Following on news from the Guardian that Facebook saw a nearly 2% decline in active UK users over the holidays, I thought I’d briefly cover some of the implications of this news, from my perspective.
- Obviously this has been coming for quite a while in core markets. As the Guardian notes, in the UK Facebook has 53% market penetration, second only to the US at 54%; in terms of gross users, the US has 169M, Brazil 65M, India 63M. Clearly the play is hoping on further expansion in the latter two markets – but that proposition is tenuous, both because the of the fast-growing but still-smaller middle classes there, and because,
- Facebook still doesn’t get mobile. Its apps are still only-OK in terms of usability, and as witnessed by the Instagram terms-of-service clusterfcuk – which resulted in more than 50% decline in users – Facebook has a fairly poor understanding of the mobile user. Which is especially unfortunate for its future expansion in emerging markets – e.g., Brazil, India – as connectivity there is primarily through mobile devices, and not desktops.
- Facebook as public company has always been a questionable proposition, as its whole model of ad-rate-growth-driven-by-traffic-growth-driven-by-user-growth is inherently untenable given that… at a certain point you run out of users. Also, the fact that every social network site so far has seen long-term time-on-site decline from its core users. Basically: if you’ve been shorting $FB, you’ve got to be feeling pretty good right now.
- Facebook as social utility isn’t going anywhere anytime soon. Too many people, content providers, websites, and the general infrastructure of the Web have too much locked in for that to happen. But there are various ways that it can evolve from here. I’m still convinced that long-term there will be a competitive market for identity hosting, and that Facebook’s best move is to get in front of that in both setting open standards and providing a premium service; but we shall see.
Jacob Kramer-Duffield thinks 
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