing Meta, as Facebook's parent company is now called, seem to be the main cause. |
Consider this chart, with compares Meta, Alphabet (Google's parent company) and the S&P 500: |
 | | Monthly data from Yahoo! Finance, except for August 2022, which is the most recent price.By The New York Times |
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I know that many readers probably still think of Facebook as a behemoth. And in many ways it still is. As Kevin has written: "It can simultaneously be true that Facebook is in decline and that it is still one of the most influential companies in history, with the ability to shape politics and culture all over the globe." |
This morning, I'll lay out the four biggest problems facing the company. |
If you have children, you've probably noticed that they prefer other social media platforms. To many of them, Facebook is for older people — which is not exactly a recipe for growth. Helen Lewis of The Atlantic, among others, has described the platform as "Boomerbook." |
Yes, many teenagers and younger adults use Instagram, which Facebook bought a decade ago. But even Instagram has been struggling to keep up. |
"TikTok is absolutely eating Instagram's lunch right now, in terms of usage and cultural sway, and advertisers generally want to be where the young people are," Kevin told me. "Even though Meta has tried to copy TikTok's most successful features and shove them into Instagram Reels, they're limited in how much change users will accept without a fight." |
Last month, for example, Kylie Jenner complained to her 361 million followers, "Make Instagram Instagram again." An anti-Instagram pile-on ensued, as The Times's Kalley Huang wrote. |
2. The innovation problem |
"The company just doesn't appear to know how to invent successful new stuff," Farhad Manjoo of Times Opinion has written. "Most of its biggest hits — not just two of its main products, Instagram and WhatsApp, but many of its most-used features, like Instagram Stories — were invented elsewhere. They made their way to Facebook either through acquisitions or, when that didn't work, outright copying." |
That's a big change from Facebook's first decade, when it transformed social media. Especially important was its News Feed, which meant users no longer had to spend time searching out other accounts to know what people were posting. |
Since the company went public in 2012, it has been much less innovative. |
Zuckerberg feels so strongly that the metaverse — based around world of virtual-reality, or VR — represents the future of the internet that he renamed the company after it. |
"It's been almost a year since Facebook rebranded itself Meta and announced its big push into the metaverse, and there aren't a lot of big, obvious wins to show for it," Kevin said. "VR is still pretty niche, and it's not clear how much usage apps like Horizon Worlds are getting. (Although, if any Meta employees are reading this, I would love to know!)" |
When Zuckerberg unveiled parts of the company's platform last week, critics mocked it as looking dated. He responded by acknowledging it was "pretty basic" and promised "major updates" soon. |
One positive sign for the company: It has sold more than 10 million of its VR headsets, which may suggest the niche is growing. But it remains unclear whether VR has anywhere near the mass-market appeal that social media does. |
 | | Meta's VR headset on display at a conference in Paris.Benoit Tessier/Reuters |
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Some Meta supporters argue that the company's recent struggles prove that it isn't the omnipotent force that its critics claim — and that the federal government should go easy on it. But I think that claim misses what's really going on. |
The company has become less dominant partly because both the Trump and Biden administrations have taken a tougher stance toward mergers. |
"If Mark Zuckerberg could acquire his way out of this problem, as he did by buying Instagram back in 2012, he absolutely would," Kevin said. "But regulators, at least under this administration, aren't going to let him." |
One example: The Federal Trade Commission, led by Lina Khan, who has called for tougher antimonopoly policies, is trying to block Meta's acquisition of Within, a VR fitness start-up. Khan and her colleagues worry Meta may be trying prevent future competitors from forming by buying them first. |
Depending on your point of view, it's either ironic or fitting. As Kevin said, "Facebook became so dominant, in part by acting in anticompetitive ways for so many years, that Meta is losing its dominance as a result." |
The bottom line: Facebook remains among the world's most powerful companies, with the ability to influence elections, public health much more. It also continues to produce huge amounts of revenue, which will allow it many chances to create successful new products. But its struggles are real, and they don't show any sign of disappearing. |
 | | Investigators this weekend at the site of a car explosion outside Moscow.Investigative Committee of Russia, via Associated Press |
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- A car bomb near Moscow killed a 29-year-old woman, who was a hawkish commentator and the daughter of a prominent backer of Vladimir Putin's war.
- In the Kremlin-controlled news media, the war is about a long history of enemies trying to keep Russia down.
- A five-deck yacht formerly owned by a Russian businessman will be the first to be publicly auctioned, Bloomberg reports.
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Office buildings waste energy. Small changes — unplugging coffee machines, keeping common spaces a few degrees warmer — can help, Carlos Gamarra says. |
The Biden comeback. The Mar-a-Lago blowback. The Liz Cheney takedown. Gail Collins and Bret Stephens discuss it all. |
Journalism like this is only possible with subscribers. |
 | | Andrew White for The New York Times |
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Lives Lived: Latisha Chong, a hair stylist, was part of a vanguard of Black talent that altered an industry and expanded the canon of beauty. She died at 32. |
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Chill, everyone: Tampa Bay Buccaneers quarterback Tom Brady is returning to practice this week after taking a mysterious but excused leave of absence. What he's returning to might be the bigger issue: The Bucs' offensive line is riddled with injuries. |
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Your fantasy football draft needs, covered: The Athletic fantasy expert Jake Ciely dropped his 2022 fantasy draft rankings, an essential tool as you plan your picks. |
 | | "City" is finally opening to visitors.Noah Thropp/The New York Times |
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For 50 years, the artist Michael Heizer has toiled in a remote stretch of the Nevada desert, working on a sculpture whose size — a mile and a half long, nearly half a mile wide — can be hard to fathom. Now, finally, he is set to open his life's work, "City." |
The megasculpture is meant to be explored on foot, allowing the site to swallow you up. Exquisitely groomed mounds, buttes and depressions spread far into the distance. Monumental structures evoke ancient ruins. |
Michael Kimmelman, The Times's architecture critic, has been reporting on Heizer's progress since the 1990s. "I have come to think of 'City' like Mount Rushmore and Hoover Dam," he writes. "It is bravado, awesome and nuts, a testament to a certain crusty kind of American can-do-ism." |
 | | Joe Lingeman for The New York Times. Food Stylist: Cyd Raftus McDowell. |
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The pangram from yesterday's Spelling Bee was empathy. Here is today's puzzle. |
Thanks for spending part of your morning with The Times. See you tomorrow. — David |
P.S. Theodore Roosevelt became the first sitting president to publicly appear in an automobile 120 years ago today (William McKinley was the first to ride in one). |
Matthew Cullen, Claire Moses, Ian Prasad Philbrick, Tom Wright-Piersanti and Ashley Wu contributed to The Morning. You can reach the team at themorning@nytimes.com. |
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