Pat Pilcher: Is Facebook dying?

Devices such as tablets have grown at an explosive rate, yet Facebook seems to be struggling to make a buck in this space. Photo / Thinkstock

Facebook has long been synonymous with social networking and with more than 1 billion users, is also the behemoth with which all other social networking startups have benchmarked themselves against. Now storm clouds appear to be gathering on the horizon with UK Facebook users falling in December by just under 2%.

According to Social Baker (a social network research/analytics firm), the total number of UK Facebook users fell by just over 600,000, leading many to speculate that Facebook has hit a saturation point in developed markets like the UK and could be going backwards.

Sceptics however, argue that the drop merely represents the seasonal dip that is Christmas, when a growing number of people in the UK go on holiday or spend time with the family rather than Facebooking.

Either way, the number of alternatives to Facebook has grown enormously and an increasing number of people are spending the small amount of free time they'd previously invested in Facebook tweeting, surfing Reddit, playing around with StumbleUpon and even building their own blog on Tumblr, or even sitting on Google+. It could also be a generational thing, with the Facebook generation now becoming increasingly disenchanted with Facebook whilst the next upcoming generation has settled on other alternatives.

Then there's Facebook's financial situation. Having limped through a vastly overhyped IPO, Facebook is still struggling to convert its scale into revenues. One financial challenge facing Facebook with is mobile. Devices such as smartphones, tablets, et cetera, have grown at an explosive rate - yet Facebook seems to be struggling to make a buck in this space.

Longer term, this is especially worrying for Facebook given that the next generation of users are spending a growing amount of time camped out on smartphones and tablets. For this generation of mobile digital natives, Facebook could become to be an uncool thing for oldies.

Additionally, controversy around privacy issues is also doing Facebook no favours. The Instagram debacle threw the whole Facebook privacy issue under the spotlight, whilst their move to rewrite user policies has eroded user confidence.

While Facebook has added a bunch of sensible and much-needed tweaks such as allowing its users to ask somebody to untag them in a photo or post, other changes are harder for ordinary folks like you or me to understand. In the absence of easily understandable terms and conditions, it is likely that many will assume the worst and potentially go elsewhere.

Although Facebook has been expanding into developing territories as well as the tiger economies of South East Asia, the billion plus user question is: will this offset a decline in developed countries like the UK, US, EU and Australasia should the UK user slump be something more than a seasonal fluctuation?