We’ve all been following the revenue losses and massive layoffs of major tech companies in recent weeks. So, are these companies facing an existential crisis?
We’ve all been following what happened to big technology companies in the last few weeks.
Giant companies such as Apple, Netflix, Amazon, Microsoft, Meta (which owns Facebook) and Alphabet (which owns Google) have lost more than $3 trillion in the US stock market in the past 12 months.
In November, some of these companies, including Amazon, made layoff announcements.
According to the website Layoffs.fyi, which monitors workforce changes in the technology sector, the number of layoffs in the sector reached 136 thousand on November 21.
The biggest cuts came from Meta and Twitter.
Meta has laid off 11,000 people so far, while Twitter has laid off 3,700 (almost half of its total workforce).
This raised important questions about the future of the world’s two most popular social media platforms.
But have we underestimated the resilience of these giant companies?
PROBLEMS FACEBOOK AND TWITTER
The data above indicate that these two platforms are affected by the global economic slowdown like other sectors.
This shows less investment in tech companies and reduced revenue from advertising, especially for social media platforms.
“Currently, those trying to find funding in the tech industry are struggling,” says Professor Jonathan Knee, a Media and Technology expert at Columbia University in New York.
Saying that social media platforms have “turned into advertising companies” today, Knee continues:
“An economic recession will create a very difficult environment when you rely on this type of income.”
Meta’s financial report, released at the end of October, shows that reduced advertising revenue has contributed to the company’s financial difficulties.
The report also talks about the competitive pressure created by other companies such as TikTok. Twitter, which was withdrawn from the stock market after being acquired by billionaire Elon Musk, is also facing various challenges.
First of all, he predicts that the social media platform will be affected by Musk’s leadership approach.
Following a poll on Twitter, Musk recently decided to reopen the personal account of former US President Donald Trump.
Trump’s account was permanently blocked after the US Congress raid on January 6, 2021, for spreading “hate speech”.
But the warning signals had already begun before Musk arrived.
Documents obtained by the Reuters news agency in October show that the number of users who use Twitter six or seven times a week and tweet three to four times a week has fallen since the start of the Covid-19 outbreak.
These users make up half of Twitter’s total revenue.
With the arrival of Musk, the number of people leaving the platform is increasing again.
A study by researchers at the Massachusetts Institute of Technology (MIT) published on November 3, a week after Musk bought the platform, found that Twitter lost nearly a million users in that one-week period.
HAVE SOCIAL MEDIA PLATFORMS COMPLETED THEIR NATURAL CYCLES?
Some experts interpret the crisis experienced by social media companies as the end of their natural life cycle.
Communications and New Media Specialist at the National University of Singapore, Dr. “Each platform has its own growth and maturity/decline trajectory. These platforms start to regress when they come in, because of the platforms that replace them,” says Natalie Pang.
Dr. Pang believes Facebook and Twitter have grown too big during the Covid-19 pandemic.
Pang says, “Technology platforms have grown rapidly with the digitalization experienced during the pandemic,” and says that these companies now need to be reshaped.
Digital Media Specialist at the University of Sheffield, Dr. “We may have underestimated the existence of these platforms. Users may now start noticing some issues with these platforms and leaving,” says Lianrui Jia.
However, Facebook and Twitter can rely on their huge user base for a while.
Saying that Facebook is the most popular social media platform in the world, according to Meta, the platform has approximately three billion monthly active users as of the third quarter of 2022.
But in February, Meta announced that for the first time in Facebook’s 18-year history, the number of daily active users fell.
Twitter, which has been recording only its daily users since 2019, instead of the total number of users, has 238 million daily users, according to the data released in October.
However, there are also concerns that users are now avoiding news and current events and are turning more towards adult content and crypto money platforms.
Renaud Foucard, Senior Lecturer in Economics at Lancaster University in England, points out that increased control by governments also exacerbates inter-company competition, which has become a major obstacle.
IS THE DISAPPEARANCE PROCESS?
Social media platforms can sometimes disappear completely.
For example, the social media giant MySpace.com, which reached many users in many parts of the world for the first time in the 2000s, could not compete with Facebook.
MySpace, which had 300 million users in 2007, has only 6 million users today.
However, some experts believe that it is healthy for popular platforms to experience such difficulties.
“It’s actually good that one of the biggest problems with these platforms is competition,” says Foucard.
“New companies can offer users more choice and better experiences.”