Every morning Mark Zuckerberg gets up and checks his emails. The news is, without fail, dreadful. It’s like getting “punched in the stomach”, he told the podcaster Joe Rogan recently. “I look at my phone to get, like, a million messages of stuff that has come in. It’s usually not good. It’s, like, OK, what’s going on in the world that I need to pay attention to that day?”
So jarring is that ritual that he has taken up another one to deal with it: fighting. Specifically, mixed martial arts. Zuck loves nothing more these days than to “wrestle with friends”. Unlike running, where his mind wanders to the catalogue of horribles bubbling inside Facebook — or the “swamp of despair” as the Twitter co-founder Jack Dorsey called it — hand-to-hand combat requires total focus. “If you stop paying attention for one second, you’re going to end up on the bottom,” Zuck enthused. That’s not a place the hyper-competitive billionaire is accustomed to.
As a child, Zuckerberg was obsessed with Roman emperors and strategy games such as Alpha Centauri, a contest to control a whole star system. The 38-year-old has not reached galactic supremacy, but here on Earth he has certainly surpassed the wildest dreams of little Zuck. His company Meta, which includes Facebook, Instagram and WhatsApp, is used by 3.6 billion people every month; just over half the global population outside China, where Meta’s apps are blocked. By the numbers, it is the largest empire in history.
Yet no empire lasts forever, especially in the frenetic world of social media, where obsolescence is just one slightly better algorithm away. The decline and fall can happen with stunning speed. That is the reality facing Zuckerberg. Nearly two decades after he kick-started the social media era, his empire has begun a slide towards irrelevance, which in this industry is akin to death. This is not to say that Facebook is going to disappear. It won’t. It is simply too big. But its era of dominance appears to be ending the same way it did for Microsoft and IBM; tech giants that, for a time, instilled fear in their rivals, but have lost the aura they once had.
Zuckerberg, who used to shout “Domination!” at the end of staff meetings, is grappling with a similar fate. Unlike past threats to the empire, he appears strangely incapable or unwilling to combat them. TikTok, the video app owned by the Chinese tech conglomerate ByteDance, is luring away hundreds of millions of young users. His attempts to copy its core features have fallen flat, as did a campaign, revealed by The Washington Post, in which Meta employed a strategy firm to promote negative stories about the company.
Nor is Zuckerberg able to buy anything, which is what he has typically done when a rival emerges. The regulators won’t let him. Meta this month agreed to sell Giphy, the maker of popular animated images, after Britain’s competition watchdog ruled that the 2020 takeover was anti-competitive. In July, the Federal Trade Commission said it would block Meta’s attempted purchase of a tiny virtual reality start-up, whose 60 staff would no doubt slip unnoticed into Meta’s 72,000-strong employee ranks.
Economically, the virtual reality “industry” is inconsequential, a fly on an elephant’s behind, but the watchdog sued to block the deal anyway, claiming that Meta was trying to “buy its way to the top”. Meta will fight the suit in court.
Meanwhile Apple, run by Zuckerberg’s arch-rival Tim Cook, has kneecapped Meta’s advertising business with the introduction last year of antitracking software; anyone with an iPhone is now familiar with the “Do you want to be tracked?” prompt. Most people say no, depriving Zuckerberg’s ad machine of the granular detail on which it relies. Meta predicted that the change would knock US$10 billion (NZ$17.4b) off its annual revenues.
The pain has already begun. For the first time in its history, Meta sales revenues fell this summer. The company has begun quietly laying people off, shutting departments and freezing most hiring as it also grapples with a post-Covid hangover. Dan Ives, a Wall Street analyst, says it has gone from “a Ferrari in the fast lane to driving a minivan in the slow lane”. Its share price has imploded, crashing 60 per cent in a year.
If any of these factors were happening in isolation, it would be cause for concern. But they are happening all at once and Zuckerberg’s response has been … strange. His plan: to spend tens of billions of dollars on the metaverse, an immersive virtual world that by his own estimation could take “10 or 15 years” to come to fruition — and it is not clear anyone wants.
“He’s distracting himself from the mess he has made at Facebook by pretending there’s this metaverse for him to create,” explains James Currier, a social media expert and venture capitalist at the Silicon Valley investment firm NFX. “Facebook [and its advertising model] is like tobacco. And he doesn’t want to deal with it anymore.”
For Zuckerberg, Meta’s irrelevance among young people hurts. A generation ago they were the fuel that powered Facebook’s rise. Now they are moving on. Consider Jordan Cooper, a second-year drama student in Los Angeles. She is 19, born a year before Zuckerberg launched thefacebook.com from his Harvard dorm room. Cooper grew up online, but she has no use for anything Zuckerberg has to offer. She used Instagram for a while in secondary school — until the pandemic hit and it was supplanted by an app full of wildly entertaining short videos: TikTok. Now virtually all of her social media time is on the Chinese-owned app.
“I can spend, like, three hours straight on TikTok. The videos are so short. You can just scroll on and on,” she explains. What about Instagram? “I don’t feel like I’m missing out if I’m not on it. Whereas with TikTok, you really do feel left out if you’re not on it. It has become such a big part of people’s humour and conversation.”
And the Facebook app itself? “Facebook is for old people,” she guffaws, before adding with genuine curiosity, “I can’t even tell you the main functions of Facebook anymore. Is it photos or just words?”
Cooper’s attitude is indicative of the dangerous territory the company has entered. The magic of Meta’s apps — the dynamic that turned it into one of the greatest success stories in business history — is what is known as the “network effect”. If your social circle uses an app, you will too. It is a powerful self-sustaining cycle. Yet it is just as powerful in reverse. If you wake up one day to realise that all your friends have left the app, the reason for being there ceases and you’ll leave too. No one knows this dynamic better than Zuckerberg, but it might not even be his biggest problem.
On a sunny afternoon in the last week of September, Sheryl Sandberg pushed through the doors of Meta one last time. Outside she was greeted by rows of clapping, crying colleagues. She hugged her way through the whooping crowd, dabbing tears from her eyes. “This really means a lot to me,” she said.
When Sandberg announced in June that she was leaving after 14 years as Meta’s chief operating officer, and the right-hand to Zuckerberg, he said it was “the end of an era”. She arrived in 2008 as the “adult in the room”, a rock star executive who had transformed Google from an interesting idea into an advertising behemoth. Zuck hired her to do the same at Facebook, which at the time had no business model to speak of. And so she did: last year Meta brought in US$117b, virtually all of it from advertising.
Yet Sandberg was not leaving on a high. Zuckerberg had sidelined her in recent years, carving up her domain, which included nearly everything outside of product engineering — policy, sales, communications, lobbying, legal — and handing it to others. She told friends she had tired of being the “punching bag” for Meta’s relentless parade of scandals.
And the ad machine she had helped to build was struggling to come to grips with the biggest change in the industry since smartphones supplanted desktop computers a decade ago. In spring 2021 Tim Cook, the avuncular chief executive of Apple, rolled out a software update for the more than 1 billion devices it has in circulation. The new version included a feature called App Tracking Transparency, or ATT, which asked users every time they opened an app if they wanted to allow that company to follow their movements across the internet.
It seemed a reasonable request. Zuckerberg, though, was furious, because he knew what it would mean for Meta. In the run-up to the change, he took out full-page newspaper ads warning of the damage it would inflict on small businesses. Without tracking, ads would be less targeted and thus less effective at reaching customers, he argued.
Zuckerberg and Cook have long had a frosty relationship. The Apple boss chided him in 2018 for Facebook’s role in the Cambridge Analytica data-harvesting scandal and the ad-driven business model that enabled it. Zuckerberg reportedly told staff he wanted to “inflict pain” on Apple.
Cook, who framed himself as the high priest of privacy, pitched ATT as a referendum on the core transaction of the internet itself: you get all this stuff for free in exchange for being tracked. In that world, Meta, along with Google, was the apex predator, mining its trove of data to turn itself into what the mobile ad expert Eric Seufert called the “everything store for ads”.
Apple’s move made that implicit bargain explicit, and in so doing rendered the everything store less useful, an outcome that Cook seemed to rather enjoy. “If a business is built on misleading users, on data exploitation, on choices that are no choices at all, then it … deserves reform”, he said last year.
But Cook wasn’t done. Not only did he bloody Zuckerberg, but Apple also began quietly building its own ad business, selling space to companies seeking to rank as the top result when someone searched for, say, a meditation or gaming app in the App Store. Incredibly, Apple built this new business, virtually from scratch, by hoovering up detailed data on user behaviour, from the news stories people read to the apps they download.
Apple employs some semantic gymnastics to explain how it has rolled out a targeted ads operation while simultaneously scuppering rivals — the Snapchat owner, Snap, has laid off 20 per cent of its staff this year, in part due to Apple’s changes. Because it does not share personal data with third parties, Apple argues, what it is doing doesn’t qualify as “tracking”, under its own narrow definition. “From a Machiavellian perspective, what Apple has done is amazing,” says the mobile ad expert Seufert.
He predicts that Apple’s ad business could become “Facebook big”. Indeed, the investment bank Evercore predicted it could pull in as much as US$30b a year by 2026 — a sum similar to the annual ad income of the global newspaper industry — up from less than US$1b in 2018.
Meta claims to have made significant progress overhauling its ad tools to “navigate this new environment”. Charles Manning, chief executive of the mobile advertising platform Kochava, told me this summer that there was “an audible sucking sound” of companies moving their ad spending to Apple and away from Meta.
While Apple attacks one flank, TikTok is laying siege to another. Zuckerberg has called the video app “one of the most effective competitors that we have ever faced”. Indeed, a recent survey by Pew Research Centre found that 67 per cent of 13 to 17-year-olds in America use TikTok, making it the most popular app behind YouTube, which was used by 95 per cent of respondents. Instagram fell to third place, used by 62 per cent of the teenagers surveyed. Given that TikTok was launched only five years ago, its rise has been staggering. Last year it surpassed the one billion user threshold and is used “almost constantly” by 16 per cent of teens, compared with 10 per cent on Instagram, according to the Pew survey.
That is a big problem for Zuckerberg. For years Instagram has been Facebook’s shining star, propping up the business by luring in younger generations while the core demographic of the Facebook app aged. It has come under growing scrutiny, however, over its effect on users, particularly young people, in the wake of the case of Molly Russell, the 14-year-old from Harrow who took her own life after being fed self-harm images that dragged her into what her father called “the bleakest of worlds”. The inquest last month made a landmark ruling that social media had contributed to her death.
The likes of Instagram, Twitter and Snapchat all rely on one’s “social graph”, the network of people, brands and interest groups one follows, to shape the content people see. TikTok takes a different, and perhaps even more worrying, approach. It has no interest in your friends. Instead, it has developed an artificial intelligence (AI)-based recommendation engine that divines your desires by interpreting the most subtle of clues. They range from how long you watch a video to whether you share it and what the content contains. And because each TikTok video takes up the entire screen, as opposed to other apps that are peppered with thumbnails and ads, the signal it interprets is much cleaner. As the technology blogger Eugene Wei has put it: “When you gaze into TikTok, TikTok gazes into you.”
The upshot? TikTok is not really a social media app. Rather, it is like television on steroids, streaming a billion-plus hyper-personalised channels to its ever-growing army of (mostly young) users. Campaigners are alarmed, claiming that it serves up highly sexualised or other inappropriate content, and that its controls have simply not kept pace with its growth. Shou Zi Chew, TikTok’s chief executive, has said that safety was a “top priority” and that the company has ploughed billions of dollars into the effort.
However, youth rights advocates are not satisfied. Chris McKenna, founder of the online child safety group Protect Young Eyes, says the app is “toxic. I don’t know how else to say it … There’s nothing on earth like the TikTok algorithm.”
Zuckerberg, however, knows a hot new app when he sees it. This summer Instagram attempted a clumsy overhaul in TikTok’s mould, testing a new AI-based system to promote viral videos while deprioritising posts from friends. The backlash was fierce and immediate. Kylie Jenner, the mega-influencer with 371 million followers, posted: “Make Instagram Instagram again. (stop trying to be tiktok i just want to see cute photos of my friends.) Sincerely, everyone x.” Instagram swiftly rolled back the changes but insisted it was still moving to a TikTok-style interface.
Its copycat short-form video feature called Reels has also faltered, however. Leaked internal research at Meta seen by The Wall Street Journal has shown falling usage and that “most Reels users have no engagement whatsoever”. Meta claims it is the “fastest growing content format” on Instagram and Facebook, with a 30 per cent rise in time spent on Reels by users through June. It is unclear from what base that 30 per cent rise was calculated.
Zuckerberg is not leaving this fight to his engineers alone. He has also drawn in Meta’s Washington influence operation. Once an outpost of a few dozen people, today it is America’s biggest corporate lobbying operation, employing more than 1000 people worldwide. Last year it spent US$20 million, more than any company in America, according to Open Secrets, a group that tracks political funding.
A significant part of its efforts appear to be focused on tarring TikTok. The company this year enlisted a Republican consulting firm, Targeted Victory, to amplify negative stories in the press about TikTok, accusing the app of being the origin of dangerous teen trends and seeking to paint it as “the real threat”. What better way to compete with TikTok than to simply not have to?
A TikTok spokesperson said the company was “deeply concerned” about “the stoking of local media reports on alleged trends that have not been found on the platform”.
Meta defended the campaign by saying: “We believe all platforms, including TikTok, should face a level of scrutiny consistent with their growing success.”
Donald Trump nearly forced ByteDance to sell TikTok’s North American operation under threat of a ban, but the deal fell apart once Joe Biden was elected in 2020.
Meta, however, is not the best messenger. After the January 6 Capitol insurrection, its already bad reputation among lawmakers got worse, according to a former lobbyist for the company. Then last year the whistleblower Frances Haugen published thousands of internal documents showing how Meta, time and again, appeared to prioritise growth over the safety and wellbeing of its users and it sunk further still. “The hatred [from Congress] became so visceral,” says the lobbyist. “There was just no room really to advance any kind of dialogue or meaningful change.”
The FTC, led by the vociferous Big Tech critic Lina Khan, has taken a similarly withering view, which is problematic because it has the power to block any takeover — even of a tiny virtual reality start-up. Regardless, the TikTok backlash is gaining steam. The White House has pressed the company over how the app handles the data of its western users and its ties to communist China, where ByteDance is based. TikTok is said to be deep in talks with the Department of Justice on a settlement that would see a third party, such as the tech giant Oracle, monitor its algorithms, and the establishment of an independent security panel to keep tabs on TikTok’s US operations and report back to the government.
Of course, nothing would please Zuckerberg more than an outright ban. But that seems unlikely. In the meantime, the Meta chief, like hundreds of millions of teenagers, can’t take his eyes off TikTok.
“All they do now is look over their shoulders, looking at what TikTok is doing instead of trying to be creative on their own,” the lobbyist says. “They’re watching the people running beside them and then just kind of tripping over their own feet.”
One could argue that in so doing, Zuckerberg has stumbled right into the metaverse. Try as he might, he just can’t seem to get anyone excited about the virtual world he is so desperate to create. And that includes, it seems, people at his own company. A leaked note from the metaverse chief, Vishal Shah, revealed that the team developing Horizon Worlds, Meta’s flagship metaverse app, barely uses it. “We don’t spend that much time in Horizon and our dogfooding dashboards show this pretty clearly,” he wrote to employees last month. “Dogfooding” refers to how companies test their new services by using them internally. “Why don’t we love the product we’ve built so much that we use it all the time? The simple truth is, if we don’t love it, how can we expect our users to love it?”
Two weeks later he issued a three-line whip: use Horizon at least once a week, or else. “Everyone in this organisation should make it their mission to fall in love with Horizon Worlds,” Shah wrote.
Zuckerberg excitedly unveiled a new US$1500 version of the Quest virtual reality headset earlier this month, alongside new avatar graphics, hoping to stir enthusiasm with the public, or at the very least among his fellow “Metamates”. The world mostly yawned. The big innovation — that avatars will soon have legs, not just floating torsos — speaks to the long road ahead.
Zuckerberg spent US$10b last year on his techno-utopian dreamland. He’ll spend tens of billions more. “We are committed to being the industry leader in what we believe will be the next phase of computing for the planet,” a Meta spokesman says.
What is striking is how all-encompassing Zuckerberg’s focus has become, given what Meta actually is: a bubbling cauldron of humanity that brings with it a mind-boggling catalogue of pressing issues, from election security to youth mental health. “Zuckerberg still thinks of himself as the wunderkind creator instead of someone running a decades-old company that is a mainstay of modern life,” the former lobbyist explains.
Meta disagrees with this characterisation. It spends more than US$5b annually on what Zuckerberg terms its “defence budget”, and employs 40,000 people to screen and moderate content. Yet the boss’s focus on a make-believe world at the expense of the real one is alarming. Because even if young people are leaving in droves, Facebook will be with us for decades.
Its ageing core audience in America and Europe is extremely valuable. And for them, says Currier, the venture capitalist, “Facebook is not getting replaced”. He adds: “All the money is in the moms. It’s in the 40, 50 and 60-year-olds, and they’re all on the blue app. That cash machine is going to run for decades.”
There are any number of ways that one could remake the experience, such as offering an ad-free subscription that does not have the endless chase for viral content baked into it. “The mature thing would be to figure out how to run the business as a $300 billion company [it was briefly worth $1 trillion last year] in a sustainable way that doesn’t hurt people,” Currier says. “They’re not trying to do that.”
Zuckerberg exudes a sense of someone who’d rather move on. This was noticeable last year after Haugen’s revelations. For weeks newspapers around the world, led by The Wall Street Journal, published damning stories about the deleterious effects the company’s apps have on young women, on politics and society at large. Zuckerberg didn’t immediately come out and apologise. He didn’t say much at all. Instead he wheeled out other executives, including the recently promoted head of global affairs, Nick Clegg, to handle the fallout.
After years of asking for forgiveness, Zuckerberg decided he didn’t want to do that anymore. The boy obsessed with empire seemed to have found that running one was pretty un-fun. He talked to Rogan about how his priorities have shifted. “For the first maybe 15 years of building the company, I was really just solely focused on, ‘Let’s connect more people, let’s grow this community,’ " he explained. “And now, I obviously care about that, I want to continue seeing these things thrive, but I think about my life more now in terms of projects I want to take on, on a decade-long basis.”
His “holy grail”, he explained, was moving the world “beyond the phone”. He added: “One of the thought experiments that I like to do is thinking about how few of the things that we physically have in the world actually need to be physical.”
Most public companies are democracies. They are owned by shareholders who, if they think the boss is doing a bad job, can simply vote them out. Meta is a dictatorship. Due to a stock structure that gives Zuckerberg majority control of the voting rights, no one can remove him.
It’s his world. The question is, in five years from now, in 10, who’s going to be living in it?
Written by: Danny Fortson
© The Times of London
