Will Meta follow the same fate as Yahoo?

Yahoo and Meta

Meta is in trouble as Mark Zuckerberg bets on the future of the Metaverse. The confusion surrounding the company is somewhat reminiscent of Yahoo. Yahoo, once called the largest Internet company, stumbled in a similar crisis and was unable to recover.

“It’s reasonable to think that Meta is in a crisis like Yahoo once was,” said a tech industry veteran who has worked closely with Meta executives. The company may no longer be as dominant as it has been in the past decade, he said.

match with Yahoo

In the late 1990s and early 2000s, Yahoo was synonymous with Internet searches. However, the emergence of rivals, delays in responding to changes in digital advertising, and the advent of Web 2.0 led to its decline.

Meta is currently facing challenges such as the rise of TikTok (the first true competitor Meta has encountered), the blow from new privacy policies in digital advertising, and the explosion of Web3-related startups and tech.

These new challenges are largely what motivated Meta to turn to the Metaverse. According to Meta, the Metaverse is a digital reality that has the potential to create new markets for digital goods and virtual experiences. Zuckerberg made the move out of fear that the company’s business was plateauing, according to a former Meta executive who recently left.

It doesn’t seem like his fear was just his imagination. Meta reported a 1% decline in revenue in the second quarter of 2022, the first decline since going public.

Advertisers are looking to cut spending on the company as other platforms rise, which is also a first for the company. Advertisers aren’t attracted to the Metaverse initiative to spend more on Meta’s platform. Instead, Meta is facing what Zuckerberg calls one of the most “tough times” in its history, as it cuts spending and curbs hiring.

After interviewing 10 current and former employees, staff inside Meta are concerned that the new bet won’t improve the business. A staff member in one of the company’s most profitable divisions also said the direction of the company was confused after the company’s name was changed from Meta to Meta in October 2021.

“Among the things that have been announced about the Metaverse, there hasn’t been much that you can actually see or touch, and even less that you can use,” said a former employee.

“Failure is unacceptable”

With Zuckerberg steering to the Metaverse, Meta may be working on the hardware and OS necessary to participate in the Metaverse in the future. But even if there is such a possibility, it’s a long way off, and it’s expensive to realize.

In 2021, Meta spent $10 billion on the Metaverse (approximately 1.34 trillion yen, $1 = 134 yen). Even in the meta, this is a lot of money. Also, the metaverse is basically empty at this point, with few users and even less things you can do there. Zuckerberg says the Metaverse is a long-term strategy and will take at least 10 years to complete development.

“Meta has the guts, the capital, and the ability to bring the Metaverse vision to life and become a major player in the space, but there is no room for failure,” said the industry veteran.

Meanwhile, insiders and investors are concerned about the many challenges Meta currently faces. These include looming regulations, competition from TikTok, and a restructuring of the entire advertising infrastructure caused by changes to the privacy policy.


Even in a cash-rich meta, a $10 billion investment is a lot of money.

Some employees are losing confidence in working for the company. Meta’s internal survey, obtained by Insider, shows that fewer employees responded positively to questions such as how they feel about the company’s leadership, whether they intend to stay with the company, and whether they are proud to work for the company. is doing. That’s despite the fact that the company is always “responsive to employee feedback,” according to a spokesperson.

“Meta is obsolete because cultural capital is the most important thing in tech,” he said. is Georgetown University professor Christie Nordheim, who specializes in data and society, marketing and advertising.

Tech giants struggling to find a place in new industry

Meta’s metaverse shift opens “a new chapter,” one that’s more ambitious and social platform agnostic, Zuckerberg said. Even if it makes investors nervous, increases stock price volatility, and costs tens of billions of dollars for years to come.

Rivals such as Apple, Google, and Microsoft are all developing their own Metaverse products, but Meta is still pushing ahead.

“Meta bet their entire fortune on a market that wasn’t their domain,” said the former employee. Ygal Arounian, managing director of Wedbush Securities, also said, “Nothing is certain about meta’s success[in the metaverse]. The company is still strong and dominant. That may not always be the case,” he said.

Many of Meta’s 70,000-plus employees work in the company’s staple products like Facebook, Instagram, and WhatsApp, or in the advertising division that generates most of the company’s revenue. Some of these employees say they don’t quite understand what the metaverse means in their work.

According to a former executive who recently retired from the company, the company is desperately trying to raise awareness about the Metaverse, and “Mark[Zuckerberg]talks about it all the time,” but it’s even percolating into employee work. I don’t think so.

Meta’s hottest commerce division has told employees it has no plans to invest in Metaverse products until at least 2023, according to people familiar with the matter.

“We don’t have a coherent strategy yet, so we don’t know what to offer or what to work on. That’s causing confusion and anxiety,” said a current employee.

But Zuckerberg’s focus is undeniably on the Metaverse, said the former executive. In fact, Zuckerberg, along with Andrew Bosworth, the Chief Technology Officer (CTO) who leads Reality Labs, went through all the new product demos and personally reviewed plans and proposals for Reality Labs partnerships. is said to be under investigation.

“He[Zuckerberg]doesn’t let anyone decide what he wants the company to be like,” said a former executive.

Indelible memories of Yahoo!

Concerns about meta’s strategic shift, which began to rise after the fall of 2021, reached a peak in February 2022. Daily Active Users (DAU) for Meta-owned apps fell slightly quarter-over-quarter for the first time after several flat quarters.

Source: BusinessInsider


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