Despite being the world’s largest social media platform, Facebook is now facing an existential user crisis. The Guardian recently reported the service has experienced a near 20 percent drop in usage since the Cambridge Analytica scandal broke. The publication notes the network’s users are making, liking, and sharing fewer posts than they did a year ago.
Facebook’s Scandals are Hurting its Engagement Rates
The Guardian’s report indicates Facebook’s engagement rates surged around the time of the 2018 U.S. midterm elections, but have since resumed their decline. The report further explained that while the platform’s overall daily active user numbers have increased, usage times have fallen. In June 2019, the average Facebook subscriber uses the platform for 38 minutes a day. In 2017, users engaged the service for 41 minutes daily.
The newspaper attributes plummeting user interest levels to all the scandals Facebook has endured since last April.
First, in January, users discovered the firm was sharing private user data with Netflix and Spotify. Second, news broke that the corporation is reportedly preparing to pay a multibillion-dollar Federal Trade Commission fine for its role in the Cambridge Analytica affair in February. Lastly, in March, The Verge revealed the company’s content moderators are underpaid, overworked, and frequently traumatized.
In May, Facebook CEO and Co-Founder Mark Zuckerberg introduced a range of platform changes designed to make the service more private and secure. However, his proposals didn’t stop his shareholders from asking for his resignation a month later.
It’s worth noting the service does seem aware of its many problems and has taken action. That’s not to say Facebook’s leadership is addressing the concerns of users, stakeholders, or the government. Instead, the firm is looking to transition its core business away from advertising to financial services.
Facebook’s Cryptocurrency Pivot
Last week, Facebook announced plans to introduce a new form of cryptocurrency called Libra next year. U.S. and European Union securities will back the coin, so it should be more stable than digital currencies like Bitcoin. The firm also revealed that it would launch a new digital wallet system called Calibra to facilitate the transfer of Libra.
The company plans to offer bank accounts, loans, and lines of credit through Calibra, which will be interoperable with Facebook, Instagram, Messenger, and WhatsApp. The corporation’s goal in entering the financial sector is to provide banking services to the developing world. For instance, India is the world’s second most populous nation, but 191 million of its citizens don’t have bank accounts.
However, the company faces some significant obstacles in achieving that goal.
For one thing, U.S., French, German, and Italian legislators worry about the problems caused by Facebook offering its own currency. Similarly, lawmakers are concerned that criminals and terrorists will use Libra. For another, India is considering banning all cryptocurrencies. As China already blocks Facebook, Calibra might not be available in the two markets where it would find the most potential customers.
If Facebook’s usage numbers keep declining, its advertisers will view it as less viable. Furthermore, if certain American politicians have their way, the platform will be dismantled or subjected to extensive government oversight. Consequently, its cryptocurrency service isn’t just a new product offering; it may be the corporation’s only way forward.