As a Gen-Z, I can't avoid Facebook; but I won't be buying its stock

ON A recent visit through Instagram, Facebook's photo-sharing social media network, I found that the user experience for Instagram Stories had once again gotten worse. These are posts that disappear after 24 hours, and that live at the top of the app.

My friend's stories were sandwiched between two ads: one for GrabFood in which a ghost climbs out of a fridge to order food; and another from The Business Times' 45th anniversary promotions. (Side note: We're 45! Check out our subscription promotions here to read the rest of this article if you're still not a subscriber.)

As I swiped my stories away, I scrolled down on my feed to see what my friends have been up to. A graduation post here, a couple of selfies there, and, strangely, a How I Met Your Mother meme from an account that I had never seen before. That's strange, I thought. Only friends I follow should show up in my own feed.

Still, I love how funny the memes are and follow the intruder in my feed. Minutes turn to hours and before I know it, my precious Saturday morning is burnt and all I am left with is guilt for not using my time better.

Facebook has done everything it can to keep us hooked - from algorithmically surfacing posts calculated to draw us, to cloning features from competitors like Snapchat - but is now becoming a victim of its own success.

Social-media addiction is raising alarm bells for parents. Hyper-optimised feeds have been blamed for siloing people into ideological echo chambers, from moon-landing conspiracies to unhealthy body image standards and anti-vaccine misinformation.

Facebook chief Mark Zuckerberg is meeting this criticism by launching the company in the direction of the metaverse. This term comes from the 1990s Neal Stephenson novel Snow Crash, which involves a virtual reality (VR) that succeeds the Internet. In this dystopian environment, the government has ceded most of its power to companies in an extreme form of plutocracy.

We do not yet know what Zuckerberg's vision of a metaverse entails, but early indications are that it will combine Horizon Workrooms, a VR meetings app powered by Oculus VR headsets that was released in beta in August this year, and Horizon Worlds, an online social VR platform that has been in an invite-only beta phase since August last year.

"I think if we're successful, then maybe 5 years from now, or 7 years from now, people will primarily think about us as a metaverse company, rather than a mobile Internet company, that's kind of helping to build these kinds of experiences," he said in an interview in July with news site The Verge's Casey Newton back in July.

Turning a blind eye

Zuckerberg's metaverse vision is now competing for headlines with revelations from former Facebook product manager Frances Haugen, who has testified to a United States Senate subcommittee that the company turned a blind eye to the harm it was causing teenagers. Leaked slides showed the company had conducted internal surveys and found that a third of teenage girls who felt bad about their bodies felt worse after using Instagram.

As a Gen-Z user of various Facebook-owned products, my own lived experience combined with Haugen's revelations have me worried. When my editor asked me if I would consider owning Facebook shares, I said I would not even if the company continued to print money.

In its recent third-quarter earnings on Monday, the company posted revenue growth of 35 per cent to US$29.01 billion, the smallest increase since last year's fourth quarter, perhaps suggesting that it is reaching saturation point with how much engagement it can realistically draw.

Instead of seeking new avenues of growth, Facebook's stubborn desire for more user data hurt itself here too, as Apple introduced App Tracking Transparency (ATT) on iPhones, a feature that allows users to stop apps like Facebook and Instagram from tracking them across apps and websites owned by other companies.

As a result, ad revenue declined slightly from the prior quarter in the US, Canada and Europe. Facebook's chief operating officer complained that sales would have grown if not for Apple's ATT.

Even with investments in Facebook Reality Labs potentially creating a US$10 billion hit to its operating profit in 2021, it is unclear that its business model would be any different than what Facebook's is today. Facebook Reality Labs was broken out in its reporting structure on Monday to include the company's augmented reality (AR) and VR products and services.

The company's price-to-earnings ratio appears to be the lowest among the FAANG (Facebook, Apple, Amazon, Netflix and Google) stocks, at about 23 times. But I would argue this does not reflect value, as shareholders begin to see the limits of its current growth model and price in the uncertainty of other disruptions or government regulation that may hurt the company.

Unfortunate development

Given all the current scrutiny, Facebook ought to be more transparent and allow researchers to study its products and recommend ways to improve them.

Instead, the company has gone the other way. Academics who were scraping Facebook data to research political ads and misinformation have lost access to their accounts.

This is unfortunate, because social media does not seem to be completely detrimental to humankind. In the same set of slides leaked by Haugen, 41 per cent of US teenagers and 33 per cent of UK teenagers said Instagram made them feel better about themselves. The survey was also self-reported by teens, which is not the most accurate form of research.

It may make sense in the short run for Facebook to worry about research setting an upper limit of engagement that stifles its growth.

But this lack of transparency will hurt the company in the long run, causing governments to overcompensate through regulation. Until the issues are accurately diagnosed, the company's goal of more engagement will remain divergent from society's best interests.

Even advertisers, Facebook's biggest clients, are crying out for more transparency. It appears Facebook has been driving Instagram users to create multiple profiles. This has pushed user numbers up but complicated the data on engagement. There are now more American 18- to 30-year-olds registered on the site than there are actual people in the age group.

Facebook is now being compared to tobacco and alcoholic beverage producers, which is not a good look for a company that needs to appeal to future generations of digital natives.

Among younger people, it already has an image problem. Only relatives above 35 years of age wish me "happy birthday" on my Facebook wall. My Gen-Z cousins' attention spans are split between Instagram and TikTok, a rival video sharing app. People are engaging in "social media detoxes", disconnecting from these apps to feel better.

If the company wishes to build a metaverse where people can live, work and play virtually, it should first reassure people that they will be safe within its walls.

For now, society does not seem to feel safe in the spaces Facebook has already created. That can't be good for the stock.

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