In building N° 20 at Facebook’s headquarters in Menlo Park, California, management was relieved that the Cambridge Analytica scandal, which left 87 million users’ data exposed, did not affect its global audience and revenue. Both advertisers — they are 6 million on FB and 2 million on Instagram — and users, remained insensitive to the recent turmoil:

But for a while, we have been hearing two major concerns that could potentially harm the long-term prospects of the platform. One is less engagement by users of the newsfeed across the board (people sharing less stuff), the second is the growing disinterest of the teenage population (13 to 17 years-old).

Pew Research has compiled the most concerning stats. It shows the evolution of usage between the 2014~2015 period and 2018:

Here are the key takeaways from this chart:

– Facebook is no longer the platform of choice among teenagers: it dropped from 71% of usage four years ago to 51% now. It also fell to the fourth place, behind Snapchat, Instagram and YouTube, which takes the lead as the preferred media platform for young people.

– Now, YouTube is counted by Pew Research as a social platform, while Google+ doesn’t even show up in the ranking; YT is now Google’s crushing success in the social sphere.

– These figures must be considered with respect to the audiences of these platforms in America: Facebook remains the leader in the US and Canada, with 241m monthly users, compared to 184m users for YouTube, and 78m for Instagram (which is owned by Facebook). And across all age groups, Facebook retains a strong position:

Then what could be the reasons for the depletion of the teenage segment? Here are some leads:

– Facebook’s newsfeed becomes increasingly difficult to manage as Facebook must combine user expectations with its economic interests. In a recent series of TV shows and podcasts from PBS (*) , the director of analytics for the newsfeed Dan Zigmond explained the conundrum (emphasis mine):

“If you take all the stories that have been posted by your friends, the pages you follow and maybe the stories your friends have commented on or liked, gather all that together, for the average person, there are about 2000 of those. But most of us going to the newsfeed each day you are probably going to scroll through, maybe, around 200 of those stories. One of our jobs in the newsfeed is to try to figure out how to rank those 2000 stories, so it’s likely that the ones you are interested in are sorted toward the top, because if you are not in the first 200, it is very unlikely that people that will see the story.”

Zigmond went on, detailing the different ways Facebook ranks stories factoring the most likely pieces to be clicked on, liked, commented, shared, or the ones that will make you spend the longest time on Facebook. Each of these signals has their pros and cons. The final sauce is actually a blend of everything that evolves constantly, and each individual gets their own set of predictions from an algorithm based on their preferences, drawn from their usage patterns.

A critical element then comes into play: a user’s preference expressed for her newsfeed can conflict with her ability to bring money to Facebook (remember, we are talking about a revenue per North American user of $107 per year!). For instance, if she likes longform journalism, as opposed to shallow posts, it obviously goes against Facebook’s commercial interest that is built on click and churn. It’s unclear (and a well-kept secret) how Facebook deals with this contradiction. However, the company is known to be literally obsessed with business-related KPIs, perhaps at the expense of the relevance of the newsfeed.

– People might want to be more in control in the way they get their news. On YouTube, the user selects what she wants to view. The channel subscription system is straightforward (even if YT’s recommendation engine is absurdly off-track). Same goes for Instagram: you subscribe to people and organizations you like (a pleasure if you enjoy great photography, for instance), and it’s easy to get rid of other people’s families pix, or stomach-churning food porn. Even ads are quite relevant. (Also, Instagram harbors a bunch of photo editors that have their say in some part of the feed…)

The other long-term worry for Facebook is the impoverishment of demographics.

In the United States, the same goes for junk food as junk news: the poorest and the less educated suffer the most. This chart, also from Pew Research, speaks for itself:

YouTube has much better teenage demographics than Facebook, both for family income and education.

Let’s conclude with this question: to what extent are these trends a threat to Facebook’s business model? The answer can be seen in the company’s latest earnings call with analysts, in which Sheryl Sandberg states the sheer size of Facebook’s operations:

“We have 80 million businesses using Facebook on a monthly basis, of which 6 million are advertisers. On Instagram, we have 25 million Instagram business profiles, of which 2 million are advertisers. Even if we just convert people who are advertising on Facebook into Instagram, that’s a lot of a growth opportunity. Then you can start thinking about Messenger and some of the other platforms that we have. What’s I think interesting and strong about our potential business growth is that we’re able to do this across these services. As I mentioned before, running an ad that has a click-to-Messenger ad that goes into Messenger is just an early example of what’s possible. And I think if you look at the large base of businesses who use us without paying, the growing base of businesses who do pay us and then the runway we have and services that are 1 billion plus that we’re really not monetizing — I think a strong focus on ads continues to be the best investment that we can make.

Facebook still has an immense room to grow. For now, at least (the next few years).

As Bernard Arnault, CEO of the luxury conglomerate said once: “Champagne is eternal. Facebook, I don’t know.”

— frederic.filloux@mondaynote.com

(*) By the way, the PBS Newshour series on misinformation, hosted by Miles O’Brien and produced by my friend Cameron Hickey (a multi-talented TV producer, cinematographer, and computer wizard), is one of the best journalistic works ever done on the subject: the series of podcasts is exceptional, especially the two hour interview with a chilling “pioneer” of the genre, the right-wing activist Cyrus Massoumi.