Has Facebook reached its climax?

Siddharth Tak and Ajay Vaishnav / Zee Research Group

Is Facebook running out of steam? The pessimism is not unwarranted as the world’s most popular social networking site has taken about 215 days to add 100 million new users to its kitty of 955 million users.

This is first time since August 2008 that Facebook had to wait for more than 200 days to add 100 million users. This is when the social networking giant has taken much lesser number of days on other occasions to cross 100 million milestones.

A Zee Research Group (ZRG) analysis reveals that Facebook is beginning to struggle in retaining its tempo to increase the number of users. There exist discernible signs that the social media behemoth is slowing down in terms of user additions across the globe. Facebook took 215 days to reach 900 million users in April 24, 2012 from 800 million in September 22, 2011. In comparison, Facebook took just 115 days to expand its user base from 700 million in May 30, 2011 to 800 million. Given numbers are central to any corporate strategy of a website, the difference of nearly 100 days to cross the 900 mark must have raised alarm bells in Facebook.

Earlier on three different occasions, Facebook took about 160 to 168 days to swell its users kitty by incremental 100 million. It took the longest tenure of 225 days to grow to 200 million users from 100 million and again it took 160 days to cross 300 million marks. However, the Facebook user growth story achieved its first significant landmark in August 26, 2008 when it crossed the 100 million mark.

Facebook monthly active users have swelled up to 955 million as on June 30, 2012. The maximum growth has come from Asia with 255 million active users. Asia is being followed by Europe with 246 million users while the United States and Canada trail at 186 million. Barring the above, there are 268 million users in the rest of the World.

The worrying trend for Facebook is that its user base in developed nations is steadily declining. As on June 30, 2012, the US and Canada has seen a decline of 19 percent compared since last two years. In the same period, Europe too has seen decline from 32 percent to 25 per cent. While Facebook is facing increased competition in the social networking space, there also has been mass grudge against its privacy policies which were arbitrarily changed in 2009.

The changed policies allowed the site to make users’ confidential profile information such as status updates, geographic location and marital status public with advertisers and third-party applications without their consent. During the weekend, Facebook has agreed to tighten its privacy policies after it settled a long-running dispute with the US Federal Trade Commission.

The settlement also entails biannual privacy inspections by an independent watchdog for the next 20 years.

Yet another evidence of the slump in Facebook’s popularity in developed countries is evident from the ebbing user growth rates. In last two years, while Europe has managed to add users at the rate of 65 percent, the US and Canada has underperformed at 35 percent. That Facebook’s future lies in Asia is clearly evident with the continent showing promising growth at 165 percent. Another beacon of hope for the social media site is the 173 percent rate of growth in the rest of the world which also includes Africa. As of now, non-American and non-European users haven’t raised privacy concerns perhaps due to different economic, cultural and sociological setting. In Asia, in particular, what constitutes privacy of an individual in the context of worldwide web remains vague.

While Facebook is the most popular social media website in many countries across the world, the same cannot be said about China, Pakistan, Japan, Russia, South Korea and Vietnam.

In an updated regulatory filing released on August 1, 2012, users in Brazil, India, and Indonesia represented key sources of growth in the second quarter of 2012 leading to an increase of 29 per cent in its monthly active users over the corresponding period of 2011. During the second quarter of calendar year 2012, Facebook users in India has jumped 84 per cent to 59 million as on July 30, 2012, compared to 32 million in the corresponding period last year.