Real world to metaverse: Will meta platforms recover in 2023?

A British court fined Meta platforms €390m (roughly 350 pounds) on January 4 for improperly using users' data in targeted ads. This came after an Indian tribunal rejected Google's appeal and ordered it to pay Rs 1,300 crore as the penalty imposed by the anti-trust regulator for anti-competitive practices.

The Irish Data Protection Commission (DPC) urged the company to alter its data usage policy within three months, stating that Facebook and Instagram cannot "force consent" by telling users they must accept how their data is used or stop using the platform. The DPC takes on the role of EU data regulator due to Facebook and Instagram's European headquarters being in Ireland.

The Mark Zuckerberg-led company, which controls both platforms, had a bad start to 2023, especially given that it is already having difficulty on a number of other fronts.

Despite the company's strong performance in India in FY22, when its ad business brought in over Rs 16,000 crore, up 75% from the year before, 2022 was a particularly bad year for Meta platforms worldwide, possibly the worst.

The US-based tech giant saw a 60% decline in the value of its stock in a single year due to macroeconomic headwinds, a significant decline in its advertising revenue (primarily as a result of Apple's privacy policy), and investors' waning faith in its plans for the metaverse.

The company announced in November that it would let go of roughly 13% of its workforce, or more than 11,000 workers, in order to manage the finances. Top Meta officials, including Chief Operating Officer Sheryl Sandberg, renowned developer John Carmack, Meta India Head Ajit Mohan, Policy Head Rajiv Aggarwal, and WhatsApp India Head Abhijit Bose, left the company around the same time.

These developments also raised the question of whether Meta would be able to improve its prospects in 2023, particularly given the current state of the world economy and dwindling investor confidence in the company's plans for the metaverse.

After all, Facebook alone has nearly three billion users, 400 million of whom are located in India. Facebook and Instagram account for a sizable portion of the digital advertising budget for almost all major Indian brands.

Additionally, Meta is a major source of advertising for micro, small, and medium-sized businesses, particularly those that shifted to online marketing during the pandemic years.

IPG Reprise company Matterkind's Chief Business Officer, Paras Mehta, says, "I think Meta has a great potential to bounce back provided they get authentic and true to themselves and they enhance their audience offering solutions. However, I don't believe their market share will significantly increase this year.

However, some media experts claim that because of saturation, a lack of innovation, and the expansion of eCommerce platforms, FB ad formats are predicted to grow at the slowest rate.

Industry watchers also point the finger at Meta's obsession with the metaverse as one of the main causes of its predicament "In just the second quarter, Reality Labs, Meta's metaverse division, lost $3.7 billion. Instead of enhancing its core business through innovations, the company is still committed to its metaverse pivot, according to a senior digital media expert.

Zuckerberg wants to increase WhatsApp payments, she continued. The highly competitive market, which is dominated by Google Pay and Paytm, has made it difficult.

Media expert Anil Solanki noted that Meta's platforms will face challenges until the economy improves and new avenues for generating revenue from advertisements open up. It will, however, only recover by using the metaverse.

"The enormous social media company is spending billions to develop the metaverse and get ready for the future.” The company might experience a challenging year in 2023, but Solanki anticipates that it will bounce back.

Future regulatory difficulties

The last few years have been difficult for Meta as more nations began looking into the anti-competitive practices and unauthorised use of consumer data by the tech giants.

The Competition Commission of India (CCI), the country's antitrust watchdog, is also looking into WhatsApp's privacy practices for 2021. The company Meta Platforms owns WhatsApp.

Following allegations of antitrust and privacy issues, the US Federal Trade Commission and the European Commission are both looking into Meta.

The United States Journalism Competition and Preservation Bill poses the greatest threat to the giant. If approved, it might be required to give digital news publishers a sizable portion of their ad revenue. According to a senior media expert, this could be a significant setback for the company, whose market share is declining in the US as a result of TikTok and e-commerce platforms' phenomenal growth.

To get around the Bill, eta has threatened to completely remove news content from its US platform. To protect its long-term interests in the US and around the world, experts say it is unlikely to do so.

According to observers, "Meta negotiated a deal with the Australian government on the same issue last year to avoid potential business loss."

Sociapa has contacted Meta to learn more about its business plans for India and the company's position on current legal disputes. We're eager to hear from them.