Under the ownership and control of a powerful founder CEO Mark Zuckerberg, who upheld 60.1% of Class B Vote shares with proxies (April 2016), and COO Sheryl Sandberg, a management guru worked two decades for McKinsey & Co., GOOG and the US Secretary of Treasury under President Bill Clinton, Facebook (FB), per 4Q16 Earnings Report, has reported having 1.22B Global Daily Active Users (DAUs), 1.14B Global Mobile DAUs, 1.86B Global Monthly Active Users (MAUs), 1.149 Global Mobile-Only Active Users (Mobile-only MAUs), and generated $19.97 Global Average Revenue per User (ARPU) and $27.6B total annual revenue. Of 3.42B worldwide internet users (46.1% of 7.43B world population in 2016), FB MAUs penetration surpassed 54.3%, very extraordinarily. However, its YoY growth trajectory in Mobile-only DAUs and Mobile MAUs simultaneously decelerated from 22% a year ago. Per eMarketer, statistic showed its US largest demographic (age 25-34) literally shrank from 29.7% (2012) to 13% (Jan 2017). In an opposite way, 56%+ of older generation over 65 was revealed having FB accounts. And, interestingly enough, US Mothers are indeed checking FB more frequently each day than they did in prior years since 2012. As well, audience under age 18 dropped markedly. In fact, the under-13 tween and teen crowd are tired of FB cuz this social networking platform ain't a "cool' place, where their parents, aunts, and uncles now socialize at, and moreover, one reason teens dropped out is the parental restriction concerning online safety and privacy (e.g. Drug dealing and FB's ex-President Sean Parker trolled girls). On the other hand, Millennials, alike their parents, also search for a new cyberhangout to call their own, which got FB worried.
The noticeable threat of losing young audience was, without delay, observed by Mark, especially when Instagram (IG, a portmanteau of instant camera and telegram), a free mobile photo-sharing app centered about liking and striving to images and videos, funded by the legendary VC Andreessen Horowitz, gained popularity with over 1M registered mobile users in just two-month time after their launch. In April 2012, prior to Facebook's IPO, Mark hovered to the board for approval to flourishingly buy IG for $1B in cash and stocks for strengthening the FB's weak link with younger demographic (He committed Instagram will run independently from FB operation). Besides that, to further expand its international users base into emerging markets, aligning with the corporate vision of connecting people, FB acquired WhatsApp, the 500M WW users based (1B Active Users today) free messenger app, in 2014 for a jaw-dropping $19.3B cash and stocks, its largest acquisition to date. Another billion dollars purchase of FB was the $2.3B Oculus VR buyout agreed by Mark as he foresaw the future of massive VR technology adoption; then, he publicly announced the hire of Hugo Barra from Xiaomi to lead all FB VR efforts withal. Unluckily, in after the announcement, Oculus found guilty of false designation, copyright infringement, and non-disclosure agreement violation for a $500M judgment to its former CEO, CTO and FB. Despite all, FB didn't conservatively withhold its own R&D spending to hire talented engineers and build more top-notch data centers (21%+ of its total revenue), and importantly, for the progression of innovation. Thus, it created: Facebook Live allows users to video streaming; Discover People like Tinder matches users with nearby persons in similar profile; Safety Check helps users to connect with friends and families during a crisis; On This Day reminds past events to the users; FB Marketplace enables users to buy and sell locally (vs Craigslist); Messenger (400M ppl used video and audio calling each month); and AI Machine Learning, as well. Although FB now proliferated a strong product portfolio, it unceasingly faces new opponents in this year.
Snapchat (SNAP) is the new terrifying contender of the social networking throne - a free imaging and multimedia mobile application allows private messages self-deleting within a 24-hour period, initially conceived as a class project by three Stanford male students wishing photos sent to girls disappears and funded by Stanford University in April 2011. Beginning as the prototype named "Picaboo", the temporary nature of short-lived videos and the natural flow of interactive design swiftly pivoted 'snaps' into a popular sensation among youngsters between age 24-13 (Per policy, no one under 13 allowed). And 100K users has straightaway captured as their social proof. In Fall 2011, the company name Snapchat, Inc. was registered and their application relaunched under the same brand to captivate growth. By Nov 2012, ~20M images shared a day or about 231 per second; 10M users seized on its iOS app; over 1B photos already shared thru the application; And today, 2.5B snaps created every day. Then, round after round of venture capital ($1.8B total fundings by 2016) was raised. With its successful traction, SNAP was offered by FB for a $3B buyout in 2013, but rejected by its founder CEO Evan Spiegel. Then on, investors and management team were more confident and determined about the future path of SNAP. After that, more astonishing features and enhancement were deliberately added: GeoFilters encourages community and business to create geographical overlays on snaps; Lenses allows real-time effects into facial snaps; Chat 2.0 allows video and audio calls and a collection of product updates; Live Stories broadcasts a 24-hour collection of snaps and videos for public and followers; and Memories personalizes snaps and stories to store into phones for convenient access. With their new perpetual innovation, SNAP has its demographic under age 24 grown beyond 60% of its 300M+ MAUs (161M DAUs) and earned $1.05 ARPU (vs FB's $4.83 ARPU) in 4Q16. Important of all, users spent 25-30mins on SNAP every day (vs FB users spent ~20mins daily). That's some remarkable works from only 1,859 employees (vs FB 17,048 headcount). During last year, the company rebranded again as Snap, Inc. (dropped the "chat"), announced itself as a camera company, and further diversified and entrenched its business core with the Spectacles sunglasses with built-in camera records 10sec videos to share on Snapchat, a New Universal Search Bar to simplify navigation of friends and the followings, the Snapcodes to open web access from QR codes, and last but not least, the Bitmoji integration to create self-portrait cartoon character for user's profile. Their magnificent growth (included the $25B valuation) has definitely put FB in fear. The 600M+ MAUs IG seems losing its cool cachet against SNAP to teens and advertisers, according to Statista. Therefore, FB desperately hurdled toward the dark force to engage in "Clone Wars" before SNAP IPO filed in 2017. Its first move in defense was to have IG made an 'exact' copy of the SNAP "Live Stories". Per the founder CEO of Instagram, he accentuated "the photos and videos (in the IG Stories) will disappear after 24 hours" and too acknowledged “other companies deserve all the credit” for popularizing disappearing photos and videos. And the second strike was to test the SNAP like "Live Stories" feature on FB Mobile app in Ireland before rolled out globally. Obviously, both moves were to neutralize the key feature of SNAP and convert the "Stories" into new "format" of any algorithm feed. By far, the "clone wars" strategy might contribute to slowed down DAUs QoQ growth of SNAP from 7% to 3.2% last quarter (YoY growth: 62.8% 3Q vs 47.7% 4Q). In contrary to the data point of view, a press media has very recently pre-declared the death of Instagram. Hence, it's still too early to conclude whether if FB/IG or SNAP will win this new round of social networking battle. Nonetheless, the newcomer is only one of dozen bombarded issues FB had.
Revolutionized the way people interact with each other, FB, however, poses problems to society and raises questions about social dysfunction, cyberbullying, privacy, and safety. Five years ago, a teen in Texas City reported killing herself with a gun placed to her chest in front of her parents and grandparents after mocked by FB fake profiles. Yet the most heartbreaking tragedy of FB cyberbullying was "My Story: Struggling, bullying, suicide and self-harm" (8:55) video with 12M+ views on YouTube. The 11th years old little girl from British Columbia, Canada began using video chat in her 7th grade to meet people online. She met strangers she thought liked her and was convinced to 'flash' her breast on camera. Unfortunate a cyberstalker "Aydin C." in Netherlands used the "capping" photo to blackmail her, including a Facebook profile that used her topless photo as profile image. Later, under distress, she shared her story5 by creating a video online. Sadly, a little over a month after her video posted on Sep 7, 2012, she hanged herself in her house and found dead. Further down the spiral, Philando Castile's Death (#BlackLivesMatter) and French terrorism suspect threatened attacks on EU 2016 Soccer Tournament on FB Live that Mark expressed his sympathy to the victims during his first Q&A "Live" session revealed FB's inability to manage the technological and logistical challenges, and bring policy openness. Apparently the public concern to FB "Live" might be relieved, but nevertheless, its social problem persists. The "Trending Topics" was under fire for its editorial team prevented some popular conservative issues from appearing in the module (denied by FB). Learned a lesson from "Live" incidents, it replaced the entire human team with algorithm feed but that didn't fix the bias, and false stories like Megyn Kelly being fired from Fox News was still circulating on the module. Consequently, FB for the first time added "fake news" in its list of risk factors in SEC Form 10-K filing. At the end, its VP, Product Management completely unplugged the idea of personalizing the topics feed based on user interests, but only features prominent news in user's region. (CONT.)
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1. Facebook by the Numbers: Stats, Demographics & Fun Facts (2017)
2. Snapchat by the Numbers: Stats, Demographics & Fun Facts (2017)