Hiltzik: Mark Zuckerberg and the Meta crash

If the old saw about madness defined as always doing the same thing and expecting a different result is true, what should we think of Mark Zuckerberg’s latest idea to save his company?

ace reported by BloombergOn Thursday, Zuckerberg gathered in a virtual meeting at Meta Platforms, the parent company of Facebook, and urged employees to focus on the company’s short video service. Dubbed Reels, the service is an impersonator of TikTok, the hugely popular video social media platform.

If Zuckerberg is serious about this, it’s an indication that he may have no ideas on how to grow his company. The last time Facebook took a strong interest in videos, the result was disastrous. We will talk about this in a moment.

Unless our civilization fundamentally collapses, we will never stop writing and reading.

– Tech writer Tim Carmody, advising caution about videos in 2016

The urgency of Zuckerberg’s speech to the troops was not difficult to understand. The stock market absolutely shattered Meta shares in Thursday’s Nasdaq trading. The stock was down $ 85.24, or 26.4%.

The $ 251 billion drop in market cap is an unprecedented one-day drop not just for the company but for the US stock market at large. Meta stocks also pulled down broader market indices, with the heavily tech composite Nasdaq down 3.74% and the Standard & Poor’s 500 index shedding 2.44%.

The woes of the Meta market developed after the company reported unexpectedly poor results for the fourth quarter of 2021 and provided a gloomier outlook than investors expected.

Zuckerberg signaled to investors that the company’s traditionally strongest advertising platforms were showing their age and suffering from Apple’s privacy enhancements for iPhone and iPad users. Apple’s changes will cost Meta up to $ 10 billion in revenue this year, or roughly 8.5% of the company’s revenue in 2021.

What might be more intriguing than Zuckerberg’s response was his suggestion that the company has reoriented towards video. This isn’t his first attempt to redefine the Facebook marketplace. In October, when he renamed the company as Meta Platforms, he said the name marked the company’s new focus on virtual reality devices.

It is worth remembering what happened the last time the company promoted video as its future.

It was 2016. Facebook executive Nicola Mendelsohn rocked the online world by stating, “If we look already, we’re seeing a year-over-year drop in text … If I had to bet, I’d say: video, video, video.”

Mendelsohn said it was because “the best way to tell stories in this world, where so much information is getting to us, is actually video. It conveys a lot more information in a much faster period. So actually the trend helps us digest a lot more information. “

Mendelsohn, as was evident to many observers even at the time, blew smoke. Although Facebook had clearly made a big commercial bet on video, in the real world it was 100% wrong.

Video is a linear, low-information medium – you have to watch an entire clip, usually in real time, to gather all the pertinent information it contains. A block of text, however, can be scanned for important information in a fraction of the time. The video requires almost total attention; text can be absorbed as a player accesses other media such as music.

As tech writer Tim Carmody noted in an answer to Mendelsohn, “The text is surprisingly resilient … It’s cheap, it’s flexible, it’s discreet. Human brains process it absurdly well. He concluded that “unless our civilization fundamentally collapses, we will never stop writing and reading.” She was right about this.

More pertinent to Meta’s proposed strategy, Facebook’s move to video proved a disaster for the media and advertising industries as they followed the company, then a dominant influence in those worlds, over the precipice.

As I observed in 2019 when the consequences were evident, based on what Facebook described as a commitment to becoming an “all video” platform, media companies dependent on its audience of approximately 2 billion people threw themselves into video production.

Newspapers fired text-oriented journalists and editors based on score, leaving room for videographers and producers. Many of these organizations quickly discovered that, despite Facebook’s claims, they were feeding their audience with a product they didn’t want. Website traffic plummeted.

Within about a year, several online publishers had switched to video they were downsizing again – partly because Facebook had decided to minimize videos from external sites on their pages.

Advertisers sued in lawsuit that Facebook has been providing them with bogus video ad view stats for years. The company he settled the case in 2019 for $ 40 million.

It’s possible that the online market has evolved since then and video is the flavor of the month or year again. But despite Zuckerberg’s concerns about TikTok, there are hints that TikTok’s online video variety may not be able to deliver all the nourishment that the broad audience craves and advertisers appreciate.

Many TikTok clips are around 15 seconds long, which may be the optimal length for the service’s youth on-the-go audience, although they can be strung together to produce videos of up to three minutes.

So maybe Zuckerberg is right. But history advises skepticism. What he’s saying today isn’t all that different from what he was saying five years ago when he was heralding a “new golden age of video” that never happened.

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