Facebook Shrinking Euro Growth Shows Silicon Valley’s Misfortune – Info Gadgets


In the bloodbath of ’s Q2 earnings report today July 26th, 2018 Facebook is set to have its worst day ever.

  • A Europe reverse user trend is bad news for Facebook, as GDPR privacy regulation and an outdated Flagship app, is hitting Facebook where it hurts.
  • Facebook is a bullish on Wall St. namely based on a history of incredible user growth data, so what happens when that falls apart?
  • It appears as if privacy regulation can indeed curtail Facebook’s massive growth and cap its revenue as companies like Alphabet and Facebook learn their boundaries in a changing world.

Amazon’s expected report later tonight is not expected to mirror Facebook’s misfortune of further slowing and a downward trend of its business. We knew after all this was coming, Facebook’s was too good to be true.

Market Watch

It’s been rough and the likes of CNBC and Business Insider are buzzing on Facebook’s peculiar position this week.

There’s even an activist investor movement to fire CEO Mark Zuckerberg, and if it were to happen it would be in the summer of 2018. It’s clear Facebook’s amazing success led to unrealistic expectations on growth numbers.


Facebook’s Business Model May be Severely Flawed

Leadership at Facebook has been somewhat negligent over user data security, there’s little doubt about that; it’s a major failing of the trust in its business model — that’s being reflected in a reverse user growth trend especially already showing up in Europe.

Facebook saw a decline in monthly active users for the first time in its history, and this week its stock is getting battered like we’ve never seen happen to a tech stock on Wall Street.

When all investors want to hear about is your user growth and you disappoint them, well Europe has spoken — a user drop of 1 million users between the first and second quarters is a massive point of user activism. Falling from 376 million from 377 million doesn’t sound awful, but it’s the beginning of a trend that’s not likely to be halted easily.

Facebook’s user growth has stalled, or gone in reverse, in its most profitable markets


While Amazon is on pace to perhaps even reaching a $1 Trillion dollar valuation soon, Facebook’s collapse this time might not be easy to claw back.

Facebook Not Keeping Up

  • Facebook’s market value plunged by $148 billion after Zuckerberg and company warned of a growth slowdown
  • That would be the biggest single-day drop in stock-market history.
  • As per CNBC: Facebook had clawed its way back from bear market territory after the company’s Cambridge Analytica privacy scandal and widespread reports of fake news, hate speech and foreign misinformation campaigns.

Facebook can paint a rosy picture for Instagram mobile Ad revenue, but for its flagship app it’s the signs of aging Millennials who actually care about their privacy and data.

At a time when Silicon Valley is failing in ethics on many fronts, Europe’s hard stance with a $5 Bn. fine of Alphabet and GDPR rules means Europe is the last bastion of human rights online.

The failure of Silicon Valley and Wall Street to grasp the reality of users is also striking here. It’s a nearly pathological disconnect with the user experience.

While Facebook is strong in the Asia-Pacific region, revenue per user there is much lower. Facebook is blaming a number of factors external to itself, which is a sign of fear within the company. Facebook executives have painted a grim future for Facebook as it adapts to 2018 and 2019 changes in user growth and higher spend to fix some of its problems, not least among those its massive emerging trust issues.

It’s the End of an Era for Facebook’s Flagship App

Facebook has done an incredible job converting Instagram and WhatsApp to mainstream apps in the attention economy, but a poor job at delivering a business model outside of mobile Ads.

This really makes Facebook a far more vulnerable business model than the likes of Tencent, Microsoft, Alphabet, Amazon or the new app ecosystem to watch in China, Bytedance. It’s not the quantity of users you have, but the services and utilities you offer them that matters in the long-run.

This really mirrors a lack of deep seated innovation in Silicon Valley who rest on their laurels, as the world passes them by.

Business Insider

No Longer the Right CEO for the Job

There’s just no way Mark Zuckerberg is the right CEO for Facebook in such a pivot as they are undergoing. Facebook’s board members are too skewed in his favor, and he has too much power and not the right ability anymore to lead Facebook.

This is not just me, it’s a majority of investors I think who feel this way. You cannot pretend everything is rosy, when you have such a failure of leadership at the top. Facebook can buy ad-spreads saying it’s sorry, but this makes a farce of what Silicon Valley is. The future of American innovation therefore rests in the hands of Alphabet and Amazon, and to a lesser extend an AI-impoverished Apple.

Silicon Valley needs to Wake up that Ethics Matter

Trump can fight trade-wars with China, Europe and even allies in the Americas, but Zuckerberg can’t bluff his way out of this one.

The writing is on the wall Zuck. Facebook’s reliance on vanity, voyerism and exhibitionism as how its user model functions to drive mobile Ad revenue is pretty twisted and it’s created nothing short of an online dystopia.

These apps may be flashy cash-cows for a few years, but if you aren’t on the bleeding edge of innovation, your company will have to face reality sooner or later. For Facebook 2018 might be the point where it diverged from its former glory.

It’s also worth noting that figures only apply to Facebook itself. Instagram and WhatsApp are more than fine, if seen purely from a user growth perspective.

Article Prepared by Ollala Corp

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