Facebook has been an inspiration to many startup founders but recent Facebook’s market activities have shocked the entire generation of entrepreneurs. But nonetheless, there are always lessons to learn from such incidents and that is what we call “Evolution”. Facebook’s implosion was based on 3 major factors –
a. The Advertisement Market
Advertisement market is always influenced by the state of economy; in this case as well, the Ad Market of Facebook was supposedly impacted by the on-going recession in the U.S. economy.
b. Changing User Behaviour
The speed bump of Cambridge Analytica is still hurting the growth process of Facebook; as per the reports there has been a significant downfall in the Daily Active Users (DAU) of Facebook in the Europe region because of the GDPR changes.
Companies as large as Facebook also suffer the consequences of increasing costs. According to the earnings call, management said that operating margins will plunge from 44% to the mid-30s (keep in mind – that a year ago – they were 47%).