There has been no shortage of explanations for the sudden, spectacular swoon in Facebook’s stock value last week. Meta, Facebook’s parent company, said in an earnings report that its user growth had stalled. Young people, its most valuable demographic, keep spending time on TikTok, the irresistible short-video app that has become Facebook’s most formidable competitor in years.
New privacy features that Apple added to the iPhone last year are also hampering one of Facebook’s main moneymakers, targeted digital ads; the company said that Apple’s changes may cost it $10 billion in revenue in the coming year. And Meta disclosed that it had spent $10 billion last year building out its new namesake, the metaverse, the virtual-reality wonderland that Facebook is betting will be the internet’s next big thing — but that, so far, remains more virtual than reality.
Investors reeled. Meta’s stock value shed more than $250 billion last week. That’s a nearly incomprehensible amount — only a few dozen publicly listed companies are valued at more than $250 billion. In other words, Facebook’s value has slumped by more than what all but the largest companies are worth.
But beneath Facebook’s many expensive problems is a single more fundamental problem, an issue that has plagued the company for more than a decade — and that Mark Zuckerberg, Facebook’s co-founder, has never really figured out how to address.
The problem is innovation: Facebook can’t seem to do it. The company just doesn’t appear to know how to invent successful new stuff. Most of its biggest hits — not just two of its main products, Instagram and WhatsApp, but many of its most-used features, like Instagram Stories — were invented elsewhere. They made their way to Facebook either through acquisitions or, when that didn’t work, outright copying.
But buying and copying other ideas is becoming increasingly difficult for Facebook. Regulators around the world, wary of Facebook’s size and market power, are sour on letting it gobble up any more would-be competitors. And Facebook’s biggest apps are so overstuffed with features cloned from other places that they’re becoming chaotic and unfocused.
Meanwhile, it’s easy to see why investors might be skeptical that Facebook is the company that will invent the next big thing, whether the metaverse or whatever else. It’s been a very long time since Facebook created something truly groundbreaking.
How long? Zuckerberg didn’t invent the idea of a social network, but Facebook’s first decade was nevertheless full of innovations. Perhaps the most important was the release in 2006 of News Feed, the system that organizes updates from your friends into a timeline — also known as the main part of the Facebook app. News Feed revolutionized how people navigated the internet.
On older social networks, like Myspace, you had to visit each of your friends’ pages to see what was happening with them. By combining posts in your network into a kind of real-time digest, News Feed ushered in something profound in human relations — a real-time window, available to any of us, into the social lives of all of us. The fact that News Feed — and the many other feeds it inspired, like Twitter’s — has gone on to change the world in both positive and quite negative ways only underlines its importance. Once, at least, Facebook could come up with new ideas that really could change the world.
Ten years ago, though, Facebook went public, and ever since, its strategy has been less about innovation than about goosing wild growth both in its user base and its ad business. Its main technological project became scale — it would build out its infrastructure to serve everyone on earth, and it could leverage that infrastructure to stay on top. When interesting new features popped up online, you could count on Facebook to bring them to the widest audience, even if it didn’t itself invent those features.
For many years, the photostat strategy worked out just fine. There wasn’t even really anything dishonorable about it; the best ideas in tech — or, for that matter, in life — are often pastiches of lots of different ideas. As Steve Jobs said: “Good artists copy. Great artists steal.” Facebook’s artistry lay in its operational excellence more than its originality.
Consider Instagram. When Facebook paid $1 billion for the photo-sharing app in 2012, Instagram had only 13 employees, about 30 million users and no revenue. Facebook showered resources on the company while allowing its founders, Kevin Systrom and Mike Krieger, wide latitude in running the place. Growth surged. Today more than a billion people use Instagram every month, and in 2018 it may have been worth more than $100 billion. Instagram’s founders
