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Feb 17, 2022 7 min read

It's all about ME: Facebook's new corporate values & more headwinds for the ad business model

It's all about ME: Facebook's new corporate values & more headwinds for the ad business model
Photo by Dima Solomin / Unsplash

Wiser! Essay: Facebook's troubles continue following the disaster that was the earnings call 2 weeks ago. Now Google had added more pain to Zuckerberg's world. Meanwhile, he's decided to revamp the corporate values...and it's all about ME!


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Market sentiment continues to drag Meta down

BackStory:  It's been a turbulent couple of weeks for MetaFacebook. Following the disastrous earnings call two weeks ago, Wall Street's thrashing of its stock looked like it was coming to a stop. That was until Google's declaration that it will follow Apple in banning ad tracking, increasing the headwinds for Meta's ad business.

Whilst Google has been largely unaffected by Apple's privacy changes, the same can not be said for Facebook. The reason is simple; Google has Search and Facebook does not.

This means that Google has its own supply of rich, first-party data and is not beholden to Apple's AppStore as the gatekeeper between it and its user. Whereas Facebook is totally reliant on tracking (surveillance) of user activity as they move around the Internet. Without this data, Facebook can not profile. And if Facebook can not profile, it becomes less attractive to advertisers wanting highly targeted campaigns.

As soon as Tim Cook, CEO of Apple, started his privacy crusade, the writing was on the wall for Facebook. Hence the Zuck has decided to turn the giant oil tanker 180's in the middle of the shark-infested waters of the Bermuda Triangle. It's a 10-year plan to replace advertising revenues with something else (TBC).

Shares in Meta dropped 2% today as I was putting this copy to bed, bringing its year-to-date loss to over 36%. In the meantime, Alphabet, the parent company of Google, gained a fraction of a percent and is now down only around 5% for the year. Alphabet (Google) now trades at a much higher premium to Meta on a price-earnings multiple basis than it has been on average since 2018.

SoWhat?:  Shares in Meta dropped 2% today as I was putting this copy to bed, bringing their year-to-date price decline to over 36%. In the meantime, Alphabet, the parent company of Google, gained a smidgen and is now down only around 5% for the year.

Even though Google and Facebook dominate digital advertising and both have a business model built around it (therefore they have comparable models), Alphabet now trades at a much higher premium to Meta on a price-earnings multiple basis. Facebook is closer to Twitter when you look at the multiples even though Twitter has a far inferior business to Facebook.

The bottom line is that the bears on Wall Street have priced in that Meta's ad business has reached its peak. And this is even before the impact of the reckoning that is coming Facebook's way following last year's whistleblower testimony and internal revelations. All in all, this goes a long way to explaining the Meta pivot and rebranding away from a social networks.

Meta, Metamates, Me

NewValues:  In a message to MetaFacebook employees this week, Mark Zuckerberg outlined six of the company's updated values. The values include 'move fast', 'focus on long-term impact', 'build awesome things', 'live in the future' and 'be direct and respect your colleagues'.

Facebook first published a set of core values back in 2007. In this update to reflect the new company name, Meta Platforms, and a new focus on the Metaverse, The Zuck announced the 6th and last of the new values as simply,  'Meta, Metamates, Me', a reference to the Navy phrase 'Ship, shipmate, self'.

In the note posted on Facebook, Zuckerberg updated the company values, saying, "It's about the sense of responsibility we have for our collective success and to each other as teammates. It's about taking care of our company and each other."

P-leeease! The glaring omission, IMHO, was 'don't build things that can harm people, be exploited by bad people or puts profits before people.'

In other MetaFacebook news...

🍪 Meta has agreed to pay $90 million to settle a case centred on the company’s use of cookies to allegedly track Facebook users’ internet activity after they had logged off from the platform.

🕵️‍♀️ The state of Texas has filed suit against Meta Platforms, claiming that the company’s past use of facial recognition technology violated the state’s privacy rules.

👮‍♀️ In anticipation of, and preparation for, its forthcoming battles with regulators and lawmakers, MetaFacebook has elevated the role of its policy chief, former UK Deputy Prime Minister Nick Clegg. Taking a lesson from the Microsoft Playbook, MetaFacebook is positioning Clegg as the person they should haul before the cameras, not CEO Mark Zuckerberg.

By promoting Clegg to President of Global Affairs, Zuckerberg is mimicking Microsoft who elevated their general counsel, Brad Smith, to the heady role of resident in charge of dealing with governments.

📰 The name of Facebook's “News Feed” has been changed to (just) “Feed.” Clearly, this is because the use of the word "news" is a breach of trades description.

Sources: MSN, CNET, Wall Street Journal, The Information, Facebook

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