Meta Platforms, Inc. (FB) is facing a rapidly growing competitive threat to its Facebook and Instagram social media platforms from Chinese 澳洲幸运5官方开奖结果体彩网:video sharing platform TikTok. In the first quarter of 2022, Meta (Facebook) ad revenue grew by just 6.1% year over year (YOY), the slowest rate in its 10 years as a 澳洲幸运5官方开奖结果体彩网:public company. The company's forecast for the second quarter is decidedly downbeat, bracing for a possible YOY decline in ad revenue.

In 2021, TikTok surpassed the global advertising revenue of Snapchat, which previously was the preferred digital hangout for users in their teens and twenties. In 2022, TikTok is forecast to triple its worldwide ad revenues YOY, surpassing the combined figures for Snap Inc. (SNAP) and Twitter, Inc. (TWTR). TikTok became the world's third-largest social network in 2021, behind Meta's Facebook and Instagram, and is projected to exceed a 20% 澳洲幸运5官方开奖结果体彩网:market share in 2022 and about 25% by 2024.

TikTok's Meteoric Growth

TikTok is owned by 澳洲幸运5官方开奖结果体彩网:privately held Chinese firm ByteDance. It reportedly has a 澳洲幸运5官方开奖结果体彩网:valuation ranging anywhere from $140 billion to $353 billion as of December 2021, up from about $80 billion a year earlier, making it the world's largest unicorn.

In 2022, TikTok's global ad revenues are forecast to triple YOY, reaching $11.6 billion and thus exceeding the combined total of $10.44 billion projected for Snap and Twitter. By 2024, TikTok is forecast to reach $23.6 billion, putting it on a par with YouTube, which was launched 12 years earlier and is owned by Google parent Alphabet Inc. (GOOGL, GOOG).

In 2021, TikTok surpassed 1 billion users, just four years after its global launch—half the time it took Facebook, YouTube, or Instagram to reach that milestone, and three years faster than WhatsApp. Recently, analysts at data.ai revised a prediction that TikTok would hit 1.5 billion 澳洲幸运5官方开奖结果体彩网:monthly active users in 2022, after its analysis revealed that TikTok had surpassed that figure by 100 million users during just the first three months of 2022.

The Threat to Meta's Facebook and Instagram

In a note to clients, analysts at Atlantic Equities observed: "Across the industry, short-form video continues to take a greater proportion of time spent. Primarily driving and benefiting from this trend has been TikTok, with some concern that this was creating a competitive challenge for Meta."

Indeed, in the first quarter of 2022, Facebook reported its first-ever decline in daily active users. They fell by 500,000 to 1.93 billion. This suggests that Facebook has reached 澳洲幸运5官方开奖结果体彩网:market saturation globally and thus that its ability to add users has peaked.

Sam O'Brien, the chief marketing officer at performance marketing company Affise, noted: "Meta clearly sees itself in a battle against TikTok for the hearts, minds and attention spans of 澳洲幸运5官方开奖结果体彩网:millennials, a significant chunk of the social media market. TikTok has experienced a staggering growth of users since the onset of the global pandemic, taking over a huge chunk of its competitor's audience."

Meta Responds to TikTok

Meta still dominates the social networking market. Facebook has 2.9 billion monthly active users, and Instagram another 2 billion. Market research firm Insider Intelligence projects 2024 ad revenues for Facebook and Instagram to be $85 billion and $82 billion, respectively. Even so, it emerged last month that fear of TikTok had led Meta to hire a lobbying firm to characterize TikTok as a "real threat, especially as a foreign-owned app."

Meta has a product called Reels that competes with TikTok in the market for short videos. The company has told investors that 20% of time on Instagram is already being spent on Reels, while 50% of time on Facebook is spent on videos. However, these videos "monetize at lower rates" than the core products.