In the first quarter, more people used Facebook than analysts expected. They thought TikTok would reign supreme after last year when the world's largest social network lost users for the first time ever.
Even though the company's profitability fell and revenue growth was the slowest since it went public a decade ago, shares in Facebook parent company Meta soared on Wednesday afternoon after it announced its latest quarterly report.
Meta's Reels Is Gaining Popularity
According to TechCrunch, citing the company's first-quarter earnings call, Reels, Meta's short-form video feature and TikTok competitor, now accounts for more than 20% of people's Instagram time. The company also stated that video accounts for 50% of all time spent on Facebook by users.
Although Meta did not clarify how much of that time is accounted for by Reels, it did mention that Reels are also performing well on Facebook.
During the call, Meta CEO Mark Zuckerberg explained that, while short-form videos are on the rise, Meta is also seeing a huge change in the growth of AI suggestions driving more of its feeds, for both posts and Reels.
Zuckerberg went on to say that feeds are moving away from being exclusively curated by users' social circles and toward being recommended by AI.
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Aisha Malik of TechCrunch noted that one of the reasons for TikTok's enormous success is its powerful recommendation algorithm. Therefore, it makes sense for Meta to focus on improving its own recommendation algorithms in order to get people to interact with Reels more, and thus be better suited to compete with TikTok.
Monetization of Reels
Separately, TechCrunch reported that Zuckerberg said while its short-form video product does not presently monetize as well as Stories, the company is optimistic about addressing this in the future. Zuckerberg cited the company's experience with Instagram Stories, which didn't initially monetize as well as the regular Instagram feed but has since improved. Meta anticipates a similar experience with monetizing Reels in the future but cautions that it will be a multiyear process and that the company is currently in the early stages of ad placement in Reels.
It was also reported that Meta's remarks on Reels monetization came just one day after Google announced that it is trying adverts in YouTube Shorts. Sundar Pichai, Google's CEO, also revealed that YouTube Shorts, the platform's TikTok clone, is earning 30 billion views per day, up fourfold from last year.
Meanwhile, Malik, citing recent data, noted that Meta and YouTube's short-form video efforts are a direct response to TikTok's popularity, which has proven to be one of the world's fastest-growing social media networks. Over the last few months, Meta has been working to improve Reels and has essentially integrated numerous of TikTok's features, including a Duet-like tool called Remix, to help it compete with the platform.
On the other hand, NPR pointed out that investors have been wary about Facebook's growth since the company released financial results in January showing a drop in daily users. This triggered Meta's worst day on Wall Street and has continued to weigh down the stock price, cutting the company's market worth by about half since the start of the year.
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