Meta is one of the world’s largest social media companies, with a market cap of over $900 billion. Despite its massive size and extensive reach, the company recently suffered a massive drop in stock value due to low earnings in the fourth quarter of 2021. Most of the losses stemmed from challenges with its advertising platform, such as the implementation of Apple’s App Tracking Transparency feature, which limits the data that advertisers can use for targeting ads. Meta gains a large amount of revenue from ads, so this was a significant hit for them financially. Since the development of this, Meta has inquired into alternative revenue streams such as subscription services. The company has gone forth with this new system as it now charges individuals who want to be verified on Instagram through a subscription service. The subscription will cost $14.99 a month on iOS, where users on Instagram and Facebook will be able to submit their government ID and get a blue verification badge. Although Zuckerberg states that “this new feature is about increasing authenticity and security across our services,” it is clearly a method to combat losses deriving from restrictions on targeted ads. Along with advertisement regulations, Meta faced regulatory challenges across various countries, including the United States and Europe. These challenges led to increased scrutiny of the company’s business practices, which could lead to fines as well as loss in users globally.
Although the company is seeking and is actively implementing new sources of revenue going away from advertisements, the success of such campaigns will rely heavily on the value that verification brings, and how this value aligns with consumer preferences globally. For instance, Americans could value verification as a status symbol much more than individuals in Sweden. Therefore, it is important to recognize cultural differences in the implementation of a subscription service that reflects status and willingness to pay rather than actual value-added services. While it is unclear how the company will further respond to challenges in targeted ads as well as pushback from the verification service, Meta will continue to adapt based on consumer preferences and focus in other methods of gaining revenue.
Meta’s Move to the Metaverse Drags Down Profit – The New York Times (nytimes.com)
Meta’s value has plunged by $700 billion. Wall Street calls it a “train wreck.” – CBS News
Meta shares sink 20% as Facebook loses daily users for the first time | Reuters