Facebook may not be the original social media platform, but it has stood the test of time – until recently. Meta, the company that owns Facebook, Instagram and WhatsApp, saw its value plummet by around $80bn (£69bn) in just one day at the end of October, after its third-quarter profits halved amid the global slowdown. Meta is now valued at around $270bn compared with more than $1tr last year.

Several issues have caused investors to turn away from the social media giant, including falling advertising revenue, a conflict with Apple over its app store charging policy, and competition for younger audiences from newer platforms such as TikTok.

Meta’s chief executive, Mark Zuckerberg, has also used his majority control to double down on his ambitions for the ‘metaverse’, a virtual reality project on which he has already spent more than $100bn – with questionable results, according to initial investor and media reaction. Zuckerberg has promised even more investment in the metaverse next year.

It’s tempting to describe this spending spree as a billionaire’s ‘insane fantasy’, but there is a simpler explanation. As dominant platforms compete for a limited amount of advertising revenue, regulation – particularly when it differs between countries or regions – has created space for more competitors. This is good news for new social media companies, but it also means that the only way Meta is likely to be able to keep its dominant position is by placing a massive bet on the technology of the future. Zuckerberg believes that means the metaverse, but this remains to be seen.

Tech’s changing fortunes

Even with its recent troubles, Meta owns the largest social network in the world. Those recent results that caused investors to flee in their droves still showed total revenues of $27bn and profits of $4.4bn.