The last couple of weeks have big digital hangouts. I have a lingering question:
Facebook Inc posted in the United States of America after it gave a scary financial forecast and – most relevant for my purpose here – said the number of people surfing Facebook daily in the US and Canada flat-lined. Twitter Inc spooked investors with a slight decline in the number of monthly users and predicted the trend. Snapchat's parent company said the number of daily users was dipped by about 3 million in the second quarter of the early part of 2018. Snap Inc also said its user pains would persist.
All three companies said or implied that the disappointing users had their digital hangouts. A tightening of Europe's privacy regulations pinched user growth, too. It did not seem to be worth it. But what if that was not a full explanation for the user growth problems?
Twitter's monthly users essentially have not budged in the US for three years. At Facebook, US and Canada user figures have been roughly flat for 18 months. Snapchat is younger and still growing, but the trends are unsettling there, too. Since Facebook's Instagram started to aggressively copy, Snapchat's in the summer of 2016, Snapchat's user growth has slowed markedly.
Twitter and Facebook continue to grow in some countries, but their gains are slowed down before Mark Zuckerberg started talking about “Time well spent.” Facebook's decision to emphasize a new user metric may reflect a desire to change the conversation to numbers that look. To me, that's a sign that Facebook does not believe. User hiccups are temporary.
Now that Zuckerberg and his peers have their belatedly started to run their companies for outcomes. But we should remember that it was hard to lure people to their digital shores.
You'd be right to ask, so what? Internet companies' desire for more and more people helped turn the internet into a garbage fire. Fair enough. But strains in user numbers should not be dismissed.
For companies that make money by selling ads, how much does it cost? they see and the price of those ads. If the number of people does not grow much or declines, the companies must lean on other factors to increase sales. That might require creepy data-harnessing methods or forays into new areas such as online video.
If user growth is tougher, especially in the biggest ad markets such as the US, then life is simply tougher for the big internet companies. – Bloomberg