What can Mark Zuckerberg do if Facebook is at its peak?

Which is why, for years, ‘daily active users’ were the North Star for Zuckerberg and his executives as they pushed the business forward. Now, for the first time, that number has declined. Still classified as a “buy” by most analysts surveyed by Bloomberg, Facebook was downgraded by four banks, including JPMorgan Chase.

Facebook said its daily users fell to 1.929 billion from 1.93 billion in the fourth quarter of 2021. You can imagine that ‘2 billion daily users’ was firmly on Zuckerberg’s mind as the next big goal, but it’s hard to see him reach it now. With their long-term inability to build lucrative new services in the face of increasing competition, a new reality is sinking in: Facebook looks like a business in decline.

In its earnings call on Wednesday night, Meta pointed to all the headwinds facing it, including a $10 billion hit to its advertising business this year from Apple’s privacy changes to its mobile users. [that make it significantly harder for digital advertisers to track their online activity],

And it announced that its Reality Labs segment, where its plans for the metaverse are headed, lost $10.2 billion in 2021, an even larger sum by its standards.

But Meta’s biggest weakness has been seen. It has tried for years to create a consumer Internet service with the same charm as Facebook or Instagram, and every one—from Facebook Watch to its TikTok rival Instagram Reels—has faltered or struggled to make money.

Despite being announced with great fanfare more than two years ago, the company’s cryptocurrency project Diem has recently folded. [when such a would-be currency was named Libra], That business in particular could pull Meta back to its arguably healthy, early days, when it generated about 15% of revenue from payments made through games like Zynga’s FarmVille.

Over the years, that share of revenue fell to almost nothing, as Facebook’s addiction to the advertising business grew. This has left Facebook — the least diverse of America’s Big Tech firms — quite vulnerable to any decline in users and their all-important engagement metric with advertisers.

This latest drop in the last quarter was written on the wall for a while. Facebook employees had become concerned in recent years about an exodus of younger users, largely invisible to those outside the company, that last year led the country’s markets regulator, the US Securities and Exchange Commission, to Facebook whistleblower Hogan. basis of complaint.

Zuckerberg can no longer buy his way into a new business, much the way his $1 billion purchase of Instagram in 2012 spun the wheels for a successful pivot to mobile. Today, Meta could buy an already successful Metaverse company like Roblox Corp., but regulators almost certainly won’t allow it. He has promised a more thorough investigation of Big Tech deals, and has already sought to reverse the $315 million deal Facebook struck with Giphy last year.

What will happen next? Zuckerberg can make investors happy through stock buybacks. And as his executives settle into taking the business forward, as he has always faced with past setbacks and scandals, Zuckerberg wants to appear ‘doing something’ to manage Facebook’s growth issues. One time-honored strategy is moving deck chairs around. She can see herself as the next best option to replace Sheryl Sandberg, the company’s chief operating officer for 14 years, and Zuckerberg’s right-hand woman.

Zuckerberg cannot be moved. He owns the majority of Meta’s voting shares and oversees a largely strong board; He is expected to remain CEO of Meta five years from now. That means investors shouldn’t expect a turnaround like Microsoft, which was launched in 2014 by Satya Nadella replacing Steve Ballmer.

For now, he must follow Zuckerberg in the metaverse, in the hopes that daily active users will get in the way, or at least stop the decline. However, this seems to be a tall order.

Parmy Olson is a Bloomberg Opinion columnist covering technology