Like it or not, Facebook and its ecosystems of apps have taken over the world. Most of us willingly spend hours of our time on its apps. We sometimes even lose count of the time we spend on social media and chatting. 

And due to that, it has grown into an advertisement behemoth. Due to its ability to keep us glued, ad revenues have been growing even during the pandemic, albeit probably slower.

But that does not mean the company is perfect. Sometimes as an investor, it is our duty and responsibility to be critical of a company. This is especially for a tech company, where it is easy to rise and easy to fall. 

Platforms and applications once rendered obsolete, will no longer be able to find its way back to our lives. We all have real-life stark reminders like the MSN Messenger, MRCQ and Friendster to remind us of the aftermath of an app being obsolete through time.

So here are 5 big points that I think might cost Facebook Inc big time.

1. Over-Reliance on Advertising Revenues

Perhaps one of the easiest ways to earn money is just to sell advertisement spaces. The world’s biggest social media company quickly morphed into an advertising company. Like it or not, Facebook and Instagram have slowly become more like an advertising space more than a social media platform. 

Now, even the normal photos and posts suddenly become an ad, on top of the random sponsored posts. By simply following an influencer or a brand, you are unknowingly (or knowingly) allowing yourself to be targeted by ads, free of charge. 

Out of the 5 FAANG stocks, Facebook’s business model has stayed pretty much the same for the past 10 years. And this is not that good because all it takes is just a worthy competitor to potentially dethrone Facebook as the social media king.

2. They Lost Big Time When They Could Not Maintain Facebook Games

Remember the times where browser games on Facebook were a huge thing?

Remember Farmville? Or perhaps you were someone who enjoyed Pet Society? Or maybe you were a chef in disguise levelling up in Restaurant City?

Back then, Facebook was already the leader of social media. Then when games suddenly become another activity that we can spend time on, it looks like Facebook suddenly cracked the code to keep us more entrenched to it.

Sadly, Facebook Games failed to take off when the internet and connectivity became mobile. Facebook games were not integrated fast enough to be applicable on mobile itself. Plus, when Facebook decided to put games into Messenger, its Facebook chat sub-app, the momentum stopped, and that lucrative pillar just crumbled off.

A Facebook with a gaming pillar would have been 10 times better today. Just look at how Tencent Holdings Limited evolved from a chat application into a payment app and then into the world’s biggest gaming company. 

What a waste of opportunity for Facebook!

3. The Libra stall is delaying its plans to outgrow its advertising business

Back then when Libra was announced, many saw it as a springboard for Facebook to enter the payment business. Of course, Libra will not be controlled by Facebook, but allowing a successful cryptocurrency project, backed by most of the tech companies and infrastructure players, would have given Facebook a new frontier to grow, this time as a cryptocurrency adopter. 

Sadly, there is nothing concrete now. A huge chunk of the founding members of the Libra Association has also left the association. 

Unless the project suddenly finds a new breath of urgency and catalyst, Libra looks half-dead, and yet another failed expedition for Facebook after losing out in the gaming sphere.

4. Facebook Shop Is Neither Here nor There

When you are the world’s largest social media company with a plethora of apps that command most of mankind’s attention, it always makes sense to build an ecosystem around it. 

We do not even need to think very far on how a social media ecosystem can become truly indispensable in our lives. 

Tencent Holdings Limited is a real-life example, where it started as a chatting app. It then grew to add in P2P payments, retail payments, gaming and eventually becoming a FinTech company as well. The blueprint to pivot a social media company into a tech conglomerate is not a hidden secret.

One of Facebook’s latest measures was to team up with Shopify Inc. to launch Facebook Shops. Facebook Shops will allow merchants and small business owners to integrate their online business onto Facebook and even vice versa since Facebook itself is where most of us lead our virtual reality lives.

But personally, I find the adoption slow, and not as groundbreaking as it seems. Plus, to truly convince people to buy and sell stuff via Facebook, it would have been easier to convince the pickup with an available e-wallet or payment solution to connect the dots. 

If only Libra was successfully launched.

5. Oculus Does Not Synergize with Facebook’s Group of Applications Currently

A good tech company owns multiple brands and pillars. But a great one can synergize two apps and create an ecosystem. Just like how Google made the Google Pixel with Android OS. And from making affordable yet nice phones they slowly ventured into building other hardware, like its Google Pixel Buds, Google Nest and other ranges of hardware. So now Google not only sells ads on its search engine and YouTube, but it is also slowly venturing into the hardware scene.

Oculus is the virtual reality headset gear that is under the Facebook Inc. group. It is one of the frontrunners into offering a reliable and immersive VR experience via its hardware headset. 

The thing is, until now, there are no tangible plans on how Oculus could become a game-changer. Or even synergizes with Facebook’s current roster of applications. It is going into the hardware scene, but with no connection or the potential to synergize with its current software yet.

Until VR suddenly becomes more receptive and adopted by the mass public, Facebook Inc. might still be scratching their heads. On how to make Oculus the next big tech thing or to yet find another way to grow a new business pillar. 

Verdict

Do not get me wrong. Facebook Inc. is still a great company with growth prospects. But today’s version of Facebook would be a shadow of its full potential should all the initiatives it planned to execute and synergize worked.

And it would be of utmost urgency that there is a breakthrough in creating the next big thing in the social media scene. Up and rising short video applications like TikTok by Bytedance Ltd is already an imminent threat. Failure of Facebook to innovate on its current apps, and to find new pastures to stay relevant, might be a dear price to pay, especially for a company in the tech scene.

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