In a notable first, Meta has announced a decrease in its daily active users, dropping from 3.58 billion to 3.56 billion this quarter. This represents a crucial turning point for the organization. Julia Angwin of the New York Times draws concerning comparisons between Meta’s current situation and the declines faced by AOL in 2003 and Yahoo in 2015, referring to this era as the beginning of what she calls Meta’s “zombie era.”
Mark Zuckerberg has invested an eye-popping $80 billion into the Metaverse over the past five years, aiming to engage users in virtual environments as avatars. However, after moving away from this ambitious vision, he has shifted focus to a complex open-source AI model that many users find challenging to use. Consequently, Zuckerberg has declared that Meta intends to allocate at least $115 billion towards AI development in the upcoming year, even as its current offerings lag behind those of its rivals.
To finance these grand initiatives, Meta has started to borrow significantly. By the close of 2025, the company’s long-term debt is anticipated to reach $59 billion, effectively doubling from the previous year. This amount does not account for a $27 billion investment in a Louisiana data center, which Meta has reportedly kept off its balance sheet through what Angwin describes as “aggressive” accounting methods. Asa Fitch from the Wall Street Journal notes that such levels of expenditure seem increasingly unsustainable.
Amid these financial challenges, Meta’s main revenue stream is facing pressure. In the first quarter of this year, the company reacted by boosting ad frequency and increasing prices, which led to a significant 27 percent rise in revenue per user within three months. Nonetheless, this achievement is overshadowed by a recent legal victory for a teenager who claimed that Meta and YouTube exacerbated her anxiety and depression through addictive design. Approximately 100,000 similar lawsuits are currently pending, highlighting a growing backlash against the company’s practices.
As Meta grapples with its downturn, Angwin posits that the company is unlikely to step back quietly. She anticipates potential reductions in safety personnel, which could lead to an increase in misleading content and scams across its platforms. Furthermore, the introduction of $500 smart glasses, viewed as unattractive by many consumers, may further complicate Meta’s attempts to uphold its market standing.
